At issue was representative claim 1 of U.S. Patent Application No. 14/786,244, which recites:

A method for facilitating asset acquisition, asset management and asset maintenance whereby customers can purchase from multiple vendors comprising:
    providing to vendor and customer users access to consortium management software;
    providing and maintaining in said consortium management software relational data base tables which are linked together, including a vendor/customer database table, whereby vendor users and customer users can enter their identifying and personal data, and a searchable product catalogue database table;
    providing in said searchable product catalogue database for receipt from vendor users, product, product pricing and product maintenance data;
    providing an inventory database table and a customer asset management database table;
    providing customer users access to said searchable product catalogue database, whereby a customer searches the catalogue data base and purchases from any vendor user product selected from said product catalogue database;
    providing for association of any said user's identifying data with information in any database table, which information is pertinent only to a particular said identified user with said users identifying data; [and]
    linking the purchasing customer's identifying information from the customer/vendor database table, and the product, product pricing and product maintenance data for the selected product or products, to one or both of said inventory database table and/or said customer asset management data base table, such that the customer can retrieve, use and manipulate the product, product pricing and product maintenance data in connection with the management of the assets purchased.

In Alice Corp. v. CLS Bank Int'l, the Supreme Court set forth a two-part test to determine whether claims are directed to patent-eligible subject matter under § 101.  One must first decide whether the claim at hand involves a judicially-excluded law of nature, a natural phenomenon, or an abstract idea.  If so, then one must further decide whether any element or combination of elements in the claim is sufficient to ensure that the claim includes an inventive concept amounting to significantly more than the judicial exclusion.  But elements or combinations of elements that are well-understood, routine, and conventional will not lift the claim over the § 101 hurdle.  While this inquiry is generally carried out as a matter of law, factual issues can come into play when determining whether something is well-understood, routine, and conventional.

In practice, either part of the Alice test can be satisfied when a claim recites a specific, technical advance over the prior art.  The Federal Circuit made this explicitly clear for part two in Dropbox Inc. v. Synchronoss Techs. Inc., holding that "an inventive concept exists when a claim recites a specific, discrete implementation of the abstract idea where the particular arrangement of elements is a technical improvement over the prior art."  Similar reasoning can be pieced together for part one through a synthesis of Federal Circuit decisions since 2014.

During prosecution, the Examiner rejected all of Smith's claims as directed to patent-ineligible subject matter.  The Examiner's rationale, tersely set forth, was that the claimed invention was drawn to an abstract method of organizing human activity without reciting significantly more than that.  The PTAB agreed, finding that the claim recited "collection, display, and manipulation of data and was thus directed to an abstract idea, and that it contained no inventive concept that would make it patent eligible."  Regarding the lack of an inventive concept, the PTAB stated that "any such additional elements include only conventional computer components and that these elements, when considered individually and as an ordered combination, are well-understood, routine, conventional activity in the field and are not specified beyond a high level of generality."

On appeal to the Federal Circuit, the Court found no error in the PTAB's reasoning.  The Court observed that claims "directed to collection of information, comprehending the meaning of that collected information, and indication of the results, all on a generic computer network operating in its normal, expected manner are claims to abstract ideas."  The Court went on to determine that there was no dispute that claim 1 did not improve the functioning of a computer.

Nonetheless, Smith made an unusual (and ultimately ill-advised) argument that "the first step in analyzing a claim to a new process or an improvement thereof must be to determine whether it is useful" and if so "it is by law patent eligible."  The Court rejected this notion in full, stating that "utility is not the test for patent eligibility" and that this argument was "inconsistent with the framework set out in Alice."

A somewhat more relevant argument was that the "Board failed to consider the claims as a whole."  The case law has never established exactly what it means to consider claims as a whole.  Often the § 101 inquiry ignores or downplays this requirement, merely allowing conclusory reasoning to win the day.  The PTAB's reasoning was not completely conclusory but it did not go into any significant detail.  Nonetheless, what the Court was likely looking for here is a contention (supported by evidence in the claim itself or in the specification) that the invention improves a computer or some other technological component or process.  Since the PTAB stated that the claim involved, at best, "an improvement in business practice for which generic computer components are used in their ordinary capacity," this was enough for the Court to affirm the rejection.

In re Smith (Fed. Cir. 2022)
Nonprecedential disposition
Panel: Circuit Judges Lourie, Dyk, and Hughes
Per curiam opinion