In the wake of its decisions denying eligibility for patent protection to diagnostic procedures (Mayo Collaborative Services v. Prometheus Laboratories, 2012), and isolated genomic DNA (Association for Molecular Pathology v. Myriad Genetics, 2013), the Supreme Court has denied patent eligibility to a computer-implemented invention on the grounds that it is directed merely to an “abstract idea,” in Alice Corporation Pty. Ltd. v. CLS Bank International, decided June 19, 2014.
In what might be a silver lining (or maybe an aluminum foil lining) to this cloud, the Court did not hold all computer-related inventions to be ineligible for patent protection, but only those that are deemed directed to an abstract idea.
Motivating the Court’s decision is a concern that patents impede innovation when they are directed to subject matter that the Court regards as an abstract idea. Abstract ideas are one of three exceptions the Court wrote into section 101 of the patent law, which defines what subject matter is eligible to be considered for patenting. (Only if subject matter claimed in a patent application is eligible for patenting will the patent application be examined for the additional requirements under patent law that the subject matter must be new, non-obvious, and clearly described and claimed in the application.)
The Court explains its rationale for these exceptions by quoting from its Myriad decision: “Laws of nature, natural phenomena, and abstract ideas are the basic tools of scientific and technological work.” To elaborate on why inventions otherwise eligible to be patented should not be eligible if one of these Court-made exceptions is present, the Court cites its Prometheus decision: “Monopolization 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.” Further relying on Prometheus, the Court admonishes, “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.”
So how does the Court determine whether patent claims are directed to an abstract idea—or, for that matter, to a law of nature or natural phenomenon? It specifies a two-step process drawn from Prometheus: “First, we determine whether the claims at issue are directed to one of those patent-ineligible concepts.” Second, if they are, then there is “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.”
Evaluating Alice Corporation’s patent, the Court concluded that the patent claims are directed to “the abstract idea of intermediated settlement”. In the Court’s words, “[t]he 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 facilitate the exchange of financial obligations between two parties by using a computer system as a third-party intermediary.”
In determining whether the claims are directed to an abstract idea, without characterizing what it had done, the Court necessarily had to generalize the claims, which in fact are quite detailed.
Having generalized the claims and determined that they are directed to an abstract idea, the Court turned to the second leg of the test, namely “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.” To conduct this search, the Court “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.”
The Court concluded that the claims fail to “do more than simply instruct the practitioner to implement the abstract idea of intermediated settlement on a generic computer…” Taking the claim elements separately, the function performed by the computer at each step of the process is purely conventional.”
Moreover, when “[c]onsidered as an ordered combination, the computer components of petitioner’s method add nothing that is not already present when the steps are considered separately.… Viewed as a whole, petitioner’s method claims simply recite the concept of intermediated settlement as performed by a generic computer.” As a corollary to the analysis of this second leg of the test, the Court holds that “the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention.”
The system claims and computer-readable-medium claims are not directed to patent-eligible subject matter either, because “[t]his Court has long warned against interpreting §101 in ways that make patent eligibility depend simply on the draftsman’s art.”
There are fundamental flaws in the Court’s approach to patent eligibility in Prometheus, Myriad, and now Alice. Foremost, the Court’s analytical framework is subjective and unpredictable. For the first step, in determining whether a patent claim is drawn to a law of nature, natural phenomenon, or abstract idea, the Court’s procedure is to generalize the claim into an abstraction.
After the generalization leads to the conclusion that a law of nature, natural phenomenon, or abstract idea is involved, the Court, for the second step, examines the claim to determine whether it contains an “inventive concept” that provides “significantly more” than the abstraction present in the claim.
Under deeply ingrained principles of patent law, a claim in a patent is composed of parts, which are called “limitations” or “elements” (the latter is the old-fashioned term). The combination of these limitations in the claim defines what is patented. Almost always, some of the limitations in a claim are old (i.e., a matter of public information), but it is the specific combination of limitations in a claim that defines what the claim covers. A claim is not infringed unless each limitation in the claim has a counterpart in the thing accused of infringement.
Similar rules are in play when a patent is being evaluated against requirements that it must cover subject matter that is new and non-obvious. A claim cannot be rejected by an examiner or declared invalid by a court on the basis of anticipation or obviousness unless each limitation in the claim has a counterpart in one or more items that were a matter of public information, that is, in the “prior art,” as of the date the patent application was filed.
The two-step analysis of the Court disregards these deeply ingrained principles by considering the claim limitations impressionistically rather than rigorously. Under the first leg of the test, as we have pointed out, the Court generalizes the claim. Because the Court generalizes the claim, it fails to address rigorously each of the claim limitations. Under the second leg of the test, after the generalization leads to the conclusion that a law of nature, natural phenomenon, or abstract idea is involved, the Court searches for and evaluates what it calls an “inventive concept” in the claim, which is another form of generalization. When the Court evaluates the “inventive concept,” therefore, it similarly fails to address rigorously each of the claim limitations.
Although the Court argues that it is considering the claim as a whole as required by the patent laws, it is not doing so. Its generalization of the claim in the first and second steps allows the Court to dodge any rigorous consideration of the claim limitations.
Because the Court’s approach to patent eligibility allows the Court to avoid rigorous consideration of the claim limitations, the Court’s approach can be used to invalidate any claim in any patent. For example, the case of Diamond v. Diehr, decided by the Court in 1981, and discussed in the Alice decision, concerned a process of molding rubber in which the temperature of the mold is constantly monitored. The temperature measurements are sent to a computer that uses an algorithm (the prior art Arrhenius equation) to repeatedly recalculate the cure time of the rubber, and, when the recalculated cure time is equal to the time elapsed since the mold was closed, the computer signals a device to open the mold. The Patent and Trademark Office, following the Court’s 1972 decision in Gottschalk v. Benson(which was also discussed in Alice), rejected the claims in the application because they included steps carried out by a computer under control of a stored program. By a 5-4 vote, the Court held that the claims are eligible subject matter because they are directed to a method of molding rubber, even though in several steps of the process a mathematical equation and a programmed digital computer are used.
The Diamond v. Diehr decision, in turn, spawned a series of lower court decisions leading to the granting of many patents for computer-implemented inventions. See, for example, In re Alappat, holding that an anti-aliasing rasterizer for reducing jagged edges in pixelated displays cannot be denied a patent on the basis of the mathematical algorithm (abstract idea) exception to section 101; and State Street Bank & Trust Co. v. Signature Financial Group,holding that claims directed to a data processing system for managing a financial services configuration of a mutual fund portfolio constituted statutory subject matter, and could not be denied patent coverage simply because they involve a mathematical algorithm or implement a business method.
The Court’s decision in Diamond v. Diehr did not follow the approach to eligibility determinations used in Prometheus, Myriad, and Alice. Had it done so, it could well have reached precisely the opposite conclusion. Under the two-step approach heralded by these cases, we would consider first whether the claims in Diamond v. Diehr implicate a law of nature, natural phenomenon, or abstract idea. They do. The claims involve a law of nature—namely, the Arrhenius equation—which determines the cure time of rubber in the mold.
Under the second step, since one of the three exceptions to eligibility is involved, we turn to the search for an “inventive concept,” that is, “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.” The claims focus on solving the Arrhenius equation, with the only other feature being the molding of rubber, a process well-known in the prior art. Because the law of nature dominates the claim and because molding of rubber fails to add “significantly more” than the ineligible concept itself, a court deciding Diamond v. Diehr today, in the wake of Prometheus, Myriad, and Alice would easily conclude that the claims at issue there would not have been eligible for patenting.
If one would object that in Diamond v. Diehr there is also the concept of constantly monitoring temperature of the mold in real time, one can reply, first of all, that the Arrhenius equation is well known in the art, and that once it is decided to use the equation to calculate the cure time of rubber, it is a simple matter to instrument the mold to determine the mold temperature as a function of time. Furthermore, it is well known to monitor temperature in real time for a wide range of processes, even, for example, when one bakes a cake at home in the oven.
If the Court’s approach to patent eligibility can be used to invalidate any claim in any patent, then how does one know whether to use the approach in fact to invalidate a patent claim? In Alice, the Court states “we tread carefully in construing this exclusionary principle lest it swallow all of patent law,” but fails to articulate any limits to its approach. Because the Court fails to provide a basis for determining when its approach should be used to conclude that a patent claim is ineligible to be patented, the Court’s approach to eligibility is hopelessly subjective and, frankly, useless.
Because patents provide a property right developed to reward innovation, the introduction of uncontrolled subjectivity into the determination of patent eligibility is particularly troubling. In order for innovators to use the patent system, it is critical that the property rights granted by patents be durable and predictable. The Court undermines the incentives created by the patent system.
Among other flaws in Prometheus, Myriad, and Alice is the confusion of the eligibility determination under section 101 with requirements under sections 102 and 103 for novelty and nonobviousness. In the second step of the two-step process, the Court embarks on “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.” In that search, however, the Court chooses to dismiss claim limitations that it regards as “conventional.” Thus, in Alice, the Court quotes from Prometheus and says that the function performed by the computer at each step of the process is “purely conventional.” In Prometheus, the Court says that the “determining” step in the claims under consideration there “tells doctors to engage in well-understood, routine, conventional activity previously engaged in by scientists who work in the field.”
There was a time when the Court knew the difference between section 101 and sections 102 and 103. In Diamond v. Diehr, the Court specifically noted the difference and criticized an eligibility analysis that confuses these sections:
In determining the eligibility of respondents’ claimed process for patent protection under §101, their claims must be considered as a whole. It is inappropriate to dissect the claims into old and new elements and then to ignore the presence of the old elements in the analysis. This is particularly true in a process claim because a new combination of steps in a process may be patentable even though all the constituents of the combination were well known and in common use before the combination was made. The “novelty” of any element or steps in a process, or even of the process itself, is of no relevance in determining whether the subject matter of a claim falls within the §101 categories of possibly patentable subject matter.
Yet another flaw in the Prometheus, Myriad, and Alice decisions is the premise urged by the Court as a basis for the exceptions to eligibility. The Court’s rationale is based on the “concern that patent law not inhibit further discovery by improperly tying up the future use of these building blocks [laws of nature, natural phenomena, and abstract ideas] of human ingenuity.” The expressed concern is the improper tying up of future use of the laws of nature, natural phenomena, and abstract ideas. However, even when the Court finds that an abstract idea is implicated in a claim, the claim invariably has more detail than the abstract idea, and the additional detail provides a context that limits the scope of the exclusive rights granted by the claim when it appears in an issued patent.
In Alice, as admitted by the Court, the claims 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.” Moreover, as admitted by the Court, “the claims are designed to facilitate the exchange of financial obligations between two parties by using a computer system as a third-party intermediary.” The claims, which appear in a patent issued by the United States Patent and Trademark Office (USPTO), had been vetted for novelty and obviousness by the USPTO. The claims do not cover prior art solutions for mitigating settlement risk, but rather a solution where the computer acts as the third-party intermediary, and even then the claims do not cover every possible type of computer-intermediated settlement. Given this specific context, how can it be said that the claims in the Alice patent would inhibit further discovery by improperly tying up the future use of the building block of this abstract idea of human ingenuity?
Similarly, the patent claims in Prometheus have a specific context. They require administering a specific class of drugs and determining the amount of a specific metabolite in the subject receiving administration of the drug. Given this context, how can it be said that the claims in the Prometheus patents would inhibit further discovery by improperly tying up the future use of the building block of this law of nature discovered by human ingenuity? In Prometheus, the Court argues that the patent claims at issue “tie up the doctor’s subsequent treatment decision whether that treatment does, or does not, change in light of the inference he has drawn using the correlations.” That argument is false, since there is an exemption under the patent law for treatment by a physician.
The Court further argues that the claims “threaten to inhibit the development of more refined treatment recommendations (like that embodied in Mayo’s test), that combine Prometheus Laboratories’ correlations with later discovered features of metabolites, human physiology or individual patient characteristics.” If there is a question whether the patent claims “improperly” tie up future use of the research by Prometheus, given the very specific context of the patent claims, it is hard to see how the patent claims are overreaching. Of course, the claims did not in fact inhibit Mayo’s test, since Mayo introduced the test. Moreover, the existence of the patents provided a valuable incentive to Prometheus to introduce its test, and absent the prospect of getting patents for its efforts, Prometheus may well have not made the effort to develop and introduce the test.
There is an irony to the Court’s trilogy of ineligibility decisions in Prometheus, Myriad, and Alice. In denying patent eligibility to medical diagnostics, isolated genomic DNA (and maybe other isolated naturally occurring compositions), and a range of computer-related inventions, the Court is fostering a retreat by technology-based companies into the land of trade secrets. If a company cannot patent an invention, it will wherever possible try to maintain the invention as a trade secret. What can the Court say to that manner of “improperly tying up the future use of these building blocks of human ingenuity”—when the building blocks are maintained as trade secrets? Whatever the disadvantages of the patent system imagined by the Court in denying patent eligibility to broad categories of inventions, they are of less concern than the darkness that comes from keeping innovations bottled up as trade secrets. An important key to the patent system lies in the grant of exclusive rights for a limited period of time in exchange for disclosure of the invention in sufficient detail so that a person of ordinary skill in the art can implement the invention.
Patents provide incentives to innovation. Wielding the bludgeon of patent eligibility to strike down an invention that is not deemed patent-worthy affects not just single inventions but rather whole classes of inventions. When the patent claims of the diagnostic test of Prometheus Laboratories were found ineligible for patenting by the Court, the patent eligibility of all diagnostic tests is put in doubt.
When an invention is not patent-worthy, there are tools more refined than patent eligibility to remove the invention from the patent system. Specifically, as we have pointed out, for a claimed invention that has survived the patent eligibility hurdle, the patent laws require that the invention must additionally be new and nonobvious in order to be patented. And these laws similarly require that the invention must be well described and clearly claimed.
In another irony, notwithstanding the Court’s warning about clever patent drafting, the Court’s increasingly narrow rules for patent eligibility will inspire precisely what it warns against: clever patent drafting. To cope with the new environment in computer-related inventions, for example, as a result of the Alice decision, the patent drafter may be moved to follow the path blazed by the patent attorney who drafted the claims in Ultramercial v. Hulu[Ultramercial v. Hulu, wherein claim 1 had 11 recited steps, reproduced in the next endnote. These claims were held to be patent eligible by the Federal Circuit, in a decision rendered after the Court’s decision in Prometheus and after the Federal Circuit’s split decision in Alice, which preceded review by the Supreme Court. Judge Lourie, whose opinion in the Federal Circuit’s decision in Aliceexpresses views that correspond largely to those later expressed in the Supreme Court’s Alice decision, concurred with the majority in Ultramercial v. Hulu. The trick to the claims in Ultramercial is that they are atomized; they have so many parts that the generalizations, required by the two-step approach for eligibility promulgated by Prometheus, Myriad, and Alice, are hard to make. Although atomizing claims may make them harder to be infringed, these claims were still broad enough to have been asserted in the litigation that brought them to the Federal Circuit.
Beyond atomizing of claims, to overcome the effective patent ban on the diagnostics industry, patent attorneys will work to include more hardware in diagnostic procedures, so that it will be harder for a court to say that a claim involves merely a law of nature. Similarly, to overcome the effective patent ban on products isolated from nature, patent attorneys will seek to add more non-natural components. For computer-related inventions, patent attorneys will also seek to claim physical effects wherever possible. Claims with such features are likely to be more successful.
In a brief in the Prometheus case, the U.S. Government urged the Court to articulate broad eligibility standards that would be applied in an inclusive manner:
The utility of every invention turns on its ability to produce a predictable chain of reactions leading to the desired result. If the “natural” character of that link were sufficient to trigger the “law of nature” exception to patent-eligibility under Section 101, the exception would swallow the rule. It is therefore essential to apply the judicially crafted “law of nature” and “physical phenomenon” exceptions to Section 101 in a restrained manner and with an eye toward their animating purposes.
The Prometheus decision characterized the Government’s position thus:
“[T]he Government argues that virtually any step beyond a statement of a law of nature itself should transform an unpatentable law of nature into a potentially patentable application sufficient to satisfy §101’s demands.”
In rejecting the Government’s position and charting an activist position in invalidating patent claims with unrestrained drive to find ineligible subject matter, the Court is harming the patent system by rendering it less inclusive and less predictable.
Because the Supreme Court has now issued three decisions that cast numerous innovations into a widening pit of patent ineligibility, those who care about incentives for invention must look elsewhere to restore what the Court has uprooted. Many patent practitioners and patent holders are talking openly about legislation that might undo the damage that these decisions are inflicting on the patent system.
 Specifically, the wording of 35 U.S.C. § 101 is as follows; “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. § 102. 35 U.S.C. § 103. 35 U.S.C. § 112. 35 U.S.C. § 112. Slip opinion, p. 6. For ease of reading, quotations from the opinion may omit interior quotation marks, capitalizations, brackets and ellipses found in the original.Id.Id.
 Slip opinion, p. 7.
 Slip opinion, p. 2.
 In footnote 2 of its opinion, on p. 2 of the slip opinion, the Court quotes claim 33, which the parties agreed was representative of the method claims:
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, the credits and debits being irrevocable, time invariant obligations placed on the exchange institutions.
 Slip opinion, p. 11.
 Slip opinion, p. 14.
 Slip opinion, p. 15.
 Slip opinion, p. 15.
 Slip opinion, p. 13.
 Slip opinion, p. 16.
 Compare the analysis provided in Diamond v. Diehr, 450 U.S. 175 at 189, n. 12 (1981) of precisely the same line of argument that was made for ineligibility: “To accept the analysis proffered by the petitioner would, if carried to its extreme, make all inventions unpatentable because all inventions can be reduced to underlying principles of nature which, once known, make their implementation obvious.” This analysis is discussed in further detail below.
Diamond v. Diehr, 450 U. S. 175 (1981).
Id., 450 U.S. 175 at 178-179.
Gottschalk v. Benson, 409 U.S. 63 (1972)
Diamond v. Diehr, 450 U. S. 175 at 179-180.
 450 U.S. at 184-185.
In re Alappat, 33 F.3d 1526 (Fed.Cir.1994) (in banc ).
Street Bank & Trust Co. v. Signature Financial Group, 149 F.3d 1368 (Fed. Cir. 1998)
 The author is suggesting, not that Diamond v. Diehr was decided incorrectly, but rather that even where the decisions in Prometheus, Myriad, and Alice have referenced patent claims said to be eligible for patenting, the logic of these decisions can be used to show ineligibility of such claims.
Mayo Collaborative Services v. Prometheus Laboratories, 132 S.Ct. 1289 at 1298.
 450 U.S. 175 at 188-189. The dissection of a claim into old and new parts is precisely what the Court has done in Prometheus, Myriad, and Alice. For support, these cases look to Parker v.Flook, 437 U.S. 584, 590 (1978). See Prometheus, 132 S.Ct.,at 1298. That approach was explicitly criticized in Diamond v. Diehr, 450 U.S. at 189, n. 12:“
It is argued that the procedure of dissecting a claim into old and new elements is mandated by our decision in Flook which noted that a mathematical algorithm must be assumed to be within the “prior art.” It is from this language that the petitioner premises his argument that if everything other than the algorithm is determined to be old in the art, then the claim cannot recite statutory subject matter. The fallacy in this argument is that we did not hold in Flook that the mathematical algorithm could not be considered at all when making the § 101 determination. To accept the analysis proffered by the petitioner would, if carried to its extreme, make all inventions unpatentable because all inventions can be reduced to underlying principles of nature which, once known, make their implementation obvious. The analysis suggested by the petitioner would also undermine our earlier decisions regarding the criteria to consider in determining the eligibility of a process for patent protection. See, e.g., Gottschalk v. Benson, supra; and Cochrane v. Deener, 94 U.S. 780, 24 L.Ed. 139 (1877).
 132 S.Ct. at 1302.
 35 U.S.C. § 287(c).
 35 U.S.C. §§ 102 and 103 respectively.
 35 U.S.C. § 112.
 See Ultramercial v. Hulu, 722 F.3d 1335 (Fed. Cir. 2013). for an example of patent claims found not abstract, in an opinion by J. Lourie, who is hostile to eligibility.
 772 F.3d at 1337-8. The claim reads thus:
A method for distribution of products over the Internet via a facilitator, said method comprising the steps of:
a first step of receiving, from a content provider, media products that are covered by intellectual
property rights protection and are available for purchase, wherein each said media product being comprised of at least one of text data, music data, and video data;
a second step of selecting a sponsor message to be associated with the media product, said sponsor message being selected from a plurality of sponsor messages, said second step including accessing an activity log to verify that the total number of times which the sponsor message has been previously presented is less than the number of transaction cycles contracted by the sponsor of the sponsor message;
a third step of providing the media product for sale at an Internet website;
a fourth step of restricting general public access to said media product;
a fifth step of offering to a consumer access to the media product without charge to the consumer
on the precondition that the consumer views the sponsor message;
a sixth step of receiving from the consumer a request to view the sponsor message, wherein the consumer submits said request in response to being offered access to the media product;
a seventh step of, in response to receiving the request from the consumer, facilitating the display
of a sponsor message to the consumer;
an eighth step of, if the sponsor message is not an interactive message, allowing said consumer access to said media product after said step of facilitating the display of said sponsor message;
a ninth step of, if the sponsor message is an interactive message, presenting at least one query
to the consumer and allowing said consumer access to said media product after receiving a
response to said at least one query;
a tenth step of recording the transaction event to the activity log, said tenth step including updating
the total number of times the sponsor message has been presented; and
an eleventh step of receiving payment from the sponsor of the sponsor message displayed.
 Brief for United States as Amicus Curiae, at page 19.
 132 S.Ct. at 1303.
 The author has prepared a draft of such proposed legislation, which reads as follows:
Section 101 of Title 35 of the United States Code shall be amended by adding the following sentence at the end thereof:
Claimed subject matter that provides a useful, concrete, and tangible result shall not be denied eligibility for a patent on the ground that it is directed to a law of nature, natural phenomenon, or abstract idea, and shall be evaluated in accordance with the other provisions of this title.
The purpose of this legislative proposal is to provide a single surgical solution to nullify the effect and rationale of Prometheus while otherwise leaving the jurisprudence of section 101 intact.
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