U.S. Supreme Court Rules Abstract Idea Implemented on Generic Computer is Not Patent Eligible


Patent claims that merely require generic computer implementation do not transform a patent-ineligible abstract idea into a patent-eligible invention, the U.S. Supreme Court ruled in Alice Corp v. CLS Bank, decided on Thursday, June 19.

While the Federal Circuit will have to deal with identifying what constitutes an abstract idea, the Supreme Court ruling provides clarity on the patentability of ideas simply implemented on computers. As a practical matter, companies and patent attorneys will likely have to focus their patent claims to include steps that improve the function or performance of the computer.

At issue were several patents relating to a computer-implemented scheme for mitigating “settlement risk” (i.e. the risk that only one party to a financial transaction will pay what it owes) by using a third-party intermediary, wherein the third-party intermediary is a computer system.

Section 101 of the Patent Act defines patentable subject matter as “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.” 

In the unanimous opinion, the Court began its analysis by noting that, for more than 150 years, it has held that this provision contains an implicit exception that laws of nature, natural phenomena, and abstract ideas are not patentable.

The Court went on to hold that the use of a third party to mitigate settlement risk is “a fundamental economic practice long prevalent in our system of commerce” and thus a patent-ineligible abstract idea.  The Court then concluded that “the method claims, which merely require generic computer implementation, fail to transform the abstract idea into a patent-eligible invention.”

The method claims did not improve the functioning of the computer nor effect an improvement in any other technology or technical field, the Court reasoned.

“Instead, the claims amount to nothing significantly more than an instruction to apply the abstract idea of intermediate settlement using some unspecified, generic computer,” the Court wrote.  “Under our precedents, that is not ‘enough’ to transform an abstract idea into a patent-eligible invention.”


Written by:

Published In:

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.

© Miller Canfield | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.