Overview
On June 19, 2014, in Alice Corp. Pty. Ltd. v. CLS Bank International, a unanimous Supreme Court stated that "[t]here is no dispute that ... many computer-implemented claims are formally addressed to patent-eligible subject matter[,]" sparing computer software patents in general.1 However, the Supreme Court found that an abstract idea is not transformed into a patent eligible invention by merely implementing it on a computer.2 Specifically the Supreme Court held that:
the claims at issue are drawn to the abstract idea of intermediated settlement, and that merely requiring generic computer implementation fails to transform that abstract idea into a patent-eligible invention.3
It is worth noting that Justice Sotomayor, in a concurring opinion joined by Justices Ginsburg and Breyer, "adhere[d] to the view that any 'claim that merely describes a method of doing business does not qualify as a 'process' under § 101.'"4
Background
The asserted claims relate to "a computerized scheme for mitigating 'settlement risk'" and "are designed to facilitate the exchange of financial obligations between two parties by using a computer system as a third party intermediary."5 The asserted patents claim methods of exchanging obligations, systems configured to carry out the methods, and computer-readable media claims containing software for performing the methods, which are all implemented using a computer.
The district court found that the asserted claims were "patent ineligible because they are directed to the abstract idea of 'employing a neutral intermediary to facilitate simultaneous exchange of obligations in order to minimize risk.'"6 After granting rehearing en banc and vacating its panel decision reversing the district court, a divided Federal Circuit affirmed the district court judgment in a one-paragraph per curiam opinion.7
The Supreme Court's Analysis
The Supreme Court began its analysis with 35 U.S.C. § 101 ("Section 101"), which defines patent eligible subject matter as "any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof[.]" However, the Supreme Court immediately referred to "an important implicit exception: Laws of nature, natural phenomena, and abstract ideas are not patentable."8 The Supreme Court was mindful that at some level all inventions embody or apply laws of nature, natural phenomena or abstract ideas and that an invention is not rendered ineligible for patent...
