Publications

Introduction

The rise of the Information Age and the increased use of the Internet have spawned many software-based technologies and business methods. This has raised the important question of whether software and computer-implemented business methods can be protected under U.S. patent law. The U.S. Supreme Court addressed this important question last summer in Alice Corp. v. CLS Bank International (Alice),[1] the latest in a chain of Supreme Court decisions on this topic that have spanned a period of more than forty years.

The patent claims at issue in Alice were directed to a computer-imple­mented escrow service for facilitating settlement of financial transactions by using a third party intermediary. The Supreme Court unanimously held that the patent claims were invalid because they covered nothing more than the abstract idea of intermediated settlement. In Alice, the Supreme Court provided some guidance for determining whether a patent claim is drawn to a patent-ineligible “abstract idea,” by outlining the following two-part test: (1) “determine whether the claims at issue are directed to a patent-ineligible concept,” i.e., an abstract idea; and if so (2) determine if the claim recites an “inventive concept”—i.e., “an element or combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.”[2]

Alice has left the law very unsettled. Although it articulated a two-part test, it unfortunately provided no further guidance on how to determine when a claim covers an “abstract idea” in the first instance, or when a claim to an abstract idea includes a sufficient inventive concept to make it patent eligible, leaving it to the lower courts to wrestle with these issues. One thing is clear: in the wake of Alice, a growing number of district court decisions and decisions from the U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”) are invalidating patents on the grounds that their claims only cover patent-ineligible abstract ideas.

This Article reviews the history of Supreme Court jurisprudence on the patent ineligibility of abstract ideas and provides observations on the current state of the law and the need for further guidance from the courts. It also offers suggestions for counsel on how to improve the chances that a client’s software or business method inventions are eligible for patent protection.
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^[1]134 S. Ct. 2347 (2014).

^[2]Id.at 2355 (alteration in original) (citations omitted) (internal quotation marks omitted).