Noose is Tightening Around Abstract Business Method Patents

In Alice Corp. V. CLS Bank, the Supreme Court ruled that an abstract idea – in this case, use of a neutral intermediary party as an escrow agent – cannot be patented, and the fact that the patent claims to administer the escrow relationship using a computer made no patentable difference. Few expected the Alice patents to survive. More interesting is why the Court has recently been tinkering with this seemingly arcane rule of patentable subject matter eligibility, and what it means for the fate of patents.

The Supreme Court has become active because lower courts and the Patent Office have been struggling to appease both the pharmaceutical industry, which needs strong patents, and the financial and information technology industries, which perceive many recent patents as akin to a plague of locusts. Alice, just the latest round, is a boon for companies that fear infringing financial products or services patents. For applicants who have legitimate inventions needing protection, Alice raises the bar. We know that merely reciting that the invention is performed using a computer is not enough.

What does the future hold? Short term, patent examiners and the courts will redouble their efforts to weed out unbridled abstract idea patents. Regretfully, some legitimate inventions will be lost as collateral damage. But eventually, patent examiners, patent applicants, and the courts will find a new equilibrium point and a new resonance, and the patent system will go on as it always has.