How the Supreme Court Decision in Alice Corp. v. CLS Bank Undermines the USPTO Subject Matter Eligibility Guidance

24 June 2014 PharmaPatents Blog

On June 19, 2014, the Supreme Court issued its decision in Alice Corp. v. CLS Bank International, finding that patents directed to “a computer-implemented scheme for mitigating ‘settlement risk’” were invalid as being drawn to a patent-ineligible abstract idea. Although the Court did not address patent claims relating to laws of nature or natural phenomena, the decision undermines the USPTO’s Subject Matter Eligibility Guidance for such claims by showing that the USPTO’s approach is contrary to the Supreme Court’s guiding principles.

The Supreme Court Decision

I summarized the patents at issue and the fractured Federal Circuit decision in this article. The Supreme Court holding is summarized at page 1 of its decision:

We hold that the claims at issue are drawn to the abstract idea of intermediated settlement, and that merely requiring generic computer implementation fails to transform that abstract idea into a patent-eligible invention. We therefore affirm the judgment of the United States Court of Appeals for the Federal Circuit.

The unanimous decision was authored by Justice Thomas. Justice Sotomayor wrote a concurring opinion that was joined by Justices Ginsburg and Breyer. That opinion states in its entirety:

I adhere to the view that any “claim that merely describes a method of doing business does not qualify as a ‘process’ under §101.” Bilski v. Kappos, 561 U. S. 593, 614 (2010) (Stevens, J., concurring in judgment); see also In re Bilski, 545 F. 3d 943, 972 (CA Fed. 2008) (Dyk, J., concurring) (“There is no suggestion in any of th[e] early [English] consideration of process patents that processes for organizing human activity were or ever had been patent- able”). As in Bilski, however, I further believe that the method claims at issue are drawn to an abstract idea. Cf. 561 U. S., at 619 (opinion of Stevens, J.). I therefore join the opinion of the Court.

Please see this Foley & Lardner LLP Legal News article for a more detailed discussion of the Supreme Court decision.

The Exclusionary Principles

The Supreme Court decision begins with a recitation of 35 USC § 101 and the judicially-created exceptions to subject matter eligibility:

We have long held that this provision contains an important implicit exception: Laws of nature, natural phenomena, and abstract ideas are not patentable.

Citing Myriad and Mayo, the Court explained:

We have described the concern that drives this exclusionary principle as one of pre-emption. …. Laws of nature, natural phenomena, and abstract ideas are “ ‘“the basic tools of scientific and technological work.”’” ….  We have “repeatedly emphasized this . . . concern that patent law not inhibit further discovery by improperly tying up the future use of ” these building blocks of human ingenuity.

At the same time, we tread carefully in construing this exclusionary principle lest it swallow all of patent law. … At some level, “all inventions . . . embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.” …. Thus, an invention is not rendered ineligible for patent simply because it involves an abstract concept. …. “[A]pplication[s]” of such concepts “‘to a new and useful end,’” we have said, remain eligible for patent protection.

Thus, the Court described the eligibility analysis as “distinguish[ing] between patents that claim the “buildin[g] block[s]” of human ingenuity and those that integrate the building blocks into something more.” According to the Court, “[t]he former ‘would risk disproportionately tying up the use of the underlying” ideas … and are therefore ineligible for patent protection” while “[t]he latter pose no comparable risk of pre-emption, and therefore remain eligible for the monopoly granted under our patent laws.”

The Mayo Framework

The Supreme Court describes its decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc. as setting forth a two-step ”framework for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts”

First, we determine whether the claims at issue are directed to one of those patent-ineligible concepts. …. If so, we then ask, “[w]hat else is there in the claims before us?” …. To answer that question, we consider the elements of each claim both individually and “as an ordered combination” to determine whether the additional elements “transform the nature of the claim” into a patent-eligible application. …. We have described step two of this analysis as a search for 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.”

The Court notes the following about this analytical approach:

Because the approach we made explicit in Mayo considers all claim elements, both individually and in combination, it is consistent with the general rule that patent claims “must be considered as a whole.”

Indeed, in assessing the claims at issue, the Court first considered each claim element “separately”, and then considered them together, “as an ordered combination.”

Undermining the USPTO’s Subject Matter Eligibility Guidance

The USPTO’s Subject Matter Eligibility Guidance has been criticized for going too far in extending the reach of Myriad far beyond the “isolated DNA” that was considered by the Supreme Court, and in taking an expansive view of the 1948 decision in Funk Brothers that threatens to eviscerate the patent eligibility of pharmaceutical compositions and vaccines. In Alice, the Supreme Court again cautions against sweeping applications of the judicial exceptions to patent eligibility. When the USPTO reconsiders its Guidance it should take this warning more seriously.

One of the specific criticisms lodged against the USPTO’s Subject Matter Eligibility Guidance is that while it gives lip service to the principle that claims must be evaluated “as a whole,” it instructs examiners to consider only whether elements other than the natural product(s), natural phenomenon, or law of nature support eligibility. The Supreme Court decision in Alice shows that that approach is erroneous. Under Alice and Mayo, Examiners should be instructed to consider all claim elements “individually” and “in … combination” when assessing eligibility.

Submit Your Comments to the USPTO

The USPTO has asked for public comments on the Guidance by July 31, 2014 (note the extended deadline), preferably by electronic mail addressed to The USPTO is particularly interested in alternative interpretations of relevant Supreme Court precedent and additional examples of eligible and ineligible subject matter. According to the USPTO’s Subject Matter Eligibility Guidance webpage, the USPTO ”will issue an update to the Guidance once it has carefully considered all feedback and the developing law regarding subject matter eligibility.”

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