throbber
(Slip Opinion)
`
`
`
` OCTOBER TERM, 2013
`
`
`Syllabus
`
`1
`
` NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
`
`
`
` being done in connection with this case, at the time the opinion is issued.
`
`
`
` The syllabus constitutes no part of the opinion of the Court but has been
`
` prepared by the Reporter of Decisions for the convenience of the reader.
`
` See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
`
`
`SUPREME COURT OF THE UNITED STATES
`
`
`
` Syllabus
`
`ALICE CORPORATION PTY. LTD. v. CLS BANK
`
`INTERNATIONAL ET AL.
`
`
`CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
`
`THE FEDERAL CIRCUIT
` No. 13–298. Argued March 31, 2014—Decided June 19, 2014
`
`Petitioner Alice Corporation is the assignee of several patents that dis-
`close a scheme for mitigating “settlement risk,” i.e., the risk that only
`one party to an agreed-upon financial exchange will satisfy its obliga-
`tion. In particular, the patent claims are designed to facilitate the
`
` exchange of financial obligations between two parties by using a
`computer system as a third-party intermediary. The patents in suit
`
`
` claim (1) a method for exchanging financial obligations, (2) a comput-
`er system configured to carry out the method for exchanging obliga-
`tions, and (3) a computer-readable medium containing program code
`for performing the method of exchanging obligations.
`
`Respondents (together, CLS Bank), who operate a global network
`that facilitates currency transactions, filed suit against petitioner,
`arguing that the patent claims at issue are invalid, unenforceable, or
`not infringed. Petitioner counterclaimed, alleging infringement. Af-
`
`
`ter Bilski v. Kappos, 561 U. S. 593, was decided, the District Court
`held that all of the claims were ineligible for patent protection under
`35 U. S. C. §101 because they are directed to an abstract idea. The
`en banc Federal Circuit affirmed.
`
`Held: Because the claims are drawn to a patent-ineligible abstract idea,
`
`they are not patent eligible under §101. Pp. 5–17.
`
`
`(a) The Court has long held that §101, which defines the subject
`
`matter eligible for patent protection, contains an implicit exception
`for ‘ “[l]aws of nature, natural phenomena, and abstract ideas.’ ” As-
`
`
`sociation for Molecular Pathology v. Myriad Genetics, Inc., 569 U. S.
`
`___, ___. In applying the §101 exception, this Court must distinguish
`
`patents that claim the “ ‘buildin[g] block[s]’ ” of human ingenuity,
`
`which are ineligible for patent protection, from those that integrate
`
`
`
`
`
`
`
`
`
`
`
`

`
`
`ALICE CORP. v. CLS BANK INT’L
`
`
`Syllabus
`the building blocks into something more, see Mayo Collaborative Ser-
`
`vices v. Prometheus Laboratories, Inc., 566 U. S. ___, ___, thereby
`
`“transform[ing]” them into a patent-eligible invention, id., at ___.
`Pp. 5–6.
`
`(b) Using this framework, the Court must first determine whether
`the claims at issue are directed to a patent-ineligible concept. 566
`U. S., at ___. If so, the Court then asks whether the claim’s elements,
`considered both individually and “as an ordered combination,” “trans-
`form the nature of the claim” into a patent-eligible application. Id.,
`
`at ___. Pp. 7–17.
`
`
`
`(1) The claims at issue are directed to a patent-ineligible concept:
`the abstract idea of intermediated settlement. Under “the longstand-
`ing rule that ‘[a]n idea of itself is not patentable,’ ” Gottschalk v. Ben-
`
`
`son, 409 U. S. 63, 67, this Court has found ineligible patent claims
`involving an algorithm for converting binary-coded decimal numerals
`into pure binary form, id., at 71–72; a mathematical formula for com-
`
`puting “alarm limits” in a catalytic conversion process, Parker v.
`Flook, 437 U. S. 584, 594–595; and, most recently, a method for hedg-
`ing against the financial risk of price fluctuations, Bilski, 561 U. S, at
`599. It follows from these cases, and Bilski in particular, that the
`
`claims at issue are directed to an abstract idea. On their face, they
`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,’ ” ibid.,
`and the use of a third-party intermediary (or “clearing house”) is a
`building block of the modern economy. Thus, intermediated settle-
`ment, like hedging, is an “abstract idea” beyond §101’s scope. Pp. 7–
`
`10.
`
`
`(2) Turning to the second step of Mayo’s framework: The method
`claims, which merely require generic computer implementation, fail
`
`to transform that abstract idea into a patent-eligible invention.
`Pp. 10–16.
`
`
`
`
`(i) “Simply appending conventional steps, specified at a high
`
`level of generality,” to a method already “well known in the art” is not
`
`
`“enough” to supply the “ ‘inventive concept’ ” needed to make this
`transformation. Mayo, supra, at ___, ___. The introduction of a com-
`puter into the claims does not alter the analysis. Neither stating an
`
`abstract idea “while adding the words ‘apply it,’ ” Mayo, supra, at ___,
`nor limiting the use of an abstract idea “ ‘to a particular technological
`
`environment,’ ” Bilski, supra, at 610–611, is enough for patent eligi-
`bility. Stating an abstract idea while adding the words “apply it with
`a computer” simply combines those two steps, with the same deficient
`result. Wholly generic computer implementation is not generally the
`
`
`
`
`
`
`
`
`
`
`
`
`
`2
`
`
`
`
`

`
`3
`
`
`
`
`
`
`
`
`
`
`
` Cite as: 573 U. S. ____ (2014)
`
`
`Syllabus
`sort of “additional featur[e]” that provides any “practical assurance
`
`that the process is more than a drafting effort designed to monopolize
`the [abstract idea] itself.” Mayo, supra, at ___. Pp. 11–14.
`
`
`
`(ii) Here, the representative method claim does no more than
`simply instruct the practitioner to implement the abstract idea of in-
`
` termediated settlement on a generic computer. Taking the claim el-
`ements separately, the function performed by the computer at each
`step—creating and maintaining “shadow” accounts, obtaining data,
`adjusting account balances, and issuing automated instructions—is
`
`“[p]urely ‘conventional. ’ ” Mayo, 566 U. S., at ___. Considered “as an
`
`
`ordered combination,” these computer components “ad[d] nothing . . .
`
`that is not already present when the steps are considered separate-
`ly.” Id., at ___. Viewed as a whole, these method claims simply recite
`the concept of intermediated settlement as performed by a generic
`computer. They do not, for example, purport to improve the function-
`ing of the computer itself or effect an improvement in any other tech-
`nology or technical field. An instruction to apply the abstract idea of
`intermediated settlement using some unspecified, generic computer
`is not “enough” to transform the abstract idea into a patent-eligible
`
`invention. Id., at ___. Pp. 14–16.
`(3) Because petitioner’s system and media claims add nothing of
`
`substance to the underlying abstract idea, they too are patent ineligi-
`
`ble under §101. Petitioner conceded below that its media claims rise
`or fall with its method claims. And the system claims are no differ-
`ent in substance from the method claims. The method claims recite
`the abstract idea implemented on a generic computer; the system
`
`claims recite a handful of generic computer components configured to
`implement the same idea. This Court has long “warn[ed] . . . against”
`interpreting §101 “in ways that make patent eligibility ‘depend simp-
`
`ly on the draftsman’s art.’ ” Mayo, supra, at ___. Holding that the
`system claims are patent eligible would have exactly that result.
`Pp. 16–17.
`717 F. 3d 1269, affirmed.
`THOMAS, J., delivered the opinion for a unanimous Court. SO-
`
`TOMAYOR, J., filed a concurring opinion, in which GINSBURG and BREYER,
`
`
`JJ., joined.
`
`
`
`
`
`

`
`
`
`
`Cite as: 573 U. S. ____ (2014)
`
`Opinion of the Court
`
`1
`
`
` NOTICE: This opinion is subject to formal revision before publication in the
`
`
`
` preliminary print of the United States Reports. Readers are requested to
`
` notify the Reporter of Decisions, Supreme Court of the United States, Wash-
`
` ington, D. C. 20543, of any typographical or other formal errors, in order
`
`
` that corrections may be made before the preliminary print goes to press.
`
`
`
`
`SUPREME COURT OF THE UNITED STATES
`
`
`
`_________________
`
` No. 13–298
`_________________
` ALICE CORPORATION PTY. LTD, PETITIONER v. CLS
`
` BANK INTERNATIONAL ET AL.
`
`ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
`
`
`APPEALS FOR THE FEDERAL CIRCUIT
`
`[June 19, 2014]
`
`JUSTICE THOMAS delivered the opinion of the Court.
`The patents at issue in this case disclose a computer-
`
`implemented scheme for mitigating “settlement risk” (i.e.,
`the risk that only one party to a financial transaction will
`pay what it owes) by using a third-party intermediary.
`The question presented is whether these claims are patent
`eligible under 35 U. S. C. §101, or are instead drawn to a
`patent-ineligible abstract idea. We hold that the claims at
`issue are drawn to the abstract idea of intermediated
`settlement, and that merely requiring generic computer
`implementation fails to transform that abstract idea into a
`patent-eligible invention. We therefore affirm the judg-
`ment of the United States Court of Appeals for the Federal
`Circuit.
`
`
`
`
`
`
`
`
`I
`
`A
`
`Petitioner Alice Corporation is the assignee of several
`
`patents that disclose schemes to manage certain forms of
`financial risk.1 According to the specification largely
`——————
` 1The patents at issue are United States Patent Nos. 5,970,479 (the
`
`
`
`
`
`
`
`

`
`
`
` ALICE CORP. v. CLS BANK INT’L
`
`Opinion of the Court
`shared by the patents, the invention “enabl[es] the man-
`agement of risk relating to specified, yet unknown, future
`events.” App. 248. The specification further explains that
`the “invention relates to methods and apparatus, includ-
`ing electrical computers and data processing systems
`applied to financial matters and risk management.” Id.,
`at 243.
`
`The claims at issue relate to a computerized scheme for
`mitigating “settlement risk”—i.e., the risk that only one
`
`party to an agreed-upon financial exchange will satisfy its
`obligation. In particular, the claims are designed to facili-
`tate the exchange of financial obligations between two
`parties by using a computer system as a third-party in-
`
`
`termediary. Id., at 383–384.2 The intermediary creates
`“shadow” credit and debit records (i.e., account ledgers)
`——————
`’479 patent), 6,912,510, 7,149,720, and 7,725,375.
`2The parties agree that claim 33 of the ’479 patent is representative
`of the method claims. Claim 33 recites:
`
`
` “A method of exchanging obligations as between parties, each party
`holding a credit record and a debit record with an exchange institution,
`the credit records and debit records for exchange of predetermined
`obligations, the method comprising the steps of:
`
`
`“(a) creating a shadow credit record and a shadow debit record for
`each stakeholder party to be held independently by a supervisory
`
`institution from the exchange institutions;
`“(b) obtaining from each exchange institution a start-of-day balance
`
`
` for each shadow credit record and shadow debit record;
`“(c) for every transaction resulting in an exchange obligation, the
`
`
`supervisory institution adjusting each respective party’s shadow credit
`record or shadow debit record, allowing only these transactions that do
`
`
`not result in the value of the shadow debit record being less than the
`
`
`
`value of the shadow credit record at any time, each said adjustment
`
`taking place in chronological order, and
`
`
`“(d) at the end-of-day, the supervisory institution instructing on[e] of
`
`the exchange institutions to exchange credits or debits to the credit
`record and debit record of the respective parties in accordance with the
`adjustments of the said permitted transactions, the credits and debits
`being irrevocable, time invariant obligations placed on the exchange
`
`institutions.” App. 383–384.
`
`
`
`
`
`
`
`
`
`
`
`
`
`2
`
`
`
`
`
`
`

`
`3
`
`
`
`
`
`
`
`
`
` Cite as: 573 U. S. ____ (2014)
`
`Opinion of the Court
`that mirror the balances in the parties’ real-world ac-
`counts at “exchange institutions” (e.g., banks). The inter-
`mediary updates the shadow records in real time as trans-
`actions are entered, allowing “only those transactions for
`
`which the parties’ updated shadow records indicate suffi-
`cient resources to satisfy their mutual obligations.” 717
`
`F. 3d 1269, 1285 (CA Fed. 2013) (Lourie, J., concurring).
`At the end of the day, the intermediary instructs the
`relevant financial institutions to carry out the “permitted”
`transactions in accordance with the updated shadow
`records, ibid., thus mitigating the risk that only one party
`will perform the agreed-upon exchange.
`
`In sum, the patents in suit claim (1) the foregoing method
`for exchanging obligations (the method claims), (2) a
`computer system configured to carry out the method for
`exchanging obligations (the system claims), and (3) a
`computer-readable medium containing program code for
`performing the method of exchanging obligations (the
`media claims). All of the claims are implemented using a
`computer; the system and media claims expressly recite a
`computer, and the parties have stipulated that the method
`claims require a computer as well.
`
`B
`
`
`Respondents CLS Bank International and CLS Services
`Ltd. (together, CLS Bank) operate a global network that
`facilitates currency transactions. In 2007, CLS Bank filed
`suit against petitioner, seeking a declaratory judgment
`that the claims at issue are invalid, unenforceable, or not
`infringed. Petitioner counterclaimed, alleging infringe-
`ment. Following this Court’s decision in Bilski v. Kappos,
`561 U. S. 593 (2010), the parties filed cross-motions for
`summary judgment on whether the asserted claims are
`eligible for patent protection under 35 U. S. C. §101. The
`District Court held that all of the claims are patent ineli-
`gible because they are directed to the abstract idea of
`
`
`
`
`
`

`
`
`
`
`
`
`
`
`
`4
`
`
`
`
`
`
`
`
`
`
` ALICE CORP. v. CLS BANK INT’L
`
`Opinion of the Court
`“employing a neutral intermediary to facilitate simultane-
`ous exchange of obligations in order to minimize risk.”
`768 F. Supp. 2d 221, 252 (DC 2011).
`
`A divided panel of the United States Court of Appeals
`for the Federal Circuit reversed, holding that it was not
`“manifestly evident” that petitioner’s claims are directed
`to an abstract idea. 685 F. 3d 1341, 1352, 1356 (2012).
`The Federal Circuit granted rehearing en banc, vacated
`the panel opinion, and affirmed the judgment of the Dis-
`trict Court in a one-paragraph per curiam opinion. 717
`F. 3d, at 1273. Seven of the ten participating judges
`agreed that petitioner’s method and media claims are
`patent ineligible. See id., at 1274 (Lourie, J., concurring);
`id., at 1312–1313 (Rader, C. J., concurring in part and
`dissenting in part). With respect to petitioner’s system
`claims, the en banc Federal Circuit affirmed the District
`
`Court’s judgment by an equally divided vote. Id., at 1273.
`
`Writing for a five-member plurality, Judge Lourie con-
`
`cluded that all of the claims at issue are patent ineligible.
`In the plurality’s view, under this Court’s decision in Mayo
`
`Collaborative Services v. Prometheus Laboratories, Inc.,
`566 U. S. ___ (2012), a court must first “identif[y] the
`abstract idea represented in the claim,” and then deter-
`mine “whether the balance of the claim adds ‘significantly
`more.’” 717 F. 3d, at 1286. The plurality concluded that
`petitioner’s claims “draw on the abstract idea of reducing
`settlement risk by effecting trades through a third-party
`
`intermediary,” and that the use of a computer to maintain,
`adjust, and reconcile shadow accounts added nothing of
`
`substance to that abstract idea. Ibid.
`
`Chief Judge Rader concurred in part and dissented in
`part. In a part of the opinion joined only by Judge Moore,
`Chief Judge Rader agreed with the plurality that petition-
`
`er’s method and media claims are drawn to an abstract
`idea. Id., at 1312–1313. In a part of the opinion joined by
`Judges Linn, Moore, and O’Malley, Chief Judge Rader
`
`

`
`
`
`
`
` Cite as: 573 U. S. ____ (2014)
`
`Opinion of the Court
`would have held that the system claims are patent eligible
`because they involve computer “hardware” that is “specifi-
`cally programmed to solve a complex problem.” Id., at
`1307. Judge Moore wrote a separate opinion dissenting in
`
`
`part, arguing that the system claims are patent eligible.
`Id., at 1313–1314. Judge Newman filed an opinion con-
`curring in part and dissenting in part, arguing that all of
`petitioner’s claims are patent eligible. Id., at 1327. Judges
`
`Linn and O’Malley filed a separate dissenting opinion
`reaching that same conclusion. Ibid.
`
`We granted certiorari, 571 U. S. ___ (2013), and now
`
`affirm.
`
`5
`
`
`
`
`
`
`II
`
`Section 101 of the Patent Act defines the subject matter
`eligible for patent protection. It provides:
`“Whoever invents or discovers any new and useful
`
`process, machine, manufacture, or composition of
`
`matter, or any new and useful improvement thereof,
`may obtain a patent therefor, subject to the conditions
`and requirements of this title.” 35 U. S. C. §101.
`“We have long held that this provision contains an im-
`portant implicit exception: Laws of nature, natural phe-
`nomena, and abstract ideas are not patentable.” Associa-
`tion for Molecular Pathology v. Myriad Genetics, Inc., 569
`U. S. ___, ___ (2013) (slip op., at 11) (internal quotation
`
`marks and brackets omitted). We have interpreted §101
`and its predecessors in light of this exception for more
`than 150 years. Bilski, supra, at 601–602; see also
`
`
`O’Reilly v. Morse, 15 How. 62, 112–120 (1854); Le Roy v.
`Tatham, 14 How. 156, 174–175 (1853).
`
`We have described the concern that drives this exclu-
`sionary principle as one of pre-emption. See, e.g., Bilski,
`supra, at 611–612 (upholding the patent “would pre-empt
`use of this approach in all fields, and would effectively
`
`
`
`

`
`
`
` ALICE CORP. v. CLS BANK INT’L
`
`Opinion of the Court
` grant a monopoly over an abstract idea”). Laws of nature,
`
`natural phenomena, and abstract ideas are “ ‘“the basic
`tools of scientific and technological work.”’” Myriad,
`supra, at ___ (slip op., at 11). “[M]onopolization of those
`
`tools through the grant of a patent might tend to impede
`innovation more than it would tend to promote it,” thereby
`thwarting the primary object of the patent laws. Mayo,
`supra, at ___ (slip op., at 2); see U. S. Const., Art. I, §8, cl.
`
`8 (Congress “shall have Power . . . To promote the Pro-
`gress of Science and useful Arts”). We have “repeatedly
`
`emphasized this . . . concern that patent law not inhibit
`further discovery by improperly tying up the future use
`
`
`of ” these building blocks of human ingenuity. Mayo,
`supra, at ___ (slip op., at 16) (citing Morse, supra, at 113).
`
`At the same time, we tread carefully in construing this
`
`exclusionary principle lest it swallow all of patent law.
`
`Mayo, 566 U. S., at ___ (slip op., at 2). At some level, “all
`
`inventions . . . embody, use, reflect, rest upon, or apply
`laws of nature, natural phenomena, or abstract ideas.”
`
`Id., at ___ (slip op., at 2). Thus, an invention is not ren-
`dered ineligible for patent simply because it involves an
`abstract concept. See Diamond v. Diehr, 450 U. S. 175,
`187 (1981). “[A]pplication[s]” of such concepts “‘to a new
`and useful end,’” we have said, remain eligible for patent
`protection. Gottschalk v. Benson, 409 U. S. 63, 67 (1972).
`
`
`Accordingly, in applying the §101 exception, we must
`distinguish between patents that claim the “‘buildin[g]
`block[s]’” of human ingenuity and those that integrate the
`building blocks into something more, Mayo, 566 U. S., at
`___ (slip op., at 20), thereby “transform[ing]” them into a
`patent-eligible invention, id., at ___ (slip op., at 3). The
`former “would risk disproportionately tying up the use of
`the underlying” ideas, id., at ___ (slip op., at 4), and are
`therefore ineligible for patent protection. The latter pose
`no comparable risk of pre-emption, and therefore remain
`eligible for the monopoly granted under our patent laws.
`
`6
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`

`
`
`
`7
`
`
`Cite as: 573 U. S. ____ (2014)
`
`
`Opinion of the Court
`
`
` III
`
` In Mayo Collaborative Services v. Prometheus Laborato-
`ries, Inc., 566 U. S. ___ (2012), we set forth a framework
`for distinguishing patents that claim laws of nature, natu-
`ral phenomena, and abstract ideas from those that claim
`patent-eligible applications of those concepts. First, we
`determine whether the claims at issue are directed to one
`of those patent-ineligible concepts. Id., at ___ (slip op., at
`8). If so, we then ask, “[w]hat else is there in the claims
`before us?” Id., at ___ (slip op., at 9). To answer that
`question, we consider the elements of each claim both
`individually and “as an ordered combination” to determine
`
`whether the additional elements “transform the nature of
`the claim” into a patent-eligible application. Id., at ___
`
`(slip op., at 10, 9). We have described step two of this
`analysis as a search for an “ ‘inventive concept’”—i.e., an
`element or combination of elements that is “sufficient to
`ensure that the patent in practice amounts to significantly
`
`more than a patent upon the [ineligible concept] itself.”
`
`Id., at ___ (slip op., at 3).3
`
`
`
`
`
`
`
`
`
`A
`
`We must first determine whether the claims at issue are
`directed to a patent-ineligible concept. We conclude that
`they are: These claims are drawn to the abstract idea of
`intermediated settlement.
`
`The “abstract ideas” category embodies “the longstand-
`ing rule that ‘[a]n idea of itself is not patentable.’ ” Ben-
`
`son, supra, at 67 (quoting Rubber-Tip Pencil Co. v. How-
`
`
`ard, 20 Wall. 498, 507 (1874)); see also Le Roy, supra, at
`——————
` 3Because the approach we made explicit in Mayo considers all claim
`
`elements, both individually and in combination, it is consistent with the
` general rule that patent claims “must be considered as a whole.”
`
`
`Diamond v. Diehr, 450 U. S. 175, 188 (1981); see Parker v. Flook, 437
`
`U. S. 584, 594 (1978) (“Our approach . . . is . . . not at all inconsistent
`
`with the view that a patent claim must be considered as a whole”).
`
`
`
`
`
`
`
`
`
`

`
`
`
` ALICE CORP. v. CLS BANK INT’L
`
`Opinion of the Court
`175 (“A principle, in the abstract, is a fundamental truth;
`an original cause; a motive; these cannot be patented, as
`no one can claim in either of them an exclusive right ”). In
`Benson, for example, this Court rejected as ineligible
`patent claims involving an algorithm for converting binary-
`coded decimal numerals into pure binary form, holding
`that the claimed patent was “in practical effect . . . a pat-
`ent on the algorithm itself.” 409 U. S., at 71–72. And in
`Parker v. Flook, 437 U. S. 584, 594–595 (1978), we held
`that a mathematical formula for computing “alarm limits”
`in a catalytic conversion process was also a patent-
`ineligible abstract idea.
`
`
`We most recently addressed the category of abstract
`ideas in Bilski v. Kappos, 561 U. S. 593 (2010). The claims
`
`at issue in Bilski described a method for hedging against
`the financial risk of price fluctuations. Claim 1 recited a
`series of steps for hedging risk, including: (1) initiating a
`series of financial transactions between providers and
`consumers of a commodity; (2) identifying market partici-
`
`pants that have a counterrisk for the same commodity;
`and (3) initiating a series of transactions between those
`market participants and the commodity provider to bal-
`ance the risk position of the first series of consumer trans-
`actions. Id., at 599. Claim 4 “pu[t] the concept articulated
`in claim 1 into a simple mathematical formula.” Ibid. The
`remaining claims were drawn to examples of hedging in
`commodities and energy markets.
`
`
`
`“[A]ll members of the Court agree[d]” that the patent at
`
`
`issue in Bilski claimed an “abstract idea.” Id., at 609; see
`also id., at 619 (Stevens, J., concurring in judgment).
`Specifically, the claims described “the basic concept of
`hedging, or protecting against risk.” Id., at 611. The
`Court explained that “‘[h]edging is a fundamental economic
`practice long prevalent in our system of commerce and
`
`taught in any introductory finance class.’” Ibid.
`“The
`concept of hedging” as recited by the claims in suit was
`
`8
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`

`
`
`
` Cite as: 573 U. S. ____ (2014)
`
`Opinion of the Court
`therefore a patent-ineligible “abstract idea, just like the
`
`algorithms at issue in Benson and Flook.” Ibid.
`
`
`It follows from our prior cases, and Bilski in particular,
`that the claims at issue here are directed to an abstract
`idea. Petitioner’s claims involve a method of exchanging
`financial obligations between two parties using a third-
`party intermediary to mitigate settlement risk. The in-
`termediary creates and updates “shadow” records to re-
`flect the value of each party’s actual accounts held at
`“exchange institutions,” thereby permitting only those
`transactions for which the parties have sufficient re-
`
`sources. At the end of each day, the intermediary issues
`irrevocable instructions to the exchange institutions to
`carry out the permitted transactions.
`
`
`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.’” Ibid.; see, e.g., Emery, Speculation
`on the Stock and Produce Exchanges of the United States,
`in 7 Studies in History, Economics and Public Law 283,
`346–356 (1896) (discussing the use of a “clearing-house” as
`an intermediary to reduce settlement risk). The use of a
`
`third-party intermediary (or “clearing house”) is also a
`
`building block of the modern economy. See, e.g., Yadav,
`The Problematic Case of Clearinghouses in Complex Mar-
`kets, 101 Geo. L. J. 387, 406–412 (2013); J. Hull, Risk
`Management and Financial Institutions 103–104 (3d ed.
`2012). Thus, intermediated settlement, like hedging, is an
`
`“abstract idea” beyond the scope of §101.
`
`Petitioner acknowledges that its claims describe inter-
`mediated settlement, see Brief for Petitioner 4, but rejects
`the conclusion that its claims recite an “abstract idea.”
`Drawing on the presence of mathematical formulas in
`some of our abstract-ideas precedents, petitioner contends
`
`
`
`
`
`
`
`9
`
`
`
`
`
`
`
`

`
`10
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`B
`
`
`Because the claims at issue are directed to the abstract
`idea of intermediated settlement, we turn to the second
`step in Mayo’s framework. We conclude that the method
`claims, which merely require generic computer implemen-
`tation, fail to transform that abstract idea into a patent-
`
`eligible invention.
`
`
`
` ALICE CORP. v. CLS BANK INT’L
`
`Opinion of the Court
`that the abstract-ideas category is confined to “preexist-
`ing, fundamental truth[s]” that “‘exis[t] in principle apart
`from any human action.’” Id., at 23, 26 (quoting Mayo,
`566 U. S., at ___ (slip op., at 8)).
`Bilski belies petitioner’s assertion. The concept of risk
`hedging we identified as an abstract idea in that case
`cannot be described as a “preexisting, fundamental truth.”
`The patent in Bilski simply involved a “series of steps
`instructing how to hedge risk.” 561 U. S., at 599. Al-
`
`though hedging is a longstanding commercial practice, id.,
`
`at 599, it is a method of organizing human activity, not a
`“truth” about the natural world “‘that has always existed,’”
`
`Brief for Petitioner 22 (quoting Flook, supra, at 593,
`
`
`n. 15). One of the claims in Bilski reduced hedging to a
`mathematical formula, but the Court did not assign any
`special significance to that fact, much less the sort of
`talismanic significance petitioner claims. Instead, the
`Court grounded its conclusion that all of the claims at
`
`issue were abstract ideas in the understanding that risk
`hedging was a “‘fundamental economic practice.’” 561
`U. S., at 611.
`
`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 distinc-
`tion 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.
`
`
`
`
`
`

`
`
`
` 11
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
` Cite as: 573 U. S. ____ (2014)
`
`Opinion of the Court
`1
`
`At Mayo step two, we must examine the elements of the
`claim to determine whether it contains an “‘inventive
`
`concept’” sufficient to “transform” the claimed abstract
`idea into a patent-eligible application. 566 U. S., at ___,
`___ (slip op., at 3, 11). A claim that recites an abstract
`idea must include “additional features” to ensure “that the
`[claim] is more than a drafting effort designed to monopo-
`lize the [abstract idea].” Id., at ___ (slip op., at 8–9). Mayo
`
`
`made clear that transformation into a patent-eligible
`application requires “more than simply stat[ing] the [ab-
`stract idea] while adding the words ‘apply it.’” Id., at ___
`(slip op., at 3).
`Mayo itself is instructive. The patents at issue in Mayo
`claimed a method for measuring metabolites in the blood-
`stream in order to calibrate the appropriate dosage of
`thiopurine drugs in the treatment of autoimmune dis-
`
`eases. Id., at ___ (slip op., at 4–6). The respondent in that
`case contended that the claimed method was a patent-
`eligible application of natural laws that describe the rela-
`tionship between the concentration of certain metabolites
`and the likelihood that the drug dosage will be harmful or
`ineffective. But methods for determining metabolite levels
`were already “well known in the art,” and the process at
`issue amounted to “nothing significantly more than an
`instruction to doctors to apply the applicable laws when
`treating their patients.” Id., at ___ (slip op., at 10).
`
`“Simply appending conventional steps, specified at a high
`level of generality,” was not “enough” to supply an “‘in-
`
`ventive concept.’” Id., at ___, ___, ___ (slip op., at 14, 8, 3).
`
`The introduction of a computer into the claims does not
`alter the analysis at Mayo step two. In Benson, for exam-
`
`ple, we considered a patent that claimed an algorithm
`implemented on “a general-purpose digital computer.” 409
`U. S., at 64. Because the algorithm was an abstract idea,
`
`see supra, at 8, the claim had to supply a “‘new and use-
`
`
`
`
`
`
`
`

`
`
`
`
`
`
`
`
`
`
`
`
`
`12
`
`
`
`
`
`
`
`
` ALICE CORP. v. CLS BANK INT’L
`
`Opinion of the Court
`ful’” application of the idea in order to be patent eligible.
`
`409 U. S., at 67. But the computer implementation did
`not supply the necessary inventive concept; the process
`could be “carried out in existing computers long in use.”
`Ibid. We accordingly “held that simply implementing a
`
`mathematical principle on a physical machine, namely a
`computer, [i]s not a patentable application of that princi-
`ple.” Mayo, supra, at ___ (slip op., at 16) (citing Benson,
`supra, at 64).
`Flook is to the same effect. There, we examined a com-
`puterized method for using a mathematical formula to
`adjust alarm limits for certain operating conditions (e.g.,
`temperature and pressure) that could signal inefficiency or
`danger in a catalytic conversion process. 437 U. S., at
`585–586. Once again, the formula itself was an abstract
`idea, see supra, at 8, and the computer implementation
`was purely conventional. 437 U. S., at 594 (noting that
`the
`“use of computers
`for
`‘automatic monitoring-
`alarming’” was “well known”). In holding that the process
`was patent ineligible, we rejected the argument that
`“implement[ing] a principle in some specific fashion” will
`“automatically fal[l] within the patentable subject matter
`of §101.” Id., at 593. Thus, “Flook stands for the proposi-
`tion that the prohibition against patenting abstract ideas
`cannot be circumvented by attempting to limit the use of
`[the idea] to a particular technological environment.”
`
`Bilski, 561 U. S., at 610–611 (internal quotation marks
`omitted).
`In Diehr, 450 U. S. 175, by contrast, we held that a
`

This document is available on Docket Alarm but you must sign up to view it.


Or .

Accessing this document will incur an additional charge of $.

After purchase, you can access this document again without charge.

Accept $ Charge

This document could not be displayed.

We could not find this document within its docket. Please go back to the docket page and check the link. If that does not work, go back to the docket and refresh it to pull the newest information.

Your account does not support viewing this document.

You need a Paid Account to view this document. Click here to change your account type.

Your account does not support viewing this document.

Set your membership status to view this document.

With a Docket Alarm membership, you'll get a whole lot more, including:

  • Up-to-date information for this case.
  • Email alerts whenever there is an update.
  • Full text search for other cases.
  • Get email alerts whenever a new case matches your search.

Become a Member

One Moment Please

The filing “” is large (MB) and is being downloaded.

Please refresh this page in a few minutes to see if the filing has been downloaded. The filing will also be emailed to you when the download completes.

Sealed Document

We are unable to display this document, it may be under a court ordered seal.

If you have proper credentials to access the file, you may proceed directly to the court's system using your government issued username and password.


Access Government Site

We are redirecting you
to a mobile optimized page.





Document Unreadable or Corrupt

Try refreshing this document from the court, or go back to the docket to see other documents.

We are unable to display this document.

Go back to the docket to see more.