Depending on the details involved, obtaining patent protection for business methods and software may have become more challenging. It has been well established that one cannot obtain a patent which simply protects an abstract idea. That said, in Alice Corp Pty Ltd. v. CLS Bank Int’l, the Supreme Court recently raised the standard of obtaining patent protection for computer-implemented patent methods. The Supreme Court unanimously held that Alice’s patent claims, directed to mitigating settlement risk in financial transactions, were not eligible for protection because “the claims 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.”

The court applied the previously established two-part analysis of Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct. 1289 (2012), in determining whether Alice’s claimed invention was a patentable subject matter. First, the court found that the claims were directed to a “patent-ineligible concept” and “the concept of intermediated settlement is a fundamental economic practice long prevalent in our system of commerce.” Subsequently, the court deemed Alice’s claims to be best characterized as “abstract ideas.”

Next, the court applied the second part of Mayo to determine whether Alice’s claimed invention contained an “inventive concept” sufficient to transform the ineligible subject matter (i.e. an abstract idea) into a “patent-eligible application.” The court noted that to obtain patent protection, the claim cannot simply state an abstract idea “while adding words ‘apply it.’”  Additionally, the patent eligibility cannot be given by “appending conventional steps, specified at a high level of generality.” Ultimately, the court ruled Alice’s claims to be unpatentable.

Many computer-implemented patents may contain, reflect or apply laws of nature, natural phenomena or abstract ideas. The Alice decision will make it more challenging for companies to protect those types of inventions utilizing the patent system. Further, several existing patents may now be invalid, as they do not meet this new standard.  In light of these developments, companies wanting to obtain patents on software or computer-implemented business methods would be well-advised to proceed with care to insure the new standards are met.

Sangbeck Kim