What is the Alice standard in United States patent law?

Frequently in United States law, when the Supreme Court of the United States makes a decision, the court will articulate a test that the court uses to come to its decision. This test is intended to guide courts below the Supreme Court of the United States in making their decisions. The tests will usually be referred to using the name of one of the parties in the case. The practice of using one of the party names to identify a test articled in a court decision is a common practice in United States law. The practice is intended to allow attorneys to communicate complex concepts quickly. For instance, the test that the Supreme Court of the United States articulated in Alice Corp. v. CLS Bank International, 573 U.S. __, 134 S. Ct. 2347 is referred to as the Alice test. The Alice test is used to determine if something is eligible to be patented.

The circumstances that lead to Alice Corp. v. CLS Bank International are as follows. Alice owned four patents on electronic methods and computer programs for financial-trading systems on which trades between two parties who are to exchange payment are settled by a third party in ways that reduce “settlement risk”—the risk that one party will perform while the other will not. Alice alleged that CLS Bank began to use similar technology in 2002. Alice accused CLS Bank of infringement of Alice’s patents, and CLS Bank sued Alice in 2007. CLS Bank sued Alice and requested that the court declare that the claims at issue were invalid. Alice counter sued CLS Bank alleging that CLS Bank was infringing on Alice’s patents. The case progressed from the district court to the federal circuit court and was finally decided by the Supreme Court of the United States.

The Supreme Court of the United States held that because Alice Corporation’s patent claims involving (1) a method for exchanging financial obligations, (2) a computer system as a third-party intermediary, and (3) a computer-readable medium containing program code for performing the method of exchanging obligations are drawn to a patent-ineligible abstract idea under 35 U.S.C. § 101, they are not patent eligible under Section 101.

In the courts decision a deceptively simple two part test was articulated:

determine whether the patent claim under examination contains an abstract idea, such as an algorithm, method of computation, or other general principle. If the claim does not contain an abstract idea, then this analysis can stop and the claim will be analyzed against the normal patentability standard. If the claim does contain an abstract idea move to step 2.
determine whether the patent adds to the idea “something extra” that embodies an “inventive concept”. If the patent does not add an inventive concept to a patent claim then the court should find that the patent is invalid and unenforceable.

The ruling continued with these points to help clarify when a claim embodies and inventive concept:

A mere instruction to implement an abstract idea on a computer “cannot impart patent eligibility.”
“[T]he mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention.”
“Stating an abstract idea ‘while adding the words “apply it”‘ is not enough for patent eligibility.”
“Nor is limiting the use of an abstract idea to a particular technological environment.”

To restate the test given by the court another way – it is possible to claim an abstract idea in a patent but the patent as a whole must impart enough knowledge to practically apply the abstract idea in a novel way.

If you have questions about the Alice test you should contact a patent attorney to help you understand how it applies to your situation.