A lot of commentary has followed in the wake of the Alice Corp. v CLS Bank decision. I think, for now, we can put aside the question of whether computer implemented inventions, i.e., software, are patent eligible and instead refocus our perspective, when drafting claims, on what the Court really sees as patent eligible in light of Alice Corp. and other Section 101 precedent.

With the Alice Corp. decision, the Court has brought its definition of an “abstract idea” into slightly sharper focus, especially when seen in the light of the other patent eligibility decisions preceding it. Alice found that software patents do not have a special test. The same test used for all other types of patents also applies to software and business method patents. I am sure opponents of software patents will continue to push their cause, but for now the main fight should shift away from whether software is patent eligible and instead focus on how specific an application needs to be claimed to be patent eligible.

With 150 years of Supreme Court precedent the viability of the exceptions to patent eligibility (often referred to as exclusions) is also not in doubt. Fundamentally, the exclusions on laws of nature, natural phenomena, and abstract ideas are linked to pre-emption. Whether stated explicitly or not, it is pre-emption that is driving Section 101 jurisprudence, and for decades the lower Federal Courts have struggled to define what is patent eligible in terms of a clear test to be applied in any instance, and the Supreme Court has struggled to provide flexible guidance while maintaining the balance between these exclusions and a viable patent system. Companies that rely on patents to protect their software or business methods need guidance on how to proceed, and the answer to that is not found in the Alice opinion.

This latest Section 101 decision is another step, a small step, forward in the evolution of a definition of an “abstract idea.” While we may never, and many say we should never, achieve the bright line test sought by the Federal Circuit and Patent Bar, we are getting closer to a workable, albeit imperfect, process for determining when an invention is truly an abstract idea ineligible for patent protection.

What Alice, Mayo, Myriad, and Bilski have given us, and what the USPTO is apparently going to follow, is a framework in the form of two questions to determine claimed inventions that are to be excluded from patentability and those that may pass to the next stage toward patentability:

Step 1. Are the claims at issue directed to “abstract ideas,” “laws of nature,” or “natural phenomena”?

Step 2. Do the claims contain an element or combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than a patent on the ineligible concept itself?

As Professor Rob Merges of UC Berkeley recently stated, Alice does not help define what an abstract idea is. This has been the problem all along, so the first question does not help in the analysis from a practical point of view. Making a Section 102/103 assessment is not the intent of the Supreme Court, for it could have long ago made that statement.

Alice’s step two is an analysis that can, in my view, help us back into the definition of an abstract idea for each claim. Step two comes down to a balanced preemption analysis, where the claims are to be analyzed to determine whether an entire field in the natural, social, or business world is pre-empted, balanced by the caution against swallowing the whole of patent law. However, I would rephrase step two to the following question:

Step 2. Do the claims contain an element or combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than using a broad guiding principle that determines, explains or describes a person’s, culture’s or society’s behavior or activity, or that determines, explains or controls natural behavior or relationships?

The following analysis of this rephrasing of Step 2 on key Supreme Court cases supports such an approach.

Gottschalk v. Benson, claims directed to converting binary coded decimal numbers to equivalent pure binary numbers using a computer was using a broad guiding principle, an algorithm for converting BCD to binary, to explain a natural relationship, a conversion from one set of numbers to another set of numbers, such that the entire field of converting BCD numbers to pure binary numbers was pre-empted from future improvement, and was not patent eligible.

Parker v. Flook, claims directed toward calculating alarm limit values (i.e., numbers) in the process of catalytic chemical conversion of hydrocarbons using a computer was using a broad guiding principle, a mathematical formula to calculate alarm limit values, to control a natural behavior, catalytic chemical conversions, such that the entire field of calculating alarm values in the process of catalytic chemical conversion of hydrocarbons was pre-empted from future improvement, and was not patent eligible.

Diamond v. Diehr, claims directed to the use of a computer in a process to cure rubber that included a formula did not use a broad guiding principle, a mathematical formula, to control a natural behavior or relationship, such that using a computer in the claimed process to cure rubber did not pre-empt the entire field of curing rubber from future improvement, and was patent eligible.

Bilski v. Kappos, claims directed to hedging against financial risk of price fluctuations was using a broad guiding principle, hedging financial risk, to determine the behavior of people, commodity buyers and sellers, such that the entire field of hedging financial risk associated with price fluctuations in commodity transactions was pre-empted by the claims, and was not patent eligible.

Association for Molecular Pathology v. Myriad Genetics, claims directed to an isolated DNA coding was using a broad guiding principle, isolating DNA sequences, to control a natural relationship, DNA sequencing, such that the entire field of isolating BRCA1 and BRCA2 DNA sequences was pre-empted from future improvement, and was not patent eligible.

Mayo v. Prometheus, claims directed to measuring metabolites in the blood stream in order to calibrate an appropriate dosage of drugs in the treatment of disease was using a broad guiding principle, identify correlations between metabolite levels and likely harm or ineffectiveness with precision, to determine a person’s behavior or activity, how a doctor should treat a patient, such that the entire field of interpreting metabolite levels to treat patients was pre-empted from future improvement, and was not patent eligible.

Alice Corp. v. CLS Bank, claims directed to using a third party via a general purpose computer to mitigate settlement risk was using a broad guiding principle, intermediate settlement, to determine the behavior of people, operators who facilitate currency transactions, such that the entire field of intermediate settlement was pre-empted from future improvement, and was not patent eligible.

The balanced pre-emption analysis proffered is not an absolute test, but it is a process to consider when drafting claims, especially for software-related inventions. Patent practitioners should consider their claim sets through such a lens, make an honest assessment as to the scope of the claims, and draw a conclusion through the balanced pre-emption analysis whether the claims as drafted fall into one of the exclusions.

The Alice Corp. ruling should not be seen as a “nail in the coffin” for certain patents. Instead, it must be viewed as another step toward a workable formula for practitioners to follow.