Supreme Court Ruling Renders Future Uncertain For Patenting "Abstract" Software Inventions

Today's long-awaited decision by the United States Supreme Court in Alice Corporation Pty. Ltd. v. CLS Bank International, 573 U.S. ___ (2014) may have broad-reaching implications on patenting software. At issue in the case was whether claims to a computer-implemented system and method for mitigating "settlement risk" in financial transactions are eligible for patenting under 35 U.S.C. § 101. In a unanimous decision, the Court held that the claims were directed to an abstract idea and, although implemented on a computer, were not patentable.

The Court's analysis for patent-eligibility followed a two-step approach based largely on the Court's prior holding in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. ___ (2012). In the first step, one must determine whether a claim at issue is directed to a patent-ineligible concept (i.e., a law of nature, a natural phenomenon, or an abstract idea). If so, in the second step, one must consider whether the