High Court Says Computerized Abstract Ideas Not Patent Eligible

In its highly anticipated decision in Alice Corp. Pty. Ltd. v. CLS Bank Int’l, the United States Supreme Court unanimously ruled that an abstract idea is not patentable simply because it is implemented on a computer.

The case itself is centered around patents that claim computerized systems and methods for mitigating settlement risks among multiple parties by using electronic “shadow” accounts linked to real-world bank accounts. In its decision, the Supreme Court found that the claimed method for mitigating settlement risk was directed to a fundamental economic process and “a building block of the modern economy.” Thus, the claims were centered around a patent-ineligible abstract idea. The Court then examined the elements of the claims to determine whether they contained any inventive concepts sufficient to “transform” the claimed abstract idea into a patent-eligible application. Based on the Court’s review of these particular claims, they did not. As such, the claims were determined to be ineligible for patent protection under 35 U.S.C. § 101. Notably, the fact that the methods were claimed to be performed using computers had no substantive impact on the § 101 analysis.

Overall, this decision offers some helpful guideposts to be used in future disputes involving § 101. To be sure, the worst offenders of § 101 will not be pleased. Yet, the ruling is clearly intended to be a narrow one and stuck closely to precedent. In fact, while some were worried that this case would be the death of all software patents, the word software never even shows up in the decision. This was likely by design. As such, perhaps this case represents more of a foreshock to the main § 101 quake looming in the background.