http://en.wikipedia.org/wiki/Alice_Corp._v._CLS_Bank_International Does Alice Corp v.s. CLS Bank really change anything about software patents? looks like it was just a cancellation of a patent that failed to comply with several requirements of patent law, not anything that is a real precedent.

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    In my opinion it was the approach and attitude of the Supreme Court that hurt patents. They set a new method of evaluating whether or not something is abstract while specifically saying they did not nee to "labor" to define abstract. They say, essentially, to try to boil a claim down to a short simple sentence. Every short simple "gist" of a claim sounds abstract. It has long been clear that the words of a claim matter and that it is improper to caricature a claim down to a simple nugget. – George White Sep 17 '14 at 23:23
  • Well I guess the jury system isn't the only absurd thing in the U.S. legal system after all :) ..... I think it should have been analyzed by the court per sections 102, 103, and 112, not by the dubious "abstract" criteria set by an earlier court decision on a different case in 2010. – matt Sep 18 '14 at 10:26

The law

This decision was about section 101 of the patent law, which reads:

Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.


The courts have read this is excluding completely abstract ideas, such as mathematical formulas:

The Court has long held that §101, which defines the subject matter eligible for patent protection, contains an implicit exception for ‘ “[l]aws of nature, natural phenomena, and abstract ideas.’ ”

The prime example for years has been Einstein's discovery of the equation E=mc2. Clearly this was new and useful, but even though various processes, machines, compositions of matter (etc.) have stemmed from it, it's not any of those in itself.

One final point about interpretation: the courts are required to treat each section of the law as defining unique requirements, so they can't (for example) treat §101 as just re-stating the same requirements as §102, 103 and/or 112. The court can't just analyze the case based upon §102, 103 and 112. If there's any way to do so at all, they have to interpret the law in a way that gives real meaning to §101 (and more generally, to every section of every law they deal with).

Previous rules/rulings

To deal with the question of whether something should be excluded for this reason, the Court of Appeals for the Federal Circuit had devised a "specific machine or transformation of matter" test, that said for something to qualify as patentable, something had to be related to either a specific machine, or to some transformation of matter (e.g., a chemical process to produce a new compound). On that basis, they had ruled that a patent in a previous case was not allowed, because it described only a business method (for hedging in a market) without describing it as being carried out by any particular machine (or involving any transformation of matter).

That case was appealed to the Supreme Court. The Supreme Court decided that the rule the CAFC had formulated was a useful indicator of whether something could be patented, but that it could not be used as an absolute or final determination. In the end, however, they agreed that the patent in question should not be allowed.

Current Case

The current case is somewhat similar. The patent describes a way of using a third party escrow service (or similar) to facilitate a transaction between businesses.

The CAFC concluded that the patent wasn't valid--but there was a great deal of divergence in the decision. The ruling has (if memory serves--it's been a while since I read it) something like 4 or 5 separate opinions given, and while the majority did agree that the patent should be found invalid, that was nearly the only point on which even that many agreed. Some of the dissenting opinions were that some of the claims should be rejected, and others accepted. Chief Judge Rader opined that all the claims should be accepted (and included a bit of reminiscing about "when in doubt, read the statute".

Predictably, the case was then appealed to the Supreme Court. They (again) agreed with the decision the CAFC had reached: that the patent should not be allowed.

Rationale for the Decision

The Supreme Court devised a "framework" within which to determine what should or shouldn't be allowed under §101:

In applying the §101 exception, this Court must distinguish patents that claim the “ ‘buildin[g] block[s]’ ” of human ingenuity, which are ineligible for patent protection, from those that integrate the building blocks into something more, thereby qualifying for patent protection. [citations elided]

Then they formulated two steps to carry out to make the determination:

Using this framework, the Court must first determine whether the claims at issue are directed to a patent-ineligible concept. If so, the Court then asks whether the claim’s elements, considered both individually and “as an ordered combination,” “transform the nature of the claim” into a patent-eligible application. [citation elided]

So, they concluded that in this case, the claim itself was directed to using an escrow to facilitate a transaction, and that about all that was added (and all that directed it to something like a machine, such as the statute cites) was basically: "and do that on a computer."

So, at least as stated by the SCOTUS, the conclusion was basically that taking something that wasn't patent-eligible otherwise, and saying: "and do that on a computer" shouldn't qualify as making it patent eligible.


In the end, I'd say it changes very little at all. The "bright line" rules the CAFC had attempted to formulate had already been been thrown out, leaving a fair amount of uncertainty about what really is or isn't patentable. This decision leaves quite a bit of uncertainty in the area--but it doesn't really seem to make it a whole lot more or less certain than it already had been.

  • +1 for thorough overview. I disagree, however that little has changed. There are a number of cases from District Courts, PTAB, and even the Federal Circuit (e.g. Ultramercial) that have invalidated patents or held claims unpatentable in light of Alice. Now, how exactly you define the change, that I grant is a bit murkier. But there is an undeniable bandwagon here I think. – bobfandango Nov 21 '14 at 1:29
  • @bobfandango: I guess I look at it a little differently--that Alice didn't change much in itself. Rather, Alice is simply showing a change that's taken place otherwise--there's a clear move toward a more restrictive view of what's patent eligible, but the Alice ruling is an effect, not a cause. – Jerry Coffin Nov 21 '14 at 5:40
  • Well, the Fed Cir saw Ultramercial differently not once, but twice prior to Alice. Seems causal. On the other hand, Rader is gone, so... ;) – bobfandango Nov 21 '14 at 5:48

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