The US Supreme Court in Alice Corp. v CLS Bank International1 has made it clear that merely confining a process to implementation on a computer, without providing any improvement in technology, will no longer be sufficient for that process to be eligible for patent protection in the US.

Alice Corporation's Patent Claims

The claims at issue were characterised as relating to a computerised scheme for mitigating settlement risk by facilitating the exchange of financial obligations between two parties by using a computer system as a third-party intermediary.  The intermediary creates shadow credit and debit records that mirror the balances in the parties' real world accounts, and updates the shadow records in real time as transactions are entered, allowing only those transactions for which parties' updated shadow records indicate sufficient resources to satisfy their mutual obligations.  A claim agreed to be representative of the patents is provided in the Appendix below.

Patent Eligible Subject Matter

The Court confirmed that the section2 of the US Patents Act that defines subject matter eligible for patent protection has always contained an implicit exception: laws of nature, natural phenomena and abstract ideas are not patentable.  In applying the exception, the Court said it was necessary to distinguish between patents that claim these "building blocks" of human ingenuity and those that integrate the building blocks into something more, thereby transforming them into a patent eligible invention.  The concern is that all uses of an abstract idea should not be pre-empted by a patent.

Two Part Test

To distinguish between claims that are eligible and those that are not, the Court relied on the following test from its decision in Mayo3.

  1. Determine whether the claims at issue are directed to one of the patent-ineligible concepts, i.e. laws of nature, natural phenomena or an abstract idea.
  2. If so, what else is there in the claims before us?

To answer the second question, the elements of each claim, both individually and as an ordered combination, need to be considered to determine whether the additional elements transform the nature of the claim into a patent-eligible application.  This analysis involves a search for an "inventive concept", i.e. an element or combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than the patent upon the ineligible concept itself.

Applying the Test

The Court referred to its past decisions on computer implemented inventions to give some guidance as to how the test is to be applied. 

In  Benson4, the claimed process converted binary coded decimal into binary using a shift register, as shown in the Appendix. The implemented algorithm was considered an abstract idea, and the claim therefore had to supply a new and useful application of that idea to be patent eligible. The Court noted the computer implementation did not supply the necessary "inventive concept" and the process could be "carried out in existing computers long in use". The Court also said the introduction of a computer into the claims does not alter the analysis for step (2).

Flook5 was considered to be "to the same effect", and the claims, as shown in the Appendix, were directed to a computerised method for using a mathematical formula to adjust alarm limits for certain operating conditions for a catalytic conversion process.  The Court said the formula was an abstract idea and the computer implementation was purely conventional.  The Court considered that Flook stood for the proposition that the prohibition against patenting abstract ideas cannot be circumvented by an attempt to limit the use to a particular technological environment. 

In Diehr6, the claims were considered to be patent-eligible but, as shown in the Appendix, are not that dissimilar to those of Flook. The claims do however include more specific implementation detail.  The claims relate to a process for curing rubber and according to the Court, employed a known mathematical equation used to solve a technological problem in a conventional industry practice.  The Court referred to the invention in Diehr using a "thermocouple" to obtain previously unobtainable temperature measurements inside the rubber mold.  The Court considered the claims in Diehr were patent-eligible because they improved an existing technological process, not because they were implemented on a computer. 

One of the other distinctions between Flook and Diehr was that in Flook the formula or "idea" was new.

Application to Alice's Claims

The Court concluded that 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 considered that they did not.  The Court felt that the method claims did 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. 

Accordingly, the previous decision of the Court of Appeals of the Federal Circuit finding that the claims were not patent-eligible, was affirmed.

Comments

To be eligible for a patent in the US, a computer implemented invention will probably now need to provide a technological improvement, solve a technical problem or effect some improvement in technology or a technical field. It will certainly need to involve more than simply implementing an abstract idea on a generic computer.

Whether it was intentional or not, the US Supreme Court may have introduced into US law technical contribution requirements similar to those of European patent law.

Claims Appendix

Alice

A method of exchanging obligations as between parties, each party holding a credit record and a debit record with an exchange institution, the credit records and debit records for exchange of predetermined obligations, the method comprising the steps of:

  1. creating a shadow credit record and a shadow debit record for each stakeholder parry to be held independently by a supervisory institution from the exchange institutions;
  2. obtaining from each exchange institution a start-of-day balance for each shadow credit record and shadow debit record;
  3. for every transaction resulting in an exchange obligation, the supervisory institution adjusting each respective party's shadow credit record or shadow debit record, allowing only these transactions that do not result in the value of the shadow debit record being less than the value of the shadow credit record at any time, each said adjustment taking place in chronological order; and
  4. at the end-of-day, the supervisory institution instructing on[e] of the exchange institutions to exchange credits or debits to the credit record and debit record of the respective parties in accordance with the adjustments of the said permitted transactions, the credits and debits being irrevocable, time invariant obligations placed on the exchange institutions.

Benson

The method of converting signals from binary coded decimal form into binary which comprises the steps of:

  1. storing the binary coded decimal signals in a re-entrant shift register;
  2. shifting the signals to the right by at least three places, until there is a binary '1' in the second position of said register;
  3. masking out said binary '1' in said second position of said register;
  4. adding a binary '1' to the first position of said register;
  5. shifting the signals to the left by two positions;
  6. adding a '1' to said first position; and
  7. shifting the signals to the right by at least three positions in preparation for a succeeding binary '1' in the second position of said register.

Flook

A method for updating the value of at least one alarm limit on at least one process variable involved in a process comprising the catalytic chemical conversion of hydrocarbon wherein said alarm limit has a current value of

Bo+K

wherein Bo is the current alarm base and K is a predetermined alarm offset which comprises:

  1. determining the present value of said process variable, said present value being defined as PVL;
  2. determining a new alarm base, B1, using the following equation: B1=Bo(1.0-F)+PVL(F) where F is a predetermined number greater than zero and less than 1.0;
  3. determining an updated alarm limit which is defined as B1+K; and thereafter
  4. adjusting said alarm limit to said updated alarm limit value.

Diehr

A method of operating a rubber-molding press for precision molded compounds with the aid of a digital computer, comprising:

providing said computer with a data base for said press including at least, natural logarithm conversion data (ln), the activation energy constant (C) unique to each batch of said compound being molded, and a constant (x) depended upon the geometry of the particular mold of the press, initiating an interval timer in said computer upon the closure of the press for monitoring the elapsed time of said closure, constantly determining the temperature (Z) of the mold at a location closely adjacent to the mold cavity in the press during molding; constantly providing the computer with the temperature (Z), repetitively calculating in the computer, at frequent intervals during each cure, the Arrhenius equation for reaction time during the cure, which is

ln v=CZ+x

where v is the total required cure time, repetitively comparing in the computer at said frequent intervals during the cure each said calculation of the total required cure time calculated with the Arrhenius equation and said elapsed time, and opening the press automatically when a said comparison indicates equivalence.