CLS v Alice – Abstract Idea, Wherefore Art Thou?

Guest post from Brad Forrest, Shareholder at Schwegman Lundberg & Woessner, P.A.

Passing on the opportunity to provide a usable test to determine what is an “abstract idea,” the Supreme court simply compared the idea underlying the claims in Alice v. CLS Bank to those in Bilski and said they both are directed to abstract ideas implemented by a general purpose computer: “In any event, we 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. Both are squarely within the realm of “abstract ideas” as we have used that term.”

At least on the bright side, no further damage to subject matter eligibility appears to have been done by the decision.  It just appears to be a repeat of Bilski at first glance.

The opinion will be the subject of much analysis in the coming months.  Some questions that will be debated include whether the court conflates obviousness with subject matter eligibility?  There are several statements in the opinion that raise that question, including: “On their face, the claims before us are drawn to the concept of intermediated settlement, i.e., the use of a third party to mitigate settlement risk. Like the risk hedging in Bilski, the concept of intermediated settlement is “ ‘a fundamental economic practice long prevalent in our system of commerce.’”  Is the court saying that all prior art may now be characterized as abstract ideas?  At least they soften that statement by referring to intermediated settlement as a building block of the modern economy.  Maybe only building blocks are abstract ideas.

The court also states: “We conclude that the method claims, which merely require generic computer implemen­tation, fail to transform that abstract idea into a patent­ eligible invention.”  This leaves open the question of how many limitations are required to screw in a light bulb?  Those that write programs and work with computers for many years, and have no idea what a “generic computer implementation” is.  Does that mean a computer with no programming?

There were several references to Mayo, Myriad, and the irreconcilable Benson, Flook, and Diehr cases in an attempt to show how the current decision is consistent with them.  I’m still waiting for an attempt to provide a definition of an abstract idea.

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2 Responses to “CLS v Alice – Abstract Idea, Wherefore Art Thou?”

  1. Paul Cole says:

    On 15 July 2002 I wrote a post entitled CLS Bank v Alice Corporation reveals “a House Divided”.

    I quoted one of the examination reports on a corresponding European application:

    “3.2 The claims of the present application are considered to relate to subject matter excluded from patentability under Art. 52(2) and (3) EPC and, although not completely devoid of technical character, are formulated to merely specify commonplace features relating to a technological implementation of such matter without inventive step (Article 56 EPC). The examiner could not, and still cannot, determine any technical solution defined in response to a problem within the content of the application as originally filed. Any problems which are addressed do not appear to require a technical, but rather an administrative, i.e. business solution. Whilst the implementation of such a solution may include the use of generic technical features these merely serve their well-known functions as would be recognised by the skilled person in the technical field under consideration.

    3.3 The subject matter claimed in this application relates to a computer apparatus for the formulation and trading of multi-party investment contracts. The problem to be solved is how to obtain, for an ordering party and in the scope of phenomena with uncertain outcomes, an investment contract from potential counterparties which best meets the requirements of said ordering party. The solution proposed is to take into account the uncertainty of said outcomes by having both the ordering party and the potential counterparties define a set of probabilities of occurrence for each outcome. Said sets of probabilities are used to compare the potential counterparties’ offers to the ordering party’s requirements and to select the best counterparty. This is a mere administrative mechanism for providing a business solution to a non-technical problem. No technical problem has been convincingly laid out and none is apparent to the person skilled in the art from reading the current application. The only technical aspect that is present is the implementation of this business scheme on a computer system. However, said implementation does not go beyond the basic computer functions of inputting, outputting, exchanging or processing financial data according to a business algorithm. Such implementation stands on the use of a standard computer system with normal data input, output, process and storage capabilities and a standard network for transmitting data. These elements were part of the common knowledge in computer system design at the priority date of the application (07.07.1995). It is thus considered that the skilled person – a computer programmer – when given the requirements of the business scheme would implement said computer-based solution without having to exercise any inventive activity, the technical features and any considerations of the implementation following directly from said requirements (T0172/03 Order management/RICOH [3]). It is also noted that no further technical effect can be seen in the implementation of this business method.”

    Much discussion followed, and I posted a comment on 16 July including the following:

    “Why, in a few words, was this a good invention? If there is no easy answer to that question then the present decision is at risk of reversal. Especially in a non-expert court such as the Supreme Court which has in recent years seen a parade of weak patents coming before it and from the decisions handed down has evidently been less than impressed. It is not attractive for a judge to support an apparently worthless patent on a technicality, and if that is how they perceive the inventions in these patents, the Supremes will be inclined to point out the similarities between this case and Bilski and hold the claimed inventions to be unpatentable. If there are cracks in the structure of fact before the Court, then the law will not be adequate to paper those cracks over and the decision will be reversed. I express no concluded view as to the outcome, merely identify a factor which in my opinion will have a powerful influence on the outcome. And identifying that question does not require legal knowledge, merely an understanding of how judges’ minds usually work. That changes less than you might think in travelling from London to Washington.”

    In many postings about this case I have yet to see any real evidence that these patents involved good inventions. In my posting I quoted the following withering comment from Judge Prost:

    “The majority objects that “[i]t is impermissible for the court to rewrite claims as it sees them.”. But that is precisely what courts do in claim construction everyday. Perhaps what the majority actually means is that the plain§ English translation in Table 1 somehow glosses over a limitation that would otherwise narrow the claims to something that is non-abstract. One would wish that the majority had not kept that limitation a secret.”

    In the outcome she has been proved right. It is noted that she is now Chief Judge Prost.