573 U.S. 208 (2014) (U.S. Supreme Court)
Alice Corp. v.
Are claims that implement intermediated settlement on a generic computer—whether framed as methods, systems, or computer-readable media—patent-eligible subject matter under 35 U.S.C. § 101, or are they directed to an abstract idea without an inventive concept?
Under § 101, laws of nature, natural phenomena, and abstract ideas are not patentable. Courts apply a two-step framework: (1) determine whether the claims are directed to a patent-ineligible concept (e.g., an abstract idea); and, if so, (2) examine the claim elements—individually and as an ordered combination—to determine whether they contain an "inventive concept" that transforms the nature of the claim into a patent-eligible application. Mere implementation of an abstract idea on a generic computer, or invocation of well-understood, routine, and conventional activities, is insufficient. Claim drafting form (method, system, or medium) cannot supply eligibility where the substance is the same abstract idea executed on generic technology.
No. The claims are ineligible under § 101. They are directed to the abstract idea of intermediated settlement, and the claim elements—individually and in combination—add nothing more than generic computer implementation, which does not supply the requisite inventive concept. This conclusion applies equally to the method, system, and computer-readable medium claims.
Alice crystallized the two-step eligibility test and made clear that automating a longstanding economic practice on a generic computer is not enough. In its wake, courts frequently decide § 101 issues at the pleading or summary judgment stage, and many software and business method claims have been invalidated for lack of an inventive concept. At the same time, subsequent Federal Circuit decisions have explained that software claims can be eligible when directed to specific improvements in computer functionality or another technology (e.g., claims that change how a computer operates, not merely what it does). For students, Alice is indispensable for understanding the boundary between abstract ideas and patent-eligible applications, the practical importance of claim drafting that emphasizes technological improvements, and the strategic use of § 101 in litigation.