For the sixth time1 this term, the Supreme Court of the United States has weighed in on a core patent issue. In its opinion today in Alice Corp. Pty. Ltd. v. CLS Bank Int’l, et al. (http://www.su pr emecourt.gov/ opinions/13pdf/13-298_7lh8.pdf), the Court found the method, system and computer readable medium claims of Alice’s four patents in question ineligible for patentability, because they sought to cover a patent- ineligible abstract idea.

Today’s decision builds upon, and in some respects clarifies, the legal precedent underpinning a core tenet of patent law in the United States that has evolved over the past 150 years: You can’t get a patent on “abstract ideas.”2

Confusing, right? Alice provides some guidance going forward.

WHAT DID ALICE’S PATENTS CONCERN?

Alice’s patents were directed to methods, systems and a computer readable medium involving a computer-implemented scheme for mitigating the risk that only one party to a financial transaction will pay what it owes, where a computer system served as a third- party intermediary.

WHY WEREN’T THOSE PATENT CLAIMS ELIGIBLE FOR PATENT PROTECTION?

The Supreme Court held that the claims in suit were “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.”3 (Emphasis added.) Alice’s patent claims failed under a framework for distinguishing ineligible patent claims directed to abstract ideas from those claiming patent-eligible applications of those concepts, announced by the Supreme Court in 2012. That is, the claims “fail[ed] to transform [the] abstract idea into a patent- eligible invention.” To have done so, the application of the abstract concept or idea would have needed to have been to a new and useful end, such that the invention represented a “new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof” (as required under 35 U.S.C. § 101).

Under the 2012 two-step framework, a court must first “determine whether the claims at issue are directed to” a patent-ineligible concept (like an “abstract idea”), taking into consideration “the elements of each claim both individually and as an ordered combination to determine whether the additional elements transform the nature of the claim into a patent-eligible application.” If the answer to this first question is “no,” then the claimed invention is patent-eligible under 35 U.S.C. § 101, and the inquiry ends. If the answer is “yes,” a court must then 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 a patent upon the ineligible concept itself.”

The Court in particular ruled that Alice’s patent claims merely required generic computer implementation, which did not alter its review under step two of the framework described above.

IS THIS DECISION GOING TO BE BAD FOR MY BUSINESS’S PATENTS?

Not necessarily. And not all is grim. First, the Court reaffirmed that an inventor can seek a patent on an application of an abstract concept, so long as it involves an application of that concept to a new and useful end.

Second, subtle language in the opinion – three words, to be precise – likely will lead to further disputes. The Court stated that “the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention,” and observed that saying in a patent claim “apply [an abstract idea] with a computer” will not be enough. (Emphasis added.) However, within a matter of sentences later, the Court stated: “Given the ubiquity of computers, wholly generic computer implementation is not generally the sort of additional feature that provides any practical assurance that the process is more than a drafting effort designed to monopolize the abstract idea itself.” (Emphasis added.) Might there be an exception to the general rule, then? What amount of claim language must be present for a claim to mount the “mere recitation” barrier? Time – and further litigation – will tell.

SO WHAT NOW?

For patent seekers having an inventive concept that potentially could involve claims requiring some manner of computer implementation (or an application of an abstract idea), the best practice will be to consult a competent patent attorney who can advise you whether your inventive concept meets the two-step framework and who can draft claims in a way that avoids involving computers in performing functions that are (in the Court’s words) “purely conventional,” “well-understood, routine, conventional activities previously known to the industry,” or actions that are “basic functions” of a computer. Patent claims may be more successful if they “purport to improve the functioning of the computer itself” or “effect an improvement in any other technology or technical field.”