In Alice Corp. v. CLS Bank International, Appeal No. 13-298, the Supreme Court unanimously affirmed the Federal Circuit and held all claims drawn to patent-ineligible subject matter under 35 U.S.C . § 101.
Alice owns several patents that disclose a scheme for mitigating “settlement risk” between two parties by using a computer system as a third-party intermediary. The patents in suit claim (1) a method for exchanging financial obligations, (2) a computer system configured to carry out the method, and (3) a computer-readable medium containing program code for performing the method. Following the precedent of Bilski v. Kappos, 561 U. S. 593 (2010), the district court held all of the claims ineligible for patent protection under 35 U. S. C. §101 because they are directed to an abstract idea. The en banc Federal Circuit affirmed.
The Supreme Court affirmed, holding that, because the claims are drawn to a patent-ineligible abstract idea, they are not patent eligible under § 101. Following the framework of Association for Molecular Pathology v. Myriad Genetics, Inc., 569 U. S. ___ (2013) and Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U. S. ___ (2012), the Court first determined whether the claims were directed to a patent-ineligible concept and then analyzed whether the claim’s elements, considered both individually and as an ordered combination, transformed the nature of the claim into a patent-eligible application. Specifically, the Court determined the claims at issue are directed to the abstract idea of intermediated settlement, a fundamental economic practice long prevalent in our system of commerce. Turning to the second step of the framework, the Court determined the addition of a computer did not render this abstract idea patent-eligible. Taking the claim elements separately, the function performed by the computer at each step is “purely conventional.” And considered “as an ordered combination,” these computer components “ad[d] nothing . . . that is not already present when the steps are considered separately.” Viewed as a whole, these method claims simply recite the concept of intermediated settlement as performed by a generic computer. The Court observed the method claims “do not, for example, purport to improve the functioning of the computer itself” or “effect an improvement in any other technology or technical field.” Rather, applying the abstract idea of intermediated settlement using some unspecified, generic computer was not “enough” to transform the abstract idea into a patent-eligible invention.
Because Alice’s system and media claims added nothing of substance to the underlying abstract idea, they too were patent-ineligible under § 101. The Court reiterated its warning against interpreting § 101 “in ways that make patent eligibility ‘depend simply on the draftsman’s art.’ ” The Court observed that holding the system and media claims patent eligible would have exactly that result.
In the concurring opinion, three justices agreed the claims were drawn to an abstract idea and also took the position business method claims do not qualify as a “process” under § 101.