The Court has long held that § 101 of the Patent Act, which defines the subject matter eligible for patent protection, contains an implicit exception for “laws of nature, natural phenomena, and abstract ideas.” In applying that rule, the Court looks to whether a patent claims the “building blocks of human ingenuity,” which are ineligible for patent protection, or integrates those building blocks into something more.
In Alice Corp. v. CLS Bank International, a particularly important patent case this term, the Court applied this standard to system of mitigating settlement risk in financial transactions that was integrated into a computer system for carrying out financial obligations, affirming the Federal Circuit’s determination that the system was not patentable subject matter under § 101. Generally speaking, the patents at issue claimed (1) a method for exchanging financial obligations, (2) a computer system configured to carry out the method for exchanging obligations, and (3) a computer-readable medium containing program code for performing the method of exchanging obligations. Writing for a unanimous court, Justice Thomas explained the risk-mitigation scheme was an abstract idea and thus not patentable subject matter under § 101. The Court concluded that the method claims, which merely require generic computer implementation, failed to transform that abstract idea into a patent-eligible invention.
The effect of this opinion is to reaffirm that merely carrying out an abstract idea by means of a computer or incorporating that abstract idea into a computer program is not transformative enough under § 101 to render an otherwise patent-ineligible idea patentable.