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U.S. Supreme Court Confirms Patents Cannot Claim Abstract Ideas

On 19 June 2014, the U.S. Supreme Court (USSC) issued a significant decision (PDF) on patent-eligible subject matter in Alice Corp. Pty. Ltd. v. CLS Bank International et al. This case particularly addresses how certain abstract subject matter may be claimed in a patent. Alice Corp. is a unanimous decision relating to the relevant patent statute, 35 U.S.C. 101.

Since reading the opinion, I have been mulling over the impact of this decision and contemplating how to apply it because I often work with computer-centric and abstract subject matter in patent claims. The U.S. Patent and Trademark Office (USPTO) has already given the Examining Corps guidance (PDF) based on this opinion. The guidance is quite specific and provides further insights on how the USPTO and everyone associated with the judiciary should apply this decision.

Alice’s patents included claims directed to a method for exchanging financial obligations, a computer system configured to carry out such method, and computer-readable media containing program code for performing such method. (An exemplary method claim is shown following these remarks.) The USSC found it unnecessary to define the “precise contours of the ‘abstract ideas’ category.”

The Alice Corp. opinion follows Mayo Collaborative Services v. Prometheus Laboratories, Inc, 566 U.S. ___ (2012), an earlier Supreme Court case. In Mayo, the USSC held that the recitation of a computer in the method claims was “‘nothing significantly more’ than an instruction to apply the abstract idea of intermediated settlement using some unspecified, generic computer.” The USSC likewise held those claims not to be drawn to statutory subject matter under 35 U.S.C. § 101.

Section 101 defines the subject matter eligible for patent protection: “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 USSC has historically held that this provision contains an important implicit exception: “Laws of nature, natural phenomena, and abstract ideas are not patentable.” (citations omitted)

The USSC indicated that the “system and [computer-readable] media claims add nothing of substance to the underlying abstract idea” found in the method claims.The USSC cautioned that there is a need to “tread carefully” when addressing the abstract idea doctrine “lest it swallow all of patent law.” I have to agree. After all, human language is imprecise and we have to live with some amount of abstractness in order to provide some justice to those seeking to ride the intellectual coat tails of technical pioneers. This balance of fairness is at the heart of patent law where we want to reward those persons who advance civilization.

In Alice, the USSC observed that “an invention is not rendered ineligible for patent simply because it involves an abstract concept.” Justice Sotomayor and two other Justices issued a concurring opinion to state a belief that any patent claim that merely describes a method of doing business is patent-ineligible.

The USSC applied a two-part test that it introduced in Mayo – the same test that led to the Federal Circuit’s fractured en banc opinion issued earlier in this dispute. Under that two-part test, the USSC found (1) that the claims were drawn to the abstract idea of “intermediated settlement,” which is a “fundamental economic practice long prevalent in our system of commerce,” and (2) that “the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention.”

The USSC fails to directly address several of the questions surrounding the two-part Mayo test, such as how to determine whether a claim is directed to an abstract idea and how much “more” is required to make such a claim patent-eligible. While I get the concept of “don’t try to patent abstract ideas,” I was left with the feeling of eating a big batch of cotton candy – lots of tasty opinion without a lot of practical substance about how to make the determination in other cases. Nevertheless, the Alice decision provides some guidance on how to view claims in view of section 101.


The parties agree that claim 33 of U.S. Patent No. 5,970,479 is representative of the method claims. Claim 33 recites:

A method of exchanging obligations as between parties, each party holding a credit record and a debit record with an exchange institution, the credit records and debit records for exchange of predetermined obligations, the method comprising the steps of:

(a) creating a shadow credit record and a shadow debit record foreach stakeholder party to be held independently by a supervisory institution from the exchange institutions;

(b) obtaining from each exchange institution a start-of-day balance for each shadow credit record and shadow debit record;

(c) for every transaction resulting in an exchange obligation, the supervisory institution adjusting each respective party’s shadow credit record or shadow debit record, allowing only these transactions that do not result in the value of the shadow debit record being less than the value of the shadow credit record at any time, each said adjustment taking place in chronological order, and

(d) at the end-of-day, the supervisory institution instructing on[e] of the exchange institutions to exchange credits or debits to the credit record and debit record of the respective parties in accordance with the adjustments of the said permitted transactions, the credits and debits being irrevocable, time invariant obligations placed on the exchange institutions.


Here are the claims in dispute from the relevant cases:

CLAIM IN ALICE CORP (2014) (not allowed)

A method of exchanging obligations as between parties, each party holding a credit record and a debit record with an exchange institution, the credit records and debit records for exchange of predetermined obligations, the method comprising the steps of:

(a) creating a shadow credit record and a shadow debit record foreach stakeholder party to be held independently by a supervisory institution from the exchange institutions;

(b) obtaining from each exchange institution a start-of-day balance for each shadow credit record and shadow debit record;

(c) for every transaction resulting in an exchange obligation, the supervisory institution adjusting each respective party’s shadow credit record or shadow debit record, allowing only these transactions that do not result in the value of the shadow debit record being less than the value of the shadow credit record at any time, each said adjustment taking place in chronological order, and

(d) at the end-of-day, the supervisory institution instructing on[e] of the exchange institutions to exchange credits or debits to the credit record and debit record of the respective parties in accordance with the adjustments of the said permitted transactions, the credits and debits being irrevocable, time invariant obligations placed on the exchange institutions.


CLAIM IN FLOOK (1978) (not allowed)

1. A method for updating the value of at least one alarm limit on at least one process variable involved in a process comprising the catalytic chemical conversion of hydrocarbons wherein said alarm limit has a current value of
Bo + K
wherein Bo is the current alarm base and K is a predetermined alarm offset which comprises:
(1) Determining the present value of said process variable, said present value being defined as PVL:
(2) determining a new alarm base B1, using the following equation:

B1 = Bo (1.0 – F) + PVL (F)

where F is a predetermined number greater than zero and less than 1.0;

(3) determining an updated alarm limit value which is defined as B1 + K; and, thereafter
(4) adjusting said alarm limit to said updated alarm limit value.


CLAIM IN DIEHR (1981) (allowed)

1. A method of operating a rubber-molding press for precision molded compounds with the aid of a digital computer, comprising:

providing said computer with a data base for said press including at least, natural logarithm conversion data (ln), the activation energy constant (C) unique to each batch of said compound being molded, and a constant (x) dependent upon the geometry of the particular mold of the press,
initiating an interval timer in said computer upon the closure of the press for monitoring the elapsed time of said closure,
constantly determining the temperature (Z) of the mold at a location closely adjacent to the mold cavity in the press during molding,
constantly providing the computer with the temperature (Z),
repetitively performing in the computer, at frequent intervals during each cure, integrations to calculate from the series of temperature determinations the Arrhenius equation for reaction time during the cure, which is

ln(v)=CZ+x
where v is the total required cure time,

repetitively comparing in the computer at frequent intervals during the cure each said calculation of the total required cure time calculated with the Arrhenius equation and said elapsed time, and
opening the press automatically when a said comparison indicates completion of curing.

One Comment - Leave a Comment
  • John Meline -

    Here are the claims in dispute from the relevant cases:

    CLAIM IN ALICE CORP (2014) (not allowed) ==========================

    A method of exchanging obligations as between parties, each party holding a credit record and a debit record with an exchange institution, the credit records and debit records for exchange of predetermined obligations, the method comprising the steps of:

    (a) creating a shadow credit record and a shadow debit record foreach stakeholder party to be held independently by a supervisory institution from the exchange institutions;

    (b) obtaining from each exchange institution a start-of-day balance for each shadow credit record and shadow debit record;

    (c) for every transaction resulting in an exchange obligation, the supervisory institution adjusting each respective party’s shadow credit record or shadow debit record, allowing only these transactions that do not result in the value of the shadow debit record being less than the value of the shadow credit record at any time, each said adjustment taking place in chronological order, and

    (d) at the end-of-day, the supervisory institution instructing on[e] of the exchange institutions to exchange credits or debits to the credit record and debit record of the respective parties in accordance with the adjustments of the said permitted transactions, the credits and debits being irrevocable, time invariant obligations placed on the exchange institutions.
    ==========================

    CLAIM IN FLOOK (1978) (not allowed) ==========================

    1. A method for updating the value of at least one alarm limit on at least one process variable involved in a process comprising the catalytic chemical conversion of hydrocarbons wherein said alarm limit has a current value of
    Bo + K
    wherein Bo is the current alarm base and K is a predetermined alarm offset which comprises:
    (1) Determining the present value of said process variable, said present value being defined as PVL:
    (2) determining a new alarm base B1, using the following equation:

    B1 = Bo (1.0 – F) + PVL (F)

    where F is a predetermined number greater than zero and less than 1.0;

    (3) determining an updated alarm limit value which is defined as B1 + K; and, thereafter
    (4) adjusting said alarm limit to said updated alarm limit value.
    ==========================

    CLAIM IN DIEHR (1981) (allowed) ==========================

    1. A method of operating a rubber-molding press for precision molded compounds with the aid of a digital computer, comprising:

    providing said computer with a data base for said press including at least, natural logarithm conversion data (ln), the activation energy constant (C) unique to each batch of said compound being molded, and a constant (x) dependent upon the geometry of the particular mold of the press,
    initiating an interval timer in said computer upon the closure of the press for monitoring the elapsed time of said closure,
    constantly determining the temperature (Z) of the mold at a location closely adjacent to the mold cavity in the press during molding,
    constantly providing the computer with the temperature (Z),
    repetitively performing in the computer, at frequent intervals during each cure, integrations to calculate from the series of temperature determinations the Arrhenius equation for reaction time during the cure, which is

    ln(v)=CZ+x
    where v is the total required cure time,

    repetitively comparing in the computer at frequent intervals during the cure each said calculation of the total required cure time calculated with the Arrhenius equation and said elapsed time, and
    opening the press automatically when a said comparison indicates completion of curing.
    ==========================

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