Today, the Supreme Court in Alice Corp. Pty Ltd. v. CLS Bank International 573 US ___ (June 19, 2014) unanimously reasserted that untransformed abstract ideas are not the appropriate subject matter for patents. The Supreme Court cut through the formalities of patent drafting to address the underlying innovation reflected in the claims. The result is a marked preference for “technological” innovations, thus increasing the challenges for innovations that are not – in substance – technological.
This decision is likely to most heavily affect fields that are viewed as less technological by the Court, such as business methods. Indeed, three of the justices joined in a concurrence explicitly stating that they believed business method claims in general to be directed to ineligible subject matter. (Conc. Op. at 1)
According to the unanimous Court, abstract ideas are not limited to preexisting, fundamental truths, but can include methods of organizing human activity (Slip Op. at 10). Even if the claims relate to an abstract idea, however, the Court left open the possibility that the claims can “transform that abstract idea into a patent-eligible invention.” (Slip Op. at 10) Mere computer implementation is not enough (Slip Op. at 12) or more precisely “the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention.” (Slip Op. at 13)
In distinguishing the claims at issue from prior claims held to have patent-eligible subject matter, the Court provided insight that will be valuable to patent drafters. Specifically, the Supreme Court held that the addition of purely functional and generic hardware will not provide the necessary transformation to go from abstract idea to patent-eligible subject matter. For example, the Court distinguished the patents at issue in Diehr, in which the claims used an equation “in a process designed to solve a technological problem in ‘conventional industry practice’” (Slip Op. at 12) and “improved an existing technological process” (Slip Op. at 13). By contrast, the patents in suit “do not, for example, purport to improve the functioning of the computer itself,” “[n]or do they effect an improvement in any other technology or technical field.” (Slip Op. at 15).
The Supreme Court acknowledged that a claim directed to a computer is directed to a “machine” under 35 U.S.C. 101, but nonetheless suggested that the patentee elevated form over substance by making the claims “formally addressed to patent-eligible subject matter.” (Slip Op. at 14) By focusing on whether a machine was claimed, the Court held, would make the determination of patent eligibility “depend simply on the draftsman’s art.” (Slip Op. at 14) “Put another way, the system claims are no different from the method claims in substance.” (Slip Op. at 16)
The Court also disagreed with the idea that “data processing system,” “communications controller,” and “data storage unit” are specific hardware. Instead, the Court took the position that these are “purely functional and generic” – the kind of features found in “[n]early every computer.” (Slip Op. at 16)
In short, increased focus on technological improvements helped to clarify the boundaries of patent-eligible subject matter in today’s decision. This clarification enables patent drafters and innovators to focus on the substance when deciding what to claim.