Alice v. CLS Bank: The Supreme Court Provides Needed Clarity on Patentable Subject Matter

by Reed Smith

In a unanimous decision Thursday, the United States Supreme Court provided much-needed clarity on the issue of patentable subject matter in Alice Corporation Pty. v. CLS Bank International. Although the issue presented to the Court was similar in many ways to that addressed in Bilski v. Kappos, 561 U.S. 593 (2010), and the Court reiterated its position in Bilski, the import of the Alice decision is its unanimous illumination on the issue of patentable subject matter that should serve to ameliorate the confusion caused by the clearly diverse views held by Federal Circuit judges as to the import of both Bilski and the related Mayo Collaborative Services v. Prometheus Labs., Inc., 566 U.S. ___ (2012)—views that have created inconsistent determinations on section 101 issues presented to various Federal Circuit panels. The patent obtained by Alice was drawn to a computer scheme for mitigating the settlement risk that only one party to an agreed-upon financial exchange will satisfy its obligation, an “invention” that suffered in many ways from the same ills as Bilski’s invention of a method for hedging against the financial risk of price fluctuation.

In the en banc Federal Circuit decision that led to yesterday's result, one set of judges (Judges Lourie, Dyk, Prost, Reyna and Wallach) hued closely to the Supreme Court’s Bilski caution that merely using a general purpose computer to “apply” an abstract idea could not be patentable subject matter, and also adopted the Supreme Court’s framework set forth in Mayo that required a search for an “inventive concept” within a claimed invention to help determine whether the test for patentable subject matter has been made.

In contrast, Federal Circuit Judges Rader, Linn, Moore and O’Malley first dismissed the merits of the “inventive concept” framework. They then appeared to argue that the combination of a general purpose computer and software code written to apply the abstract idea of mitigating settlement risk created a “new” machine that, in and of itself raised the abstract idea to a patentable level because the computer with the new software would no longer, in their view, be “general purpose.” This group of judges believed that no particular type of limitation of a general purpose computer is necessary to bring an abstract concept within patentable subject matter, and “meaningful limitations may include the computer being part of the solution, being integral to the performance of the method, or containing an improvement in computer technology.” The first two of the offered trilogy of limitations is what caused the division between the respective Federal Circuit opinions.

As a result of these divergent views, while the entire Federal Circuit agreed that the method—standing alone and sans computer—would not be patentable, the Judge Rader-led group would have found that the combination of the abstract intermediated settlement plus computer plus software to apply the abstract idea to be patentable. It was this vast gulf that required the Supreme Court’s attention.

In contrast with the lengthily and sometimes confusing opinion by the Supreme Court in Bilski, the 17-page opinion of Alice provides clear instructions going forward. No matter what software is installed on a computer to “apply” the abstract idea, it does not automatically create a “new machine” that constitutes patentable subject matter, as thought by at least some Federal Circuit judges. If the abstract idea is merely implemented on a general purpose computer with software to apply the abstract idea, even with specialized software, it must either provide for an improvement in the operation of the computer itself, or provide an improvement in another technology or technical field to meet the standard of patentable subject matter. Where a generic computer performs conventional computer steps in the application of an abstract idea, it cannot meet the requirement for patentable subject matter.

Justices Sotomayor, Ginsburg and Breyer filed a short concurrence that restated their prior position in Bilski, one that might be simpler, but could be significantly broader than yesterday’s decision. It remains their view that a “claim that merely describes a method of doing business does not qualify as a ‘process’ under §101.”


Written by:

Reed Smith

Reed Smith on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*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. Or, sign up using your email address.