The technological advances of post-WWII America spurred the growth of patenting of modern technology. From chemicals to useful bacteria, and from petroleum derivatives to computer chips, many of the inventions that are now a part of everyday life used or incorporated earlier inventions and discoveries. This is the cycle of technological advancement—past innovation informs and supports future innovation.

Over time, as computers became ubiquitous features of modern commerce and technological innovation, inventors have sought to patent new and useful processes that use a computer to obtain a certain result. In response to this demand from the inventing public, the Patent Office has issued many patents for computer-based inventions.

But in June, in Alice Corp. Pty. Ltd v. CLS Bank Int’l, the Supreme Court made it clear that use of a computer does not, standing alone, create an invention eligible for patent protection. Confirming that abstract ideas cannot be patented, Alice held that using a computer to implement those abstract ideas are likewise ineligible for patenting.

Courts may further develop Alice to affect technological areas beyond basic economic concepts of business methods. Thus all technology innovators need to pay attention to Alice and its potential impact on patent validity in the years to come.

Patent eligibility, defined

Section 101 of the U.S. Patent Law defines patentable inventions as:

[A]ny new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

The “conditions and requirements” for patentability include, among other things, that the invention is novel[1] and not obvious in light of the prior art,[2] and that the claims are supported by an adequate description that enables a skilled artisan to make or use the invention without undue experimentation.[3]

The Supreme Court has interpreted the remainder of Section 101 to establish the rules of patent eligibility: those inventions that qualify for patent protection in the first place. The Court has long prohibited patenting of “fundamental principles.” Fundamental principles include laws of nature, abstract ideas, and naturally-occurring materials and phenomena—things and concepts that are “part of the storehouse of knowledge of all men.”[4]

For decades, the patent eligibility of a non-machine based process depended upon the invention’s “transformation and reduction of an article to a different state or thing.”[5]  Courts divided on whether the use of a generic computer—a machine—could transform a fundamental principle into a patent-eligible application of a fundamental principle.[6]

In Alice, the Supreme Court invalidated a patent protecting a method of using a computer to manage financial risk when using a third-party clearinghouse. The argument before the Court was whether the claimant could transform the practice of intermediated financial settlement into a patent-eligible method.

The Court answered “no.” The Court said that the financial settlement process the patent sought to claim is “a fundamental economic practice long prevalent in our system of commerce.”[7] Merely requiring the use of a generic computer was insufficient to transform that process from a patent-ineligible abstract idea to a patent-eligible application of that idea.[8]

Alice contains two broad takeaways that all innovators should note when considering patent protection for their inventions, regardless of the technology involved.

Takeaway #1: Mayo’s two-step inquiry rules

The Alice court confirmed that patent eligibility depends upon the two-step inquiry process the Court defined in Mayo Collaborative Services v. Prometheus Labs., Inc.[9]

The first step in that inquiry asks whether the claim involves a patent-ineligible fundamental principle.

If the answer is “yes,” then, in the second step, a reviewing court must explore what other features exist in the patent claims that serve to “transform the nature of the claim into a patent-eligible application.”[10] As the Court explained in Alice, this second step is really a search for an inventive concept or “an element or combination of elements that is sufficient to ensure that patent in practice amounts to significantly more than a patent upon the ineligible concept itself.[11]

The emphasis Mayo (and Alice) place on “inventive concept” demands vigilance from technology innovators and their patent counsel. Going forward, highlighting additional features that add “significantly more” to a patent claim should become standard practice to avoid risking rejection or invalidity under Section 101. Note also that an “inventive concept” cannot be “conventional steps,” “well known in the art” or applied at a “high level of generality.”[12]

For inventors across all fields, these requirements could complicate the patentability of inventions that:

• Use new combinations of existing technologies and/or
• Represent incremental improvements over known products or methods

Determining which additional features are “well known” and “conventional,” however, will depend on the particular field of the invention.

Takeaway #2: Pay attention to preemption

Fears of preemption drove the Court’s decision in Alice. A patent monopoly should not tie up “the basic tools of scientific and technological work” that should remain free to all to use. [13] While a patent grant awards an owner a monopoly that preempt others from making or using the invention, the Court’s decisions hold that fundamental principles should never be inaccessible to others.

For inventors, it is possible to avoid pre-emption concerns by adding more specific elements and limitations to otherwise broad claims directed to fundamental principles. This step will also help ensure that the claim is patent-eligible because it is narrowly tailored to be an application of a fundamental principle.

But inventors seeking a patent must take extra care here. On the one hand, additional elements may narrow the claim sufficiently to add “significantly more” to the fundamental principle, making the claim patent-eligible. On the other hand, adding elements to claims may also limit their value if infringement becomes more difficult to establish and prove[14]

Conclusion

The Supreme Court’s decision in Alice definitively establishes a new patent-eligibility regime, challenging what once seemingly well settled expectations about what can and cannot be patented. Those halcyon days of patenting may be gone for good and technology innovators in all disciplines must heed the new patenting realities established in Mayo—and confirmed in Alice— or risk exclusion from the next patenting paradigm.

[1] 35 U.S.C. § 102.

[2] 35 U.S.C. § 103.

[3] 35 U.S.C. § 112.

[4] Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130 (1948); see Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. ___, 133 S.Ct. 2107, 2116 (2013).

[5] Gottschalk v. Benson, 409 U.S. 63, 70 (1972) (internal quotations omitted); Bilski v. Kappos, 561 U.S. 593, __, 130 S.Ct. 3218, 3227 (2010).

[6] See Alice (slip op. at 3-5) (describing the disparate opinions of the Federal Circuit sitting en banc in the case below).

[7] Alice (slip op. at 9).

[8] Id. (slip op. at 15-16).

[9] 566 U.S. __, 132 S.Ct. 1289, 1297-98 (2012).

[10] Alice (slip op. at 7).

[11] Id. (emphasis added; internal quotations and brackets omitted).

[12] Alice (slip op. at 11) (citing Mayo).

[13] Alice (slip op. at 5-6) (citations omitted).

[14] The Court in Alice points to the invention in Diamond v. Diehr as an example. This case involved the Arrhenius equation, an unpatentable mathematical formula. There, the court found the claimant could apply the equation in an improved method for curing rubber that satisfies basic patentability requirements.