On June 19, 2014, the Supreme Court invalidated claims directed to methods and computer systems for using an intermediary to reduce the settlement risk in certain financial transactions. The claims were invalidated on the ground that they were drawn to an abstract idea that was not patent- able subject matter and that could not be made patentable by implementing it via a computer system. This decision, which provides a new guidepost in the murky jurisprudence of patentable subject matter, will aid those seeking to invalidate patents directed to computer-implemented methods, including computer-implemented business methods.
Patentable subject matter is broadly defined in 35 U.S.C. §101 as “any new and useful process, machine, manufacture, or composition of matter.” But the Supreme Court has long limited §101, interpreting the provision to implicitly exclude “laws of nature, natural phenomena, and abstract ideas.” These exclusions reflect the principle that the basic tools of science and technology should not be monopolized. All inventions, however, to some extent involve a law of nature, natural phenomenon, or an abstract idea. As a result, drawing the line between abstract ideas and patentable subject matter, particularly in light of technological advances, has been the source of much confusion and debate, within the courts and beyond.
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