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Supreme Court Confirms That Tranforming Abstract Idea into a Patent-Eligible Invention Requires More Than Mere Recitation in Claims of Generic Computer

Posted on Jun 24, 2014 in Blog

On June 19, 2014 the U.S. Supreme Court ruled that the claims in several patents for software to facilitate the exchange of financial obligations between two parties using a computer system as a third-party intermediary are invalid as claiming patent-ineligible subject matter under 35 U. S. C. §101. Alice Corp. Pty Ltd. v. CLS Bank Int’l, U.S., No. 13-298, 6/19/14.

The claims were directed to a method for exchanging financial obligations, a computer system configured to carry out the method for exchanging obligations, and a computer-readable medium containing program code for performing the method of exchanging obligations. The District Court had held that all of the claims were ineligible for patent protection under §101 because they were directed to an abstract idea. The en banc Court of Appeals for the Federal Circuit affirmed.

The Supreme Court followed its framework set forth in Mayo Collaborative Services v. Prometheus Laborato­ries, Inc., 566 U. S. ___, 132 S. Ct. 1289 (2012) for distinguishing patents that claim laws of nature, natu­ral phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts. First, the Court determined that the claims are directed to a patent-ineligible concept, as drawn to the abstract idea of intermediated settlement, which “is a fundamental economic practice long prevalent in our system of commerce” as Justice Clarence Thomas wrote, quoting an earlier opinion.

Second, the Court determined that the elements of the claim do not contain an “inventive concept” sufficient to transform the claimed abstract idea into a patent-eligible application. Justice Thomas stated that “the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention.” Here, he added, “the claims at issue amount to nothing significantly more than an instruction to apply the abstract idea of intermediated settlement using some unspecified, generic computer.” That “is not enough to transform an abstract idea into a patent-eligible invention.” (internal quotation marks omitted)

The Court’s ruling applies not only to the method claims, but also to the computer system claims and the computer-readable medium claims. Regarding the computer system claims, the Court added that “Nearly every computer will include a “communications controller” and “data storage unit” capable of performing the basic calculation, storage, and transmission functions required by the method claims. As a result, none of the hardware recited by the system claims “offers a meaningful limitation beyond generally linking the use of the [method] to a particular technological environment, that is, implementation via computers.” (internal quotation marks omitted). “Put another way, the system claims are no different from the method claims in substance”, Justice Thomas added.

This ruling follows the recent Bilski v. Kappos, 561 U. S. 593 (2010) and Mayo Supreme Court precedents and potentially makes it more difficult to patent software operating on computers, especially in the business-method and e-commerce fields.

– by Michael J. Cornelison

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