Processes and Business Methods and Cabbages and Kings!
One hundred years from now, each nineteenth day of June, grandfathers may tell their grandchildren (or whatever cyborg abominations pass for grandchildren by then) the story of Alice, a precocious young corporation who followed the white rabbit of Process down its hole to meet the March hare that is Business Method.1 It was all rather abstract, and it took place on the very same count of June in the year of our Common Era, 2014.
Section 101 of Title 35 of the United States Code lists four classes of invention eligible for patent protection—“process[es], machine[s], manufacture[s], [and] composition[s] of matter.”2 Since the Age of Antiquity (A.K.A. the 40’s and earlier), when judicial opinions were chiseled on cave walls, the Supreme Court of the United States has maintained that § 101 contains an “implicit exception for ‘laws of nature, natural phenomena, and abstract ideas.’”3 The United States Court of Appeals for the Federal Circuit recognized a further exception for business methods, until its opinion in State Street Bank & Trust Co. v. Signature Financial Group, Inc. ended the prohibition.4
The current blog entry takes a brief look (it’s probably already half over) at the current understanding of the “abstract idea” exception to § 101 eligibility in light of the recent holding in Alice. Should the Fates align and this series continue, later installments will further explore process patents, business method patents, and the extent to which they are eligible for patent protection. Finally, should the blogger grow bored (or hunger for the torment of unfortunate readers), the series will culminate in quick-and-dirty roadmap through the Wonderland of § 101 to patentability of these precious process and business method inventions.
On June 19 of this year, the Supreme Court released its latest piece to the jigsaw puzzle of business method and software patentability. Many commentators were exasperated to find yet another blue piece that could fit anywhere either in the sky or the largely empty duck pond. More optimistic observers thought they saw the tip of an oar which might go to the rowboat as shown on the box. For this lowly intern, it was a treasure chest of pearls to throw before my examiner, who will ignore it.
In Alice Corp. v. CLS Bank Int’l, the US Supreme Court affirmed the Federal Circuit’s invalidation of Alice Corporation’s patent claims directed to a method for managing financial risk, a computer system configured for implementation of the method, and software to implement to method.5 The Court extended application of the Mayo Framework to evaluation of the judicially-created “abstract idea exception” to subject matter eligible for patent under 35 U.S.C. § 101.6 Applying the Mayo Framework, one first determines whether a claim at issue contains an abstract idea. If it does, the test proceeds to ask whether the elements of the claim, individually or in combination, “transform the nature of the claim’ into a patent-eligible application.”7
In Alice, the Court described abstract ideas and other judicial exceptions to patent-eligible subject matter as “building blocks of human ingenuity.”8 The Court rejected Alice Corp’s argument that abstract ideas are limited to “preexisting, fundamental truth[s]” “exis[ting] in principle apart from any human action.”9 While the Court declined to provide a definitive rule for what does and does not constitute an abstract idea, it did imply that examples of abstract ideas include “fundamental economic practice[s]” and “method[s] of organizing human activity.” Here again, the Court neglected to define the scope of either of these terms or state whether all such examples qualify as the basic “building blocks” that make up abstract ideas. To obtain a guess as to the scope of this term, one may consider the Court’s treatment of “hedging” and “intermediate settlement;” the Court considered each these abstract ideas, separate from other components, such as application on a computer.10
The Court described hedging and intermediate settlement as components distinct from associated computing requirements. Id. Noting that “[a]t some level, ‘all inventions . . . embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas,’” the Court stated that mere inclusion of an abstract idea does not render an invention ineligible for patent.11
The second step of the Mayo Framework involves determining whether the elements of the claim “contain an ‘inventive concept sufficient to transform the claimed abstract idea into a patent-eligible application.”12 To make this determination, one examines whether the claim elements separately and in combination are “significantly more than the abstract idea itself.”13 The Court was further instructive where it stated that “‘Application[s]’ of such concepts ‘to a new and useful end’ . . . remain eligible for patent protection.”14
Again, while the Court declined to precisely define what constitutes such an application, it did give us some clues as to what does and does not suffice. Generic application on a computer system undifferentiated from existing setups probably won’t cut it. Looking at the Court’s discussion of Diehr, it would appear that—whether there is a computer component or not—implementation of the abstract idea or “building block” in a novel process constituting an inventive application of the idea.
However, as that all seems very foggy, and some of the results of decisions discussed can appear rather arbitrary, it may be that the Court simply prefers to give itself some wiggle room to justify decisions based, in the end, on whatever psychic impressions they sense from these claims.
1. See Alice Corp. v. CLS Bank Int’l, 110 U.S.P.Q.2d (BNA) 1976 (U.S. 2014). 2. Patent Act of 1952, 35 U.S.C. § 101. 3. Alice, 110 U.S.P.Q.2d at 1977 (quoting Association for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. __, __, 133 S. Ct. 2107 (2013). 4. 149 F. 3d 1368 (Fed. Cir. 1998). 5. 110 U.S.P.Q.2d 1976 (2014). 6. 110 U.S.P.Q.2d 1976 (2014) (applying Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct. 1289 (2012)). 7. Alice, 110 U.S.P.Q.2d at 1981. 8. Id. at 1980 (quoting Mayo, 132 S. Ct. at 1289). 9. Noting that the holding in Bilski v. Kappos held that a method for hedging risk (deemed a commercial practice) was an abstract idea. Id.at 1982. 10. Alice, 110 U.S.P.Q.2D at 1981-82. 11. Alice, 110, U.S.P.Q.2d at 1980-81 (quoting Mayo, 132 S. Ct. and citing Diamond v. Diehr, 450 U.S. 175, 187 (1981)). 12. Id. at 1982. 13. Memorandum: Preliminary Examination Instructions in view of the Supreme Court Decision in Alice Corporation Pt. Ltd. V. CLS Bank International, et al., p.3 (June 25, 2014) (referring to Alice, 110 U.S.P.Q.2d at 1984). 14. Alice, 110 U.S.P.Q.2d at 1984 (quoting Gottschalk v. Benson, 409 U.S. 63, 67 (1972)).