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Definitive US supreme court case on the patentability of business methods


On 19th June 2014, the United States Supreme Court published its opinion in the case Alice v CLS setting out its view on what constitutes patent-eligible subject-matter, particularly in relation to business methods.

In the patents in suit, the claims are considered as directed to a scheme for mitigating settlement risk implemented on a generic computer system (settlement risk is the risk that one party to an agreed financial exchange will satisfy its obligation). All nine judges of the Supreme Court unanimously decided that implementing this scheme on a generic computer system did not make the claims patent eligible. This is in contrast to the current practice of the US Patent and Trade Mark Office (USPTO), which has been granting patents with claims in which business method steps are carried out by a generic computer system.

In the US, “abstract ideas” are not patentable subject-matter. Over the years, the US courts have failed to define “abstract”. In Alice v CLS, the Supreme Court judges took the view that adding features of a generic computer system to otherwise abstract features in a claim (in this case, a scheme for mitigating settlement risk) did not make the claim patent eligible. They took this view for all of the method and system claims of the patents in suit.

However, the limits of what constitutes “abstract” under US patent law remain unclear. For example, this Supreme Court decision does not consider the patent-eligibility of software more generally. Some of the wording in the decision sounds almost European in its approach to patent eligibility, for example, the decision states: “the method claims do not, for example, purport to improve the functioning of the computer itself”, “nor do they effect an improvement in any other technology or technical field”. In contrast, most of the judges did not accept the view in a concurring opinion that any “claim that merely describes a method of doing business does not qualify as a [patent eligible] process”.

The USPTO has since issued preliminary examining instructions for determining patent-eligibility based on Alice v CLS, which can be found here.

Please let your usual adviser at Reddie & Grose know if you have any questions about this decision.

This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice. Please contact Reddie & Grose LLP for advice before taking any action in reliance on it.

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