SCOTUS holds patents in Alice v CLS ineligible

“Because the claims are drawn to a patent-ineligible abstract idea, they are not patent eligible under §101,” said the Supreme Court.

Justice Clarence Thomas delivered the unanimous opinion, while Justice Sonia Sotomayor filed a concurring opinion in which Justice Ruth Bader Ginsberg and Justice Stephen Breyer joined.

The patents at issue in the case disclose a computer-implemented scheme for mitigating settlement risk in financial transactions by using a third-party intermediary. The question the Supreme Court was asked to answer was whether the claims presented are patent eligible under Section 101 of the Patent Act or instead are drawn to a patent-ineligible idea.

The Supreme Court explained that it had long held that Section 101 contains an implicit exception for laws of nature, natural phenomena, and abstract ideas, such as in its Association for Molecular Pathology v Myriad Genetics decision. The Court noted that in applying the Section 101 exception, it must distinguish patents that claim the “building blocks” of human ingenuity, which are ineligible for patent protection, from those that integrate the building blocks into something more, thereby “transforming” them into a patent-eligible invention. This was an issue the Supreme Court explored in its Mayo Collaborative Services v Prometheus Laboratories decision.

The Supreme Court said that using this Mayo framework it must first determine whether the claims at issue are directed to a patent-ineligible concept and, if so, whether the claim’s elements transform the nature of the claim into a patent-eligible application.

The Court said the patents in Alice relate to an abstract idea. “Turning to the second step of Mayo’s framework: The method claims, which merely require generic computer implementation, fail to transform that abstract idea in to a patent-eligible invention,” said the Court.

It said simply adding conventional steps to a method “well known in the art” is not enough and that the “introduction of a computer into the claims does not alter the anlaysis”.

“Here, the representative method claim does no more than simply instruct the practitioner to implement the abstract idea of intermediated settlement on a generic computer,” said the Court.

The concurring opinion written by Justice Sotomayor agreed with the view that any “claim that merely describes a method of doing business does not qualify as a ’process’ under §101”. But Sotomayor added: “As in Bilski, however, I further believe that the method claims at issue are drawn to an abstract idea.”

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