After deciding Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 132 S. Ct. 1289 (2012), the U.S. Supreme Court decided a case involving a software-enabled invention and clarified the analysis the lower courts should use to analyze Section 101 cases.
Previously in Mayo, the Court considered a patent that claimed a method of administering a drug based on the measurement of a metabolite of that drug. The Court first determined that the claims were directed to a law of nature – the naturally occurring correlation between the metabolism of the drug and the presence of the metabolite in the patient’s blood.
Referencing prior opinions concerning natural phenomena and natural laws, including the Funk Brothers case discussed in the last installment, the Court then looked at the rest of the claimed subject matter to see if the claims did more than simply apply the law of nature, i.e. did they contain an “inventive concept.”
The case did not define the term inventive concept but did hold that an inventive concept is not present if the claims merely recite a process of applying a law of nature using routine techniques.
In Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 573 U.S. 208, 134 S. Ct. 2347 (2014), the U.S. Supreme Court held that the “inventive concept” discussed in Mayo is not present when an abstract idea is simply implemented on a computer.
Alice Corporation owned the rights to patents that disclosed a computer-implemented process for mitigating the risk in a transaction that only one party to the transaction would pay or perform using a third-party intermediary. In the patents at issue, a computer was used to act as the third-party intermediary. The Court noted that the practice of using a third-party intermediary in this manner had been in public use for at least a century and the improvement recited in the patent appeared to be implementing this practice on a computer.
The U.S. Supreme Court clarified that the two-part test used in Mayo is the appropriate test to use to analyze Section 101 questions. First, the Court is to determine if the claims are directed to a patent-ineligible concept, such as a law of nature or an abstract idea. In Alice Corp., the U.S. Supreme Court concluded that the process of mediating settlement risk using a third party was an abstract idea. Second, the Courts are to determine if the elements of the claims, considered individually and in combination, transform the ineligible concept into patent-eligible subject matter.
The U.S. Supreme Court reviewed the claims and determined that the remaining elements of the claims recited nothing more than a process of implementing the abstract idea on a computer and that was not enough to transform the claimed elements into patent-eligible subject matter.
Practitioners have widely criticized the Alice Corp. decision as not clarifying exactly how to define an abstract idea. This is likely because the Court admitted in the opinion that “’all inventions…embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.’” Id., 573 U.S. 208, 134 S. Ct. 2347, 2354 (2014) (quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 71, 132 S. Ct. 1289, 1293 (2012)) and declined to precisely define what an abstract idea is, other than to state that an abstract idea is essentially “… a fundamental truth; an original cause; [or] a motive…” Id., 573 U.S. 208, 134 S. Ct. 2347, 2355 (2014) and to explain that the goal of Section 101 is to rule out patents that merely claim the building blocks of science in favor of those that integrate those building blocks into something more.
So, the last word from the U.S. Supreme Court confirms that if the patent claims recite an existing business practice being implemented on a computer, then the claims are merely directed to an abstract idea and are not patent-eligible under Section 101.
In doing so, the Court affirmed the earlier holding in Mayo that claims applying a law of nature using conventional techniques are also not valid under Section 101. Prior cases also leave us with a rule against claiming a naturally occurring product or phenomenon.
In the next installment of this article, recent cases from the Federal Circuit discussing Section 101 will be reviewed to demonstrate how the lower courts are applying the Alice Corp. decision.Russell is a native of Wilmington, N.C. and has been practicing law in Eastern N.C. since 2004. Prior to that, he worked in Chapel Hill and Durham as a research technician on teams exploring RNA-based gene therapies, viral fusion inhibitors, and the role Galactocerebroside plays in protein localization near nodes of Ranvier. After passing the patent bar in 2003 and becoming a registered patent agent, Russell received his law degree from Georgetown in 2004. He began his legal career representing clients in personal injury matters but later left personal injury to provide patent prosecution services to law firms in China and Taiwan prior to joining The Humphries Law Firm in 2014. Russell helps individuals and businesses protect their innovations, creations and business information using strategies based in patent, trademark, copyright and trade secret law. His work includes both strategic planning and dispute resolution. He assists clients who want to buy and sell businesses, and license or transfer their intellectual property assets. Russell also assists with the firm’s litigation practice, particularly in insurance and employment disputes.
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