Supreme Court Reaffirms Computerized Abstract Ideas Not Patent-Eligible

by Knobbe Martens

Alice Corp. v. CLS Bank International

Justice THOMAS delivered the Court’s unanimous opinion. Justice SOTOMAYOR filed a concurring opinion, in which Justices GINSBURG and BREYER joined. Appeal from the Federal Circuit.


Unanimously affirming the Federal Circuit and holding all claims drawn to patent-ineligible subject matter under 35 U.S.C . § 101. 

How This May Be Important

The Supreme Court’s approach is similar to what qualified patent practitioners have known for quite some time. Methods that simply use a general purpose computer to reproduce what a person could “do in his/her head” or to conduct business transactions that are conventionally performed over the phone, through emails, with spreadsheets, etc., are not patent eligible subject matter.  Thus, the Court has squarely placed the burden on the patent drafter to look deeper, and do more than recite the “purely conventional.” The decision is unlikely to significantly affect software patents involving other types of inventions, and especially those of a more technical nature.  However, this case is part of a trend of appellate court decisions striking down patents under Section 101. This defense has been raised with increasing frequency by accused patent infringers in litigation, and we expect the outcome of this case will result in the defense being litigated even more frequently.

Detailed Summary

Alice owns several patents that disclose a scheme for mitigating “settlement risk” between two parties by using a computer system as a third-party intermediary.  The patents in suit claim (1) a method for exchanging financial obligations, (2) a computer system configured to carry out the method, and (3) a computer-readable medium containing program code for performing the method.  Following the precedent of Bilski v. Kappos, 561 U.S. 593 (2010), the district court held that all of the claims were ineligible for patent protection under 35 U.S.C. §101 because they are directed to an abstract idea. The en banc Federal Circuit affirmed.  The Supreme Court also affirmed.

Following the framework of Association for Molecular Pathology v. Myriad Genetics, Inc., 569 U. S. ___ (2013) and Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U. S. ___ (2012), the Court first determined whether the claims were directed to a patent-ineligible concept and then analyzed whether the claim’s elements, considered both individually and as an ordered combination, transformed the nature of the claim into a patent-eligible application.  Specifically, the Court determined that the claims at issue are directed to the abstract idea of intermediated settlement, a fundamental economic practice long prevalent in our system of commerce.  Turning to the second step of the framework, the Court determined that the addition of a computer did not render this abstract idea patent-eligible.  Taking the claim elements separately, the function performed by the computer at each step is “purely conventional. ”  And considered “as an ordered combination,” these computer components “ad[d] nothing . . . that is not already present when the steps are considered separately.”  Viewed as a whole, these method claims simply recite the concept of intermediated settlement as performed by a generic computer.  The Court observed that the method claims “do not, for example, purport to improve the functioning of the computer itself” or “effect an improvement in any other technology or technical field.”  Rather, applying the abstract idea of intermediated settlement using some unspecified, generic computer was not “enough” to transform the abstract idea into a patent-eligible invention. 

Because Alice’s system and media claims added nothing of substance to the underlying abstract idea, they too were patent-ineligible under § 101.  The Court reiterated its warning against interpreting § 101 “in ways that make patent eligibility ‘depend simply on the draftsman’s art.’ ”  The Court observed that holding that the system and media claims patent eligible would have exactly that result.

Justice Sotomayor, joined by Justices Ginsburg and Breyer, agreed that the method claims were drawn to an abstract idea and also took the position that business method claims do not qualify as a “process” under § 101.

Although the Supreme Court determined the claims were patent ineligible, this decision does not seem to substantially erode the scope of patentable subject matter that has evolved after Bilski.  Significantly, only three justices would subscribe to a broad ban on all business method patents.  Nevertheless, although business methods are presumably still patentable after Alice, the precise scope of what is patent eligible remains unclear.  The Court passed on providing concrete guidance on what qualifies as an abstract idea, instead choosing to sidle up to Bilski and recognizing “no meaningful distinction” between the facts of the two cases.


Written by:

Knobbe Martens

Knobbe Martens 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.