Supreme Court Rules Patent Claims Ineligible as Abstract Ideas, Affirming Federal Circuit in Alice Corp Pty. Ltd. V. CLS Bank Int'l

In a 9-0 decision written by Justice Clarence Thomas, the US Supreme Court affirmed the decision by the US Court of Appeals for the Federal Circuit in Alice Corp. Pty. Ltd. v. CLS Bank Int'l, Case No.13-298, holding that all of the patent claims at issue were directed to unpatentable subject matter under 35 U.S.C. § 101. 573 U.S. __ (2014). The claims were directed to computer-implemented methods, systems and articles of manufacture (media) for mitigating settlement risk — the risk that only one party to a financial exchange will satisfy its obligation.

The Court first reaffirmed its long-held position that although § 101 broadly permits patents for "any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof," this provision does not apply to laws of nature, natural phenomena and abstract ideas. Slip Op. at 5 (citations omitted). " The concern that drives this exclusionary principle" is "one of pre-emption." Id. (citation omitted). Because "[l]aws of nature, natural phenomena, and abstract ideas are the basic tools of scientific and technological work. . . . [m]onopolization of those tools through the grant of a patent might tend to impede innovation more than it would tend to promote it." Id. at 6 (citations and internal quotations omitted). Thus, the Court has "repeatedly emphasized this . . . concern that patent law not inhibit further discovery by improperly tying up the future use of these building blocks." Id. (citation and internal quotation omitted); see also CLS Bank Int'l v. Alice Corp. Pty. Ltd., 717 F.3d 1269, 1281 (Fed. Cir. 2013) (Lourie, J., concurring) ("What matters is whether a claim threatens to subsume the full scope of a fundamental concept . . . .").

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