Patent Protection for Computer-Implemented Business Methods: Supreme Court Holds That Abstract Ideas, Which Include “Funda­mental Economic Practices,” Are Not Rendered Patentable by Implementation on a Computer

Sullivan & Cromwell LLP - June 20, 2014

In Alice Corp Pty Ltd. v. CLS Bank Int’l, the U.S. Supreme Court held that a computer-implemented method for mitigating risk of default in financial transactions was not eligible for patent protection.  The Court reasoned that abstract ideas, including “fundamental economic practices,” are not transformed into patentable subject matter merely by implementing them on a generic, conventional computer.  The Court’s decision relies upon and extends the Court’s rejection of a similar computer-implemented business method in Bilski v. Kappos, and uses the framework established by the Court to evaluate claims directed to laws of nature in Mayo Collaborative Services v. Prometheus Laboratories, Inc.  The decision calls into question the patentability of many patents on software or computer-implemented business methods.