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IP Alert: Supreme Court Issues Significant Decision on Patent Eligibility in Alice v. CLS

June 19, 2014

Today the U.S. Supreme Court issued its decision in Alice Corp. Pty. Ltd. v. CLS Bank International et al. The case is an important decision relating to patent-eligible subject matter under the U.S. patent statute.

Alice’s patents claimed variously a method for exchanging financial obligations, a computer system configured to carry out the method for exchanging obligations, and computer-readable media containing program code for performing the method of exchanging obligations. Although the Court found it unnecessary to define the “precise contours of the ‘abstract ideas’ category,” it unanimously held that Alice’s claims each were drawn to an “abstract idea.” Following Mayo Collaborative Services v. Prometheus Laboratories, Inc., an earlier Supreme Court case discussed in a previous alert here, the Court held that the recitation of a computer in the method claims was “‘nothing significantly more’ than an instruction to apply the abstract idea of intermediated settlement using some unspecified, generic computer.” The Court therefore held these claims not to be drawn to statutory subject matter. 

Based in part on Alice’s earlier concession that the patent-eligibility of the hardware and software claims rose or fell with the method claims, the Court then held these claims to likewise be patent-ineligible. The Court further indicated that the “system and [computer-readable] media claims add nothing of substance to the underlying abstract idea.”

In holding the specific claims at issue to be patent-ineligible, the Court cautioned that there is a need to “tread carefully” when addressing the abstract idea doctrine “lest it swallow all of patent law.” The Court further observed that “an invention is not rendered ineligible for patent simply because it involves an abstract concept.”

The decision was unanimous. Justice Sotomayor, joined by two other Justices, issued a concurring opinion to state her belief that any patent claim that merely describes a method of doing business is patent-ineligible.

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