In a hotly watched case involving the patent-eligibility of software, the U.S. Supreme Court today issued an unanimous (that’s right, unanimous) opinion striking down a software patent on the basis that it was merely an abstract idea and that implementation using conventional computer functions on a generic computer is not sufficient to transform the idea into a patentable invention.  You can download the slip opinion here.

Quick Take Aways

1.  Computer software is not, per se, ineligible for patent protection.

2.  However, claims that recite an abstract idea and merely require “generic implementation on a computer” are not patentable.

3.  To be patentable, software claims based on an abstract idea must add “something significantly more” than a purely conventional computer implementation.  A purely conventional computer implementation is one where the computer functions are “well-understood, routine, conventional activities]” previously known to the industry (i.e., being implemented by the performance of generic computer functions on a generic computer).

More Detailed Discussion

Alice Corp.’s Claims.  Alice Corporation’s patent related to the use of a computer system as a third party intermediary to facilitate settlement of financial transactions.  The claims included (1) a method claim for exchanging obligations in such transactions, (2) a system claim for using a computer system to automate the exchanging obligations, and (3) a media claim in the nature of computer code for performing the method of the exchanging such obligations.

Patent Eligibility Test.  The Court applied the test set forth in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. ___ (2012) to distinguish patentable inventions from abstract ideas.  Step one is to determine whether the patent claims are directed to a patent-ineligible concept (e.g., a law of nature, a natural phenomena or an abstract idea).  Step two is to determine whether each claim individually or in all claims combination transform the otherwise patent-ineligible concept into “something more.”  Alice Corp., slip op. at 6, citing Mayo, 566 U.S., at ___ (slip op., at 20).  The Court went on to cite its prior decision in Mayo as labeling that “something more” as the “inventive concept” and clarifying that it must be “significantly” more.  Alice Corp., slip op. at 7, citing Mayo, 566 U.S., at ___ (slip op., at 3).

Comparison to Other Cases.  The Court compared the Alice Corp. patent claims to those previously considered by the Court in Bilski v. Kappos, 561 U.S. 593 (2010), Parker v. Flook, 437 U.S. 584 (1978) and Diamond v. Diehr, 450 U.S. 175 (1981).  They found that the Bilski claims (a method for hedging against the financial risk of price fluctuations) were similar to the Alice Corp. claims in that they both constituted “a fundamental economic practice long prevalent in our system of commerce.”  Alice Corp., slip op. at 9, citing Bilski, 561 U.S. at 611.  They also found the Flook claims (computerized method for using a mathematical formula to adjust alarm limits for certain operating conditions, such as temperature and pressure) to be similar to the Alice Corp. claims in that the Flook formula was merely an abstract idea and “the computer implementation was purely conventional.”  Alice Corp., slip op. at 12, citing Flook, 437 U.S. at 594.  By contrast, the Court found that the Diehr claims (computer-implemented process for curing rubber), which were patentable, differed from the Alice Corp. claims in that the claims included something the industry had not yet been able to obtain (i.e., use of a “thermocouple” to record constant temperature measurements inside a rubber mold).  Alice Corp., slip op. at 13, citing Diehr, 450 U.S. at 178, and n.3.  In other words, the Diehr claims were patentable because they “improved an existing technological process.” Id.

In the Court’s analysis of the claim elements separately, the court found that the functions performed by the computer were “purely conventional” and that each step did “no more than require a generic computer to perform generic computer functions.”  Alice Corp., slip op. at 15, citing Mayo, slip op. at 10.  The Court further rejected the claims as an ordered combination for the same reason.

Limited Additional Guidance.  While the Court did provide some very high-level guidance (see the Quick Take Aways above), I was hoping that the Court would have provided some more concrete guidance from the principles outlined in Mayo and Bilski.  Instead, the Court expressly declined to offer more guidance on how to determine whether something constituted an “abstract idea” writing “we need not labor to delimit the precise contours of the ‘abstract ideas’ category in this case.”  Alice Corp., slip op. at 10.  This is unfortunate.  Without such guidance, practitioners and the USPTO alike will be left doing nothing more than trying to compare claims in question with those in cases like Bilski, Diehr, Flook and now Alice Corp. and trying to decide whether the claims being considered look more like the claims in Bilksi, Flook and Alice Corp. (no patentable) or more like the claims in Diehr (patentable).  While I don’t think anyone expected bright line rules for determining patent eligibility for software, I think many (including myself) were hoping for a little more concrete guidance from the Court.

For now, we are left with the “something significantly more” concept.  To be patentable, the software must be something significantly more than an abstract idea implemented using conventional computer functionality on a conventional computer.