Alice Corp. v. CLS Bank is out and the result is not unexpected:

1) Alice's patents for computer-implemented methods and systems for financial risk intermediation are invalid.

2) The patents claim abstract idea, but the Court will not "labor to delimit the precise contours of the "abstract ideas" category." That leaves unanswered the primary problem that has plagued the lower courts, identifying in a particular case whether the claims recite an abstract idea. As Judge Lourie said in his plurality opinion below, "deciding whether or not a particular claim is abstract can feel subjective and unsystematic, and the debate often trends toward the metaphysical, littered with unhelpful analogies and generalizations." CLS Bank v. Alice Corp, 717 F.3rd 1269, 1277. Today's decision only continues the trend towards glosses and legal mysticism, with the Court expressing concern over patents on the "building blocks" of "human ingenuity" or the "modern economy," or covering "fundamental practices" "long prevalent" in the field.  What is a "building block"? What is "fundamental"? How is a court or a patent examiner supposed to figure that out?

3) The "mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention." This too we knew, because it's implicit in the underlying question. Of course once you've assumed you have an "abstract idea" recited, you've essentially already decided that the computer elements don't do any "work." The Court's analysis talks about "transformation" but never states what's sufficient, only what's not. There are hints that the claims must recite elements that "improve the functioning of the computer itself" or "any other technology or field." But what counts as an improvement and what is "technology" or a "technical field?"

These are just some of the unanswered questions. The Court did not address many other topics that arise in patent eligibility contests:

  • whether there is a presumption of validity for Section 101 for issued patents; if there is, what counts as “clear and convincing evidence”;
  • whether preemption matters (it’s mentioned in Alice, Benson, Diehr, Bilski and Mayo), and if so how to determine the scope of preemption;
  • how to distinguish between hardware and software implementations of abstract idea;
  • is Section 101 a “gateway” or “threshold” question that must be decided first;
  • does patent eligibility depend on resolving any factual questions, such as what counts as "conventional" or "routine";
  • is claim construction;
  • how to distinguish between a generic computer performing generic functions, and a particular computer performing specialized functions.

We can expect these and many other issues to be vigorously debated in court and before the USPTO.

Thirty-three years ago Justice Stevens stated that the Supreme Court “cases considering the patentability of program-related inventions do not establish rules that enable a conscientious patent lawyer to determine with a fair degree of accuracy which, if any, program-related inventions will be patentable.” Diamond v. Diehr, 450 U.S. 175, 219 (1981) (Stevens J., dissenting). Two generations later and we are no closer to this goal.


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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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