Justin Nelson is a partner at Susman Godfrey L.L.P.
The reaction from patent litigants to the Supreme Court’s decision yesterday in Alice Corp. v. CLS Bank was one big shrug. The decision was exactly as expected. While the Court made clear that abstract ideas remain unpatentable, it “tread[ed] carefully” in construing patentability. Indeed, the most notable part of the decision was that it shied away from any grand pronouncements. Rather, it relied heavily on prior cases such as Bilski v. Kappos, Mayo Collaborative Services v. Prometheus Laboratories, Inc., and Association for Molecular Pathology v. Myriad Genetics. As the Court correctly concluded, “[i]t follows from our prior cases, and Bilski in particular, that the claims at issue here are directed to an abstract idea.” Yet it went no further than necessary: “[W]e need not labor to delimit the precise contours of the ‘abstract ideas’ category in this case. It is enough to recognize that there is no meaningful distinction between the concept of risk hedging in Bilski and the concept of intermediated settlement at issue here.”
Likewise, the Court framed quite narrowly whether the claim contains an inventive concept sufficient to transform the abstract idea into a patent-eligible application. The Court again correctly answered no, holding that “the relevant question is whether the claims here do more than simply instruct the practitioner to implement the abstract idea of intermediated settlement on a generic computer. They do not.” Moreover, although the Court applied the same rationale to invalidate the corresponding system claims, this holding too broke no new ground. Instead, it merely closed a possible loophole in Section 101 jurisprudence, and was consistent with the Court’s prior decisions. The Court’s opinion also gave guidance on what would qualify as patent eligible, including “improving the functioning of the computer itself.”
But the Court left open the scope of how far such a principle extends. The facts in Alice are not often where the rubber hits the road. Alice was an easy case, flowing logically from Bilski and Mayo. How the Supreme Court – or the Federal Circuit on remand – handles the Ultramercial petition for certiorari will provide significantly more guidance than Alice itself. The Court could have surprised in Alice by either taking an expansive view of ineligibility – as Justices Sotomayor, Ginsburg, and Breyer would have done – or by allowing even the system claims here. It did neither, however. The decision was predictable and logical, almost a “natural phenomenon” flowing from Bilski itself. And for patent litigants and lower court judges, trying to decipher the outer bounds of patent eligibility for software patents today remains just as fuzzy as yesterday.