On June 19, 2014, in a tidy 17-page decision, Justice Thomas wrote for a unanimous Supreme Court in Alice Corporation v. CLS Bank that “claims [for exchanging obligations] 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.” Slip opinion at p. 1. Accordingly, the Supreme Court affirmed the Federal Circuit's en banc decision.

The Supreme Court began with the applicable statute, Section 101 of the Patent Act, and cited the principle that “Laws of nature, natural phenomena, and abstract ideas are not patentable.” Id. at 5. “[I]n applying the §101 exception, we must distinguish between patents that claim the ‘building blocks’ of human ingenuity and those that integrate the building blocks into something more . . . thereby ‘transforming’ them into a patent-eligible invention.” Id. at 6.

In its discussion of applicable precedent, the Court relied heavily on the Bilski and Mayo cases: “We must first determine whether the claims at issue are directed to a patent-ineligible concept. We conclude that they are: These claims are drawn to the abstract idea of intermediated settlement.” Id. at 7. The Court compared the claims in question to those in Bilski, in which “the claims described ‘the basic concept of hedging, or protecting against risk.’” Id. at 8. Then: “It follows from our prior cases, and Bilski in particular, that the claims at issue here are directed to an abstract idea.” Id. at 9.

The Court continued as follows: “We turn to the second step in Mayo’s framework. We conclude that the method claims, which merely required generic computer implementation, fail to transform that abstract idea into a patent-eligible invention.” Id. at 10. “Mayo itself is instructive. . . . methods for determining metabolite levels were already ‘well known in the art,’ and the process at issue amounted to ‘nothing significantly more than an instruction to doctors to apply the applicable laws when treating their patients. . . . Simply appending conventional steps, specified at a high level of generality, was not ‘enough’ to supply an ‘inventive concept’” [emphasis in original]. Id. at 11.

The Court also cited Benson and Flook, and contrasted those cases with Diehr: “simply implementing a mathematical principle on a physical machine, namely a computer, [i]s not a patentable application of that principle. . .”. Id. at 12. “Flook is to the same effect. . . . the prohibition against patenting abstract ideas cannot be circumvented by attempting to limit the use of [the idea] to a particular technological environment.” Id. In contrast, "[t]he invention in Diehr used a ‘thermocouple’ to [implement an otherwise abstract idea] – something ‘the industry had not been able to obtain. . . . These additional steps . . . ‘transformed’ the process into an inventive application of the formula.” Id. at 12-13.

The Court then alluded to “the ubiquity of computers” (id. at 13) with a citation from the Lourie concurrence in the en banc Federal Circuit decision in setting the stage for its analysis of the case at bar: “[T]the relevant question is whether the claims here do more than simply instruct the practitioner to implement the abstract idea of intermediated settlement on a generic computer. They do not.” Id. at 14.

The Court set forth its main rationale for the holding as follows: “Taking the claim elements separately, the function performed by the computer at each step of the process is ‘[p]urely conventional’ . . . . The method claims do not, for example, purport to improve the functioning of the computer itself . . . Nor do they effect an improvement in any other technology or technical field. . . . Instead, 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. . . . Under our precedents, that is not ‘enough’ to transform an abstract idea into a patent-eligible invention.” Id. at 15-16. Finally, the Court addressed the apparatus claims, stating that “the system claims are no different from the method claims in substance.” Id. at 16.

In a brief concurrence by Justice Sotomayor (joined by Justices Ginsburg and Breyer), a general statement regarding “business method” patents is noteworthy: “I adhere to the view that any ‘claim that merely describes a method of doing business does not qualify as a ‘process’ under §101.’” Concurrence, slip op. at 1.

Notably, the Supreme Court opinion tracks Judge Lourie’s concurrence from the decision below very closely, citing Lourie’s concurring opinion repeatedly. The Court relies heavily on the notion of adding “enough” to the abstract idea to “transform” the claim into one that is patent-eligible – mere computer implementation is not “enough,” but the use of an apparatus such as thermocouple in a manner not previously obtainable by industry is “enough.” Other specific guidelines for what constitutes “enough” include an improvement to functioning of computer itself, and/or an improvement in some other technology or technical field.

In view of the parallels between Justice Thomas’s opinion and Judge Lourie’s concurrence, we believe that Judge Lourie’s framework presently provides the best set of guidelines for patent eligible subject matter, regardless of whether a claim is designated as a "business method," "software invention" or the statutory class of invention (process or system). In this aspect, we are reminded that Judge Lourie participated in the Ultramercial case (a three-judge panel, Judge Rader wrote the main opinion, Judge Lourie wrote a separate concurrence), in which the claims at bar were held to be patent-eligible, despite the district court holding that the claims were directed to an abstract idea.

In Ultramercial, the Federal Circuit held that the “claim, as a whole, includes meaningful limitations restricting it to an application, rather than merely an abstract idea.” Claim 1 of the patent-in-suit included a recitation of eleven explicit “step[s]” which the Court characterized as “requir[ing] intricate and complex computer programming.” In the concurrence, Judge Lourie stated that “[t]he additional claim limitations reciting how that [otherwise abstract] idea is implemented ‘narrow, confine, or otherwise tie down the claim so that, in practical terms, it does not cover the full abstract idea itself’” and that “the added limitations in these claims represent significantly more than the underlying abstract idea of using advertising as an exchange or currency.”

After the Supreme Court's decision in CLS Bank, practitioners and applicants should look to Judge Lourie’s analysis in Ultramercial as indicating that by providing “additional claim limitations [that] represent significantly more than the underlying abstract idea,” one can be reasonably sure that the claim will be deemed patent-eligible. In this aspect, as usual, the particular details of each claim are the key to the analysis, and a patent practitioner should therefore endeavor to recite claim limitations which he/she can “hang your hat on” with respect to what represents “significantly more” – and the reasons why they represent “significantly more” – than the underlying abstract idea.