Abstract Idea Or Real World Software Solution?

On Dec. 6, the U.S. Supreme Court granted certiorari in CLS Bank Intl. v. Alice Corp. Pty. Ltd., 717 F.3d 1269 (Fed. Cir. 2013), to address the patent eligibility of computer implemented inventions. For some, the issue is emblematic of what they see as the problems resulting from U.S. Patent and Trademark Office granting "too many patents" for too trivial of inventions. Others see patent eligibility as the touchstone question for the future of research and development.

A patent may be obtained for any "process, machine, manufacture, or composition of matter, or any new and useful improvement thereof." 35 U.S.C. 101. These statutory categories are quite broad, covering "anything under the sun made by man." Diamond v. Chakrabarty, 447 U.S. 303, 309 (1980).

Even so, there are three exceptions: a patent may not cover a law of nature, a natural phenomenon, or an abstract idea. In Gottschalk v. Benson, 409 U.S. 67 (1972), the court articulated these exceptions to ensure no one could "preempt" the use of ideas and discoveries that are fundamental to scientific research and development. But the Supreme Court and the Federal Circuit have struggled with how to identify an "abstract idea." In Parker v. Flook, 437 U.S. 584 (1978), the court adopted a "mathematical algorithm" test, holding invalid a claim that added nothing inventive beyond the algorithm itself. In Diamond v. Diehr, 450 U.S. 175, 182 (1981), the court narrowed Flook, holding valid a claim that contained a well-known equation, and stating that it was improper to separate out the equation from the rest of the patent claim. The court did not address the issue of abstract ideas again until Bilski v. Kappos, 130 S. Ct. 3218 (2010).

At issue in Bilski was a method for hedging energy commodities. The Supreme Court rebuked the Federal Circuit - which had interpreted the Supreme Court to mean a process is patent eligible only if "(1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article to a different state or thing," the so-called "machine or transformation test." The court held that while that test is useful, it is not the sole test. Second, the court held that statute did not exclude business methods from being a "process." Finally, the court held that Bilski's method was an abstract idea. However, the court declined to set forth any particular test to identify an abstract idea, only referring to the "guideposts" in Benson, Flook and Diehr.

The Federal...