Building on Abstract Ideas: Alice v CLS Bank

By Evan Jensen

In its much-anticipated Alice v CLS Bank decision the Supreme Court held that Alice’s software patent was patent-ineligible subject matter under §101. But in its decision the Supreme Court seems to have blended a §101 analysis with a §103 analysis. The Court seems to infer that well-known ideas, such as methods that are fundamental to modern economy, are abstract and therefore patent-ineligible under §101.

There is no debate that abstract ideas are not patentable subject matter. No one may claim exclusive rights to the idea of addition, or of binary-decimal conversion, or any other generic abstract mathematical or conceptual idea. To allow a patent on an abstract idea would preempt everyone else from using that idea, greatly discouraging innovation, which is contrary to the primary goals of the patent system. The issue is which software claims, or whether software claims in general, are made patent-ineligible by the Alice decision.

Alice v CLS Bank

In the Supreme Court’s Alice v CLS Bank decision, the Court seems to have sidestepped the issue of whether software is or should be patentable.

Instead, the Supreme Court seems to have conflated the concept of “abstract idea” with the concept of “obviousness.” The Court’s determination that Alice’s patent is drawn to patent-ineligible subject matter under §101 parallels a §103 analysis.

The Supreme Court reaffirmed the existing exclusionary principle that makes laws of nature, natural phenomena, and abstract ideas patent ineligible subject matter. In the unanimous opinion, Justice Thomas writes “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.” Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 110 U.S.P.Q.2d 1976, 2014 ILRC 2109 (U.S. 2014) [2014 BL 1701013], at 6. But despite this reaffirmation, the Court does not appear to have provided clear guidelines as to the boundaries of those basic building blocks.

Justice Thomas enumerated an application of the framework set forth in Mayo v Prometheus to distinguish between ineligible basic building blocks and eligible applications of those ideas. To answer the question of whether the claims are directed to patent-ineligible concepts,

[W]e 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.”

Id. at 7. It appears that the Supreme Court arrived at its determination that Alice’s claims are drawn to abstract concepts because they are obvious. Alice’s claims lack sufficient inventiveness to ‘transform’ them into a patent-eligible application. The parallel with an application lacking sufficient inventiveness to escape a rejection for being obvious is striking.

In detail, the Court’s analysis looks similar to an obviousness analysis under §103. Justice Thomas writes, “Using a computer to create and maintain ‘shadow’ accounts amounts to electronic recordkeeping—one of the most basic functions of a computer.” Id. at 15. And likewise for other outlined features of Alice’s patent; obtaining data, adjusting account balances, etc. “All of these computer functions are ‘well-understood, routine, conventional activit[ies]” previously known to the industry.” Id. But at least on the surface, whether the claims are abstract ideas does not depend on whether the functions are previously known to the industry.

The strongest links between a well-known idea and an abstract idea arises in the Court’s discussion of Bilski.

Like the risk hedging in Bilski, the concept of intermediated settlement is “a fundamental economic practice long prevalent in our system of commerce.”… The use of a third-party intermediary (or “clearing house”) is also a building block of the modern economy… Thus, intermediated settlement, like hedging, is an “abstract idea” beyond the scope of §101.

Id. at 9. In the majority opinion, because the concept is a long-prevalent practice and a building block of the modern economy, it is therefore abstract.

This type of analysis is ordinarily used when considering an application in the light of §103 regarding whether the invention is non-obvious. Whether the invention is previously known to the industry does not seem to have any direct bearing on whether the claims of the patent are drawn to patent-eligible subject matter. However, this connection between abstract ideas and well-known or conventional features becomes clearer when applied to the system claims which, interestingly, fail for the same reasons as the method claims.

Justice Thomas determined that the claims to a computer system and computer-readable medium fail for the same reasons. Id. at 16. “Nearly 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.” Id. And as a result, “The 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 same idea.” Id. The merging of the system and method claims appears to be the root cause of the confusion. Patentees can connect process/method claims to systems and pretend the system is a limitation on the method, and vice versa for connecting system claims to what they are configured to compute and pretend that the function is a limitation on the system.

The Supreme Court was having none of it. “[S]imply implementing a mathematical principle on a physical machine, namely a computer, [i]s not a patentable application of that principle.” Id. at 12. However it is unclear whether the Court intends to invalidate patents on mathematical principles, well-known practices, or some combination. The Court appears to consider the abstract idea as the baseline upon which the invention builds (as opposed to prior art). And in this case the inventive addition is too small to escape the ineligibility of the abstract idea upon which it builds. Under §103, a claim is obvious if it is insufficiently inventive in building on prior art. In the same fashion, Alice seems to indicate that under §101 a claim is patent-ineligible subject matter if it is insufficiently inventive in building on a mathematical principle or abstract idea.

The Supreme Court applied §101, invalidating Alice’s patent on its subject matter and not §103, for obviousness. Interestingly, the Supreme Court’s decision also mentions both that Alice’s method is a well-known practice, and that implementing a mathematical principle on a generic computer is patent-ineligible. Long story short, the Supreme Court is clear that implementing a known method using software on a generic computer is not patentable.



It seems to me that the majority is implicitly applying a preemption standard. A well-established and conventional idea or practice is patent-ineligible subject matter for the same justifications as natural laws, phenomena, and abstract ideas. Granting a patent which covers a well-established idea would be contrary to the basic goals of the patent system by hampering innovation, even if the patent would be non-obvious by incorporating new elements, such as adding a computer. This approach makes intuitive sense; it creates a broad exception that can apply to a wide variety of patents that try to claim something that is too close to an abstract idea already accessible to everyone.

In short, “simply implementing a mathematical principle on a physical machine, namely a computer, [i]s not a patentable application of that principle.” Id. at 12. However, the Court declined to give guidance about how inventive a claim must be in order to avoid ineligibility.

It makes sense to require a high standard of inventiveness to make the application of an abstract idea patentable. Abstract ideas like mathematical equations or abstract sets of instructions are accessible to anyone. Different inventors anywhere in the world will converge on the same natural laws and mathematical truths. Patent protection of such abstract ideas treads on the same realm of public access that precludes patenting of natural laws. Useful original ideas do not automatically deserve patent protection; Einstein’s equation e=mc2 required original thought and discovery just like the invention of a new algorithm does. In order to transform the abstract idea into a patentable application, the application of the idea must be specific enough that the preemptive effect on the idea is minimized.

Applied to software, this means software is much harder to patent. Software is inherently abstract. The concept of software is the separation of the instructions a computer performs from the hardware that performs them. Likewise, algorithms are inherently abstract precisely because they are amenable to a wide variety of implementations of the same instructions.

To combine these concepts, a software algorithm might be implemented in a variety of programming languages for a plethora of different hardware configurations. In the words of the Supreme Court, merely implementing a familiar concept or method on a computer using software is too abstract to be patentable subject matter.

It seems to me that the same logic could apply to many software patents and inventions. I think it is highly significant that the Supreme Court applied §101 and not §103, particularly the Court’s reference to a “generic computer.” I read the Supreme Court’s decision as making pure software implemented on a general-purpose computer unpatentable subject matter. Implementing a known method on a generic computer is not patentable.

But I also read into the Court’s opinion as excluding abstract software, not just reiterating the existing §103 prohibition for obvious software. For example, a newly invented algorithm would be academically interesting, but a software implementation of the algorithm would be too close to the mathematical idea of the algorithm. Therefore the newly-discovered algorithm implemented in software would still be too abstract to obtain patent protection.

While this does mean that many software patents could be bogus, it does not eliminate software patents. To be patentable subject matter, software must be more inventive than merely an implementation of an underlying abstract idea. For example, a software invention necessary for the operation of a new type of hardware architecture actually invents a function and simultaneously implements the details. Merely taking a familiar abstract notion and filling in some details for implementing it is insufficient.

It is unclear how inventive software must be for the Supreme Court to determine it is no longer abstract. But hopefully Alice v CLS Bank heralds a shift in the treatment of software patents to stop companies from patenting software functionality that should be universal, regardless of whether the patent is rejected because it is obvious or because it is abstract.



In Alice v CLS the Supreme Court seems to have blended together the ideas of obviousness and of subject matter eligibility. The majority opinion determined that Alice’s patent is drawn to a well-known idea, and therefore that the idea is abstract, and thus patent-ineligible subject-matter under §101. Although the Court does not specify how inventive a software invention must be in order to be patent-eligible, it is clear that standards for software patents are rising.

Opinions expressed in this article are those of the author and do not necessarily represent the views of Stein IP.


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