New Supreme Court Case on Patents – Alice v. CLS Bank

On June 19, 2014, the Supreme Court issued a new patent opinion relating to business methods, which can be seen here As a patent attorney, it was necessary that I read the case. These are my observations. Business methods are still available to be patented, as long they pass a two part test: 1. Are the claims at issue directed to patent-ineligible concepts (i.e. laws of nature, natural phenomena, and abstract ideas); 2. if so, do the claims purport to improve the functioning of a computer, or effect an improvement in any other technology or technical field.
The court held that the claims in Alice did not improve the functioning of a computer, or effect an improvement in any other technology or technical field, and therefore were not patent eligible. The abstract idea of Alice was the “use of a third party to mitigate settlement risk”. The problem, as seen by the Supreme Court, was that the claims simply instructed to apply the abstract idea using some unspecified, generic computer, and thus did not effect an improvement in the functioning of a computer or in any other technology or technical field.
What could have Alice (or the original drafters of the patent application) have done to make the claims patent eligibly. The supreme court gives a clue when it discussed Diamond v. Diehr, 450 U.S. 175 (1981), and stated:
“The invention in Diehr used a “thermocouple” to record constant temperature measurements inside the rubber mold—something “the industry ha[d] not been able to obtain.” Id., at 178, and n. 3. The temperature measurements were then fed into a computer,which repeatedly recalculated the remaining cure timeby using the mathematical equation. Id., at 178–179. These additional steps, we recently explained, “transformed the process into an inventive application of theformula.” Mayo, supra, at ___ (slip op., at 12). In other words, the claims in Diehr were patent eligible because they improved an existing technological process, not because they were implemented on a computer.”
Thus, if the Alice claims used some sort of hardware, or even software that improved the process described in Alice, then perhaps the claims would be patent eligible. Perhaps such software could provide a data window that would pop up at the request of any of the parties to the settlement risk showing the likelihood of any party satisfying their own obligations, thus giving information to the parties that they did not have before, and therefore improving the technical field of risk allocation. Of course that leads to the question of whether risk allocation is a technical field!!