IP: Supreme Court to determine patentability of software-implemented inventions

The Supreme Court will review a split en banc decision by the Federal Circuit which held that claims drawn to abstract ideas implemented using a computer are not patentable subject matter

On March 31, 2014, the U.S. Supreme Court will hear oral arguments in Alice Corporation Pty. Ltd.. v. CLS Bank International, et al., a case involving the issue of whether claims to computer-implemented inventions are directed to patent-eligible subject matter.

Section 101 of the Patent Act provides that “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof” may qualify as patent eligible subject matter. The Supreme Court has recognized the broad nature of these subject matter categories and has thus created three specific exceptions to the categories of patentable subject matter, namely “laws of nature, natural phenomena, and abstract ideas.” Thus, in the Alice case, the Court will look at whether an “abstract idea” may be included in a patent claim and still result in a determination of patent-eligible subject matter of that claim under Section 101.

The Supreme Court will review a split en banc decision by the Court of Appeals for the Federal Circuit — which included a one paragraph panel decision and six separate concurring and dissenting opinions — which ultimately affirmed a decision of the U.S. District Court for the District of Columbia and held that claims drawn to abstract ideas implemented using a computer are not patentable subject matter. The issue at hand focuses on whether an invention deemed to be merely abstract in nature may be patent eligible when implemented by a computer, and the Federal Circuit disagreed as to the method of interpreting patent claims drawn to these inventions. For example, Judge Lourie, in a concurring opinion, indicated that a court must first identify any unpatentable abstract concept and then determine whether the claim “contains additional substantive limitations that narrow, confine, or otherwise tie down the claim so that, in practical terms, it does not cover the full abstract idea itself.” By contrast, Chief Judge Rader’s dissenting opinion stated that a “court must consider the asserted claim as a whole when assessing eligibility.”

The drastically differing approaches in the Federal Circuit’s opinions shed light on the confusion created by the seemingly divergent approaches to a Section 101 analysis set in previous Supreme Court case law, an issue which the Supreme Court will now have the opportunity to resolve. Specifically, in Diamond v. Diehr, the Court held that “claims must be considered as a whole,” and as such “[i]t is inappropriate to dissect the claims into old and new elements and then to ignore the presence of the old elements in the analysis,” while its holding in Mayo Collaborative Serv. v. Prometheus Lab., Inc. seemed to diverge from this path by stating that “matter unpatentable on its own, such as a natural law, [should] be disregarded whereupon the balance of the claim must contain an “inventive concept” or must “add enough” in order for the claim to be patent eligible.”

The Supreme Court’s determination in this case could not only shape the framework of future patent drafting and enforceability of already-issued patents, but could open the floodgates for a challenge of many issued patents — both in the U.S. Patent Office and the district courts — should the Court affirm the Federal Circuit’s decision below. To aid in the Supreme Court’s determination — and emphasizing the utmost importance of the issues at hand — two dozen Amicus Curiae briefs were filed in support of neither party, in which patent practitioners sought to impart guidance on the Court and indicate the important effects of its decision. In one such brief, submitted on behalf of the Patents Committee of the Association of the Bar of the City of New York, it was urged that some of the difficulty in predicting whether a claim may or may not be patent-eligible under Section 101 would be eliminated by requiring that a court interpret the claims before making any patent-eligibility determination.

Software industry professionals and patent practitioners alike are eagerly awaiting the upcoming oral argument in the Alice case to get a feel for the way the justices may lean. Regardless of the precise holding of the Supreme Court’s decision, it seems certain that there will be important and long-term repercussions in both the law and business of computer-implemented inventions.

The authors are respectively chair and secretary of the Patents Committee of the Association of the Bar of the City of New York and are two of the co-authors of that committee’s amicus brief in the Alice case.

Contributing Author

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James R. Klaiber

Jim Klaiber is a partner in Pryor Cashman’s Intellectual Property Group and is experienced in all aspects of patent law including transactions, litigation and client...

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Contributing Author

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Ryan S. Osterweil

Ryan Osterweil is an associate in Pryor Cashman’s Intellectual Property Group.

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