Practical Points From The Supreme Court’s Alice Decision

John Kong | June 26, 2014

Alice Corp. v. CLS Bank Int’l

June 19, 2014

Summary: 

The Supreme Court’s Alice decision does not eliminate software patents as per se ineligible subject matter under 35 USC §101. The Court confirms the application of Mayo’s two step §101 analysis and provides some new considerations for addressing patent eligibility issues for computer-implemented inventions.  Unfortunately, the Supreme Court’s admonition that the mere addition of “conventional” computer functionality to an abstract idea does not transform the claim into patent eligible subject matter conflates the §101 analysis with patentability issues under 35 USC §§102 and 103.

This is Not the Death of Software Patents

The Court stated “the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention.”  The fact that many software inventions are implemented on a general purpose computer (a “generic” computer) may lead some to think that this is the death of software patents.  That is not the case.

In fact, knowing that this case may lead to the downfall of many software patents (as raised in Judge Moore’s opinion in the en banc Federal Circuit decision), the Supreme Court very carefully avoided mentioning the word “software” in the entire decision.  In addition, the Court stated that “many computer-implemented claims are formally addressed to patent-eligible subject matter.”  This clearly signifies that software inventions, in the form of “computer-implemented claims” remain viable patent-eligible subject matter under §101.

The issue, rather, is whether the claim is reciting an “abstract idea” to begin with, and if so, whether there is something “more” in the claim to save it from ineligibility.

Conflating §101 With Novelty and Non-Obviousness Issues Under §§102 and 103 In The Two Step Determination of Patent Eligible Subject Matter 

The Supreme Court applies the two step framework from Mayo Collaborative Services v. Prometheus Laboratories, Inc. to determine if a claim is patent eligible subject matter under 35 USC §101:

Step 1:  Is the claim directed to a law of nature, a natural phenomena, or an abstract idea?

The Court provides no specific guidelines to determine what is an abstract idea, “[w]e need not labor to delimit the precise contours of the ‘abstract idea’ category in this case.”  Here, the Court simply concludes that the claims are drawn to the concept of intermediated settlement, which is comparable to the patent ineligible abstract idea of risk hedging in Bilski.  “Abstract idea” encompasses “fundamental economic practice[s] long prevalent in our system of commerce.”  The one paragraph concurrence by Justices Sotomayor, Ginsburg and Breyer also emphasizes that methods of doing business or “processes for organizing human activity” are not patentable subject matter.

Step 2:  If yes to Step 1, then is there some claimed element or a combination of elements that amounts to something significantly more than a patent on the ineligible concept itself?  Is there an “inventive concept” sufficient to transform the claimed abstract idea into a patent-eligible application?  Are there “additional features” to ensure that the claim is more than a drafting effort designed to monopolize the abstract idea?

The Court recognizes that every invention can be characterized as an “abstract idea.”  Therefore, “we tread carefully in construing this exclusionary principle lest it swallow all of patent law.”  This second step in the §101 analysis attempts to reign in an otherwise overbroad exercise of simply identifying an abstract idea.

Here, the Court framed the question as whether the claims do more than simply instruct the practitioner to implement the abstract idea of intermediated settlement on a generic computer.  Unfortunately, without any briefing or evidence as to any prior art, the Supreme Court states that “[t]aking the claim elements separately, the function performed by the computer at each step of the process is ‘[p]urely conventional.’”  The inquiry into “conventional” steps was derived from Mayo, “[s]imply appending conventional steps, specified at a high level of generality, was not enough to supply an inventive concept.”  The fear many commentators had about the Court conflating patent eligibility issues under §101 with patentability issues under 35 USC §§102 and 103 appears to have been reinforced in this decision.

Forget about the clear and convincing standard for establishing the claimed invention to be “conventional” based on prior art pursuant to 35 USC §§102 and 103.  This is a much easier attack under the §101 analysis by simply asserting claimed features to be “conventional” without spending resources developing any invalidity arguments based on prior art, expert testimony, or other supporting evidence, without any Markman hearing, and without any claims construction decision.  Section 101 may become the de facto poor-man’s prior art attack on a patent.

The USPTO issued Preliminary Examination Instructions on June 25, 2014 in view of the Alice decision.  As part of the Step 2 analysis, there is a reference to an inadequate claim limitation “requiring no more than a generic computer to perform generic computer functions that are well-understood, routine and conventional activities previously known to the industry.”  This is part of the consideration of whether there is some “meaningful” limitation in the claim to save it from being an ineligible abstract idea.  The upcoming battleground is in the diversity of examiner application of such undefined references to “conventional” and “meaningful” limitations.

Improvement of the Computer Or Improvement of Another Technology Or Technical Field

Although simply adding a computer does not impart the “meaningful limitation” to transform an abstract idea claim into patent eligible subject matter, the Court does provide some new guidance.  First, the Court re-characterized the claims in Diehr as being patent eligible because they improved an existing technological process, using a well-known mathematical equation in a computer-implemented process for curing rubber designed to solve a technological problem in conventional industry practice.  Second, the Court characterized Alice’s claimed features as merely reciting well-understood, routine, conventional computer functions, “each step does no more than require a generic computer to perform generic computer functions.”  The method claim “lacks any express language to define the computer’s participation.”  The method claim does not improve the functioning of the computer itself.  And, the claim does not “effect an improvement in any other technology or technical field.”  From these comments, some practice pointers emerge:

  • describe how the invention improves upon an existing/conventional technology
  • describe how the invention solves a technological problem in the conventional industry
  • identify claimed features that go beyond a “generic” computer function
  • identify claimed features that defines the computer’s participation
  • identify claimed features that improve the functioning of the computer itself
  • identify claimed features that effect an improvement in some technical field or technology other than in the computer arts

These pointers may translate into new considerations for writing specifications, crafting attorney arguments in response to a §101 attack, preparing declarations by someone of ordinary skill in the art for submission during patent prosecution, drafting claims that recite non-generic computer functionality that improves the computer itself or improves some other technology, and defining some non-generic computer participation in the claim.

For the patent applicant, instead of the taboo of discussing prior art in the Background section of a specification, Alice highlights the benefit for identifying what’s “conventional” and how one’s invention is an improvement over that conventional technology.  It may also be helpful to define a high level “abstract idea” so that it is easier to pinpoint “meaningful” limitations remaining in the claim after subtracting out that high level abstract idea.  Such specification disclosures may help overcome a §101 attack made during litigation in an early motion to dismiss or in a summary judgment motion, before there is sufficient time and/or opportunity to present expert testimony and/or develop further evidence on the issue.

With 20/20 hindsight, for Alice’s specification, the result may have been different if the specification described the “abstract idea” as intermediated settlements, identified the conventional computerized practice, and then identified the “inventive concept” or the specific computerized improvements over that conventional practice.  In the case of Alice’s claims, this could have been some non-generic computer functionality for handling, processing, and/or managing the shadow records.  If there is some claimed algorithm uniquely handling/processing the shadow records that improved computer efficiency/reliability, solved some conventional technical problem, and/or otherwise enhanced some computer characteristic (e.g., scalability, transparency across different technology platforms, etc), then the claim may have had a better chance at patent-eligibility.  Such an algorithm or detailed non-conventional technical functionality may be the type of “computer participation” that transforms an otherwise abstract idea into patent eligibility.

Considering other “processes for organizing human activity,” such as Facebook’s “friend” feature, a high level claim on the “friend” feature may not pass the §101 test.  This brings to mind a recent commercial for Esurance, where one elderly lady says “I unfriend you” after hearing an unpleasant remark from another elderly lady.  That other lady then says, “that’s not how it works…that’s not how any of this works!”  Exactly.  The claim cannot be crafted at a high level of generality.  Simply adding a computer is also insufficient.  If the hypothetical social network “friend” claim recited specific computerized features regarding the tagging of accounts, linking between tagged accounts across the internet, and/or other details of computer functionality that do not exist in the conventional art pre-Facebook, then the otherwise abstract idea of “friending” may pass muster under step 2 of patent eligibility.  Basically, there must be claimed ties to some technological improvements over conventional features.  Some commentators note that this technology requirement brings the U.S. consideration under §101 closer to the European requirements for patentable subject matter.

Given the potential for a detailed algorithm to save a claim under a §101, the use of means-plus-function (MPF) claim elements should be revisited.  Under the Aristocrat rule, a computer-implemented MPF claim element is limited by the disclosed algorithm for performing the claimed function.  Although some of Alice’s asserted claims included MPF elements (as Judge Moore’s opinion noted in the en banc Federal Circuit decision), neither the Supreme Court nor the Federal Circuit considered the patent-eligibility of system claims or apparatus claims that included MPF claim elements.  This is one area that may offer salvation to otherwise abstract idea claims.  Perhaps somewhere in the details of the corresponding algorithm for the claimed function is a “meaningful” limitation that does not exist in the “generic” computer.

If the concern is the scope of protection achieved by a MPF claim element, a multi-tiered disclosure of supporting algorithm at different levels of detail and with different alternatives should be used in drafting the specification.

As for reciting a computer or a processor in a claim, just adding a generic computer does not transform an otherwise abstract idea into a patent eligible claim.  However, this is not to say that applicants should avoid reciting a computer or a processor.  On the contrary, the Court highlighted the importance of the computer when it stated that “[t]here is no dispute … that many computer-implemented claims are formally addressed to patent-eligible subject matter.”  Reciting a computer, which the Court recognizes to be a “machine” in §101 terms, helps to avoid the issue of the claim being even more “abstract” in terms of being implemented by a mental process or by paper and pen.

Of course, if MPF claim elements are used, recitation of the computer is not necessary.  In fact, if the corresponding structure is a computer for implementing the claimed function of the MPF claim element, reciting a computer in the claim would remove the claim element from interpretation under 35 USC §112(f) or sixth paragraph (pre-AIA) as a MPF claim element.

What is a “Generic” Computer? 

The Court makes numerous comparisons to a “generic” computer, for example:

  • “[w]holly generic computer implementation is not generally the sort of ‘additional feature[e]’ that provides any ‘practical assurance that the process is more than a drafting effort designed to monopolize the [abstract idea] itself”
  • “the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention”
  • “[t]he method claims recite the abstract idea implemented on a generic computer; the system claims recite a handful of generic computer components configured to implement the idea.”

However, the Court never defines what is a “generic” computer.  Is it the iPhone they might be using?  Is it the desktop IBM PC from the 1980s?  Is it the vacuum tube monstrosity of history?  Or, is it some future artificial intelligence?  Since the Court considers whether “conventional” features are being claimed, perhaps the Court is importing the “at the time of the invention” time frame employed in the §102 and §103 contexts.  But, even if we assume the temporal point to be at the time of the invention, how a “generic” computer is defined may impact the analysis.

For instance, the Court asserts that “[n]early every computer will include a ‘communications controller’ and ‘data storage unit’ capable of performing the basic calculation, storage, and transmission functions required by the method claims.”  With regard to a communications controller capable of performing the transmissions required by the method claims, maybe every iPhone has one.  But, a car engine’s “computer” (the ECU controlling the car’s performance) doesn’t.  A car engine’s ECU may be “generic” in the automotive industry.  The iPhone may be “generic” in the cell phone industry.  What is a “generic” computer in the financial transactions industry?  It is probably not the computer in every ATM.  Is it the mainframe computer used by banks to synchronize their data across their many branches?  If it is the mainframe computer, or some server complex, did Alice’s specification disclose any unique algorithm that distinguishes its computer-implemented invention over such conventional/generic technology?  If the “generic” computer was indeed a mainframe, maybe a claim involving the specifics of how to provide a secure cloud-based network implementation of an intermediated settlement may be patent eligible.  What a “generic” computer is in the relevant art and at the time of the invention may impact the patent-eligibility analysis.

Full Opinion

USPTO Preliminary Examination Instructions

 

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