Continuing its recent series of patent law decisions, the Supreme Court issued its opinion in Alice Corp. v. CLS Bank International on June 19, 2014. The question before the Court was whether Alice Corp.’s patent claims, directed to a computer implementation of a “settlement risk” mitigation scheme, recited subject matter that was eligible for patent protection under 35 U.S.C. § 101. More specifically, the issue was whether Alice Corp.’s claims recited more than abstract ideas, which are ineligible subject matter for patent protection. In a unanimous opinion, the Court affirmed the Federal Circuit’s decision holding that Alice Corp.’s claims were directed to abstract ideas and thus ineligible subject matter. While not providing a bright line test, the Court’s opinion provides additional guidance on how to evaluate the validity of business method and software patent claims.

The Court’s analysis in Alice Corp. relied on the two-part test it set forth in 2012 in Mayo Collaborative Services v. Prometheus Laboratories, Inc., which addressed the patentability of a method for measuring metabolites in the blood to determine appropriate drug dosages. The first prong of this Mayo test is to “determine whether the claims at issue are directed to a patent eligible concept,” which the Court has long held to exclude laws of nature, natural phenomena and abstract ideas. Alice Corp., p. 7. If it is determined that an abstract idea has been claimed, the second prong of the Mayo test asks whether the claim elements, viewed individually or in combination, “transform that abstract idea into a patent-eligible invention.” Alice Corp., pp. 10-11...