134 S.Ct. 2347, 189 L.Ed.2d 296, 82 USLW 4508, 110 U.S.P.Q.2d 1976, 14 Cal. Daily Op. Serv. 6713, 2014 Daily
`Journal D.A.R. 7838, 24 Fla. L. Weekly Fed. S 870
`(Cite as: 134 S.Ct. 2347)
`
`Page 1
`
`
`
`
`
`Supreme Court of the United States
`ALICE CORPORATION PTY. LTD., Petitioner
`v.
`CLS BANK INTERNATIONAL et al.
`
`No. 13–298.
`Argued March 31, 2014.
`Decided June 19, 2014.
`
`
`Background: Banks brought action seeking declara-
`tion that patents for mitigating settlement risk in fi-
`nancial transactions by using a computer system as a
`third-party intermediary were invalid, and patents'
`assignee filed counterclaim for infringement. The
`United States District Court for the District of Co-
`lumbia, Rosemary M. Collyer, J., 768 F.Supp.2d 221,
`granted banks' motion for summary judgment, and
`assignee appealed. On rehearing en banc, the United
`States Court of Appeals for the Federal Circuit, 717
`F.3d 1269, affirmed, and certiorari was granted.
`
`Holdings: The Supreme Court, Justice Thomas, held
`that:
`(1) the abstract idea of an intermediated settlement
`was not patentable, and
`(2) method claims requiring generic computer im-
`plementation failed to transform the abstract idea of
`intermediated settlement into a patent-eligible inven-
`tion.
`
`
`Affirmed.
`
`
`
`
`
`
`
`5
`
`
`[1] Patents 291
`
`291 Patents
` 291I Subjects of Patents
` 291k4 Arts
` 291k5 k. In general. Most Cited Cases
`
`
`5
`
`Laws of nature, natural phenomena, and abstract
`ideas are not patentable. 35 U.S.C.A. § 101.
`
`[2] Patents 291
`
`291 Patents
` 291I Subjects of Patents
` 291k4 Arts
` 291k5 k. In general. Most Cited Cases
`
`
`At some level, all inventions embody, use, reflect,
`rest upon, or apply laws of nature, natural phenomena,
`or abstract ideas; thus, an invention is not rendered
`ineligible for patent simply because it involves an
`abstract concept. 35 U.S.C.A. § 101.
`
`[3] Patents 291
`
`291 Patents
` 291I Subjects of Patents
` 291k4 Arts
` 291k5 k. In general. Most Cited Cases
`
`
`5
`
`Applications of abstract concepts to a new and
`useful end remain eligible for patent protection. 35
`U.S.C.A. § 101.
`
`[4] Patents 291
`
`
`5
`
` Justice Sotomayor filed concurring opinion in
`which Justices Ginsburg and Breyer joined.
`
`
`West Headnotes
`
`© 2014 Thomson Reuters. No Claim to Orig. US Gov. Works.
`
`
`Page 00001
`
`Apple Exhibit 1033
`
`

`
`
`
`134 S.Ct. 2347, 189 L.Ed.2d 296, 82 USLW 4508, 110 U.S.P.Q.2d 1976, 14 Cal. Daily Op. Serv. 6713, 2014 Daily
`Journal D.A.R. 7838, 24 Fla. L. Weekly Fed. S 870
`(Cite as: 134 S.Ct. 2347)
`291 Patents
` 291I Subjects of Patents
` 291k4 Arts
` 291k5 k. In general. Most Cited Cases
`
`
`Page 2
`
`In applying the patentability exception for laws of
`nature, natural phenomena, and abstract ideas, courts
`must distinguish between patents that claim the
`building blocks of human ingenuity and those that
`integrate the building blocks into something more,
`thereby transforming them into a patent-eligible in-
`vention; the former would risk disproportionately
`tying up the use of the underlying ideas, and are
`therefore ineligible for patent protection, while the
`latter pose no comparable risk of pre-emption, and
`therefore remain eligible for the monopoly granted
`under our patent laws. 35 U.S.C.A. § 101.
`
`[5] Patents 291
`
`291 Patents
` 291IX Construction and Operation of Letters Pa-
`tent
` 291IX(A) In General
` 291k157 General Rules of Construction
` 291k157(1) k. In general. Most Cited
`Cases
`
`
`157(1)
`
`Patent claims must be considered as a whole.
`
`5
`
`
`[6] Patents 291
`
`291 Patents
` 291I Subjects of Patents
` 291k4 Arts
` 291k5 k. In general. Most Cited Cases
`
`
`To distinguish patents that claim laws of nature,
`natural phenomena, and abstract ideas from those that
`claim patent-eligible applications of those concepts,
`courts first determine whether the claims at issue are
`
`7.14
`
`directed to one of those patent-ineligible concepts, and
`if so, then ask what else there is in those claims. 35
`U.S.C.A. § 101.
`
`[7] Patents 291
`
`291 Patents
` 291I Subjects of Patents
` 291k4 Arts
` 291k7.14 k. Particular processes or methods
`as constituting invention. Most Cited Cases
`
`
`Claims in patents for mitigating settlement risk in
`financial transactions by using a computer system as a
`third-party intermediary were directed to a pa-
`tent-ineligible concept; claims were drawn to the ab-
`stract idea of intermediated settlement, which was a
`fundamental economic practice long prevalent in our
`system of commerce. 35 U.S.C.A. § 101.
`
`[8] Patents 291
`
`291 Patents
` 291I Subjects of Patents
` 291k4 Arts
` 291k7.14 k. Particular processes or methods
`as constituting invention. Most Cited Cases
`
`
`7.14
`
`Method claims in patents for mitigating settle-
`ment risk in financial transactions through use of a
`computer system as a third-party intermediary, by
`requiring generic computer implementation, failed to
`transform the abstract idea of intermediated settlement
`into a patent-eligible invention; claims simply in-
`structed a practitioner to implement the abstract idea
`of intermediated settlement on a generic computer,
`without purporting to improve the functioning of the
`computer itself, or effecting an improvement in any
`other technology or technical field. 35 U.S.C.A. § 101.
`
`[9] Patents 291
`
`5
`
`© 2014 Thomson Reuters. No Claim to Orig. US Gov. Works.
`
`
`Page 00002
`
`

`
`
`
`134 S.Ct. 2347, 189 L.Ed.2d 296, 82 USLW 4508, 110 U.S.P.Q.2d 1976, 14 Cal. Daily Op. Serv. 6713, 2014 Daily
`Journal D.A.R. 7838, 24 Fla. L. Weekly Fed. S 870
`(Cite as: 134 S.Ct. 2347)
`
`291 Patents
` 291I Subjects of Patents
` 291k4 Arts
` 291k5 k. In general. Most Cited Cases
`
`
`Page 3
`
`291 Patents
` 291I Subjects of Patents
` 291k4 Arts
` 291k7.11 k. Use or operation of machine or
`apparatus as affecting process. Most Cited Cases
`
`
`A patent claim that recites an abstract idea must
`include additional features to ensure that the claim is
`more than a drafting effort designed to monopolize the
`abstract idea; transformation into a patent-eligible
`application requires more than simply stating the
`abstract idea while adding the words “apply it.” 35
`U.S.C.A. § 101.
`
`[10] Patents 291
`
`291 Patents
` 291I Subjects of Patents
` 291k4 Arts
` 291k6 k. Principles or laws of nature. Most
`Cited Cases
`
`
`6
`
`Simply implementing a mathematical principle
`on a physical machine, namely a computer, is not a
`patentable application of that principle. 35 U.S.C.A. §
`101.
`
`[11] Patents 291
`
`291 Patents
` 291I Subjects of Patents
` 291k4 Arts
` 291k5 k. In general. Most Cited Cases
`
`
`5
`
`The prohibition against patenting abstract ideas
`cannot be circumvented by attempting to limit the use
`of the idea to a particular technological environment.
`35 U.S.C.A. § 101.
`
`[12] Patents 291
`
`
`7.11
`
`7.11
`
`Mere recitation of a generic computer cannot
`transform a patent-ineligible abstract idea into a pa-
`tent-eligible invention. 35 U.S.C.A. § 101.
`
`[13] Patents 291
`
`291 Patents
` 291I Subjects of Patents
` 291k4 Arts
` 291k7.11 k. Use or operation of machine or
`apparatus as affecting process. Most Cited Cases
`
`
`7.14
`
`If a patent's recitation of a computer amounts to a
`mere instruction to implement an abstract idea on a
`computer, that addition cannot impart patent eligibil-
`ity. 35 U.S.C.A. § 101.
`
`[14] Patents 291
`
`291 Patents
` 291I Subjects of Patents
` 291k4 Arts
` 291k7.14 k. Particular processes or methods
`as constituting invention. Most Cited Cases
`
`
`Claims to a computer system and a comput-
`er-readable medium in patents for mitigating settle-
`ment risk in financial transactions through use of a
`computer system as a third-party intermediary were
`patent ineligible; system claims recited a handful of
`generic computer components configured to imple-
`ment the unpatentable abstract idea of an intermedi-
`ated settlement. 35 U.S.C.A. § 101.
`
`Patents 291
`
`328(2)
`
`© 2014 Thomson Reuters. No Claim to Orig. US Gov. Works.
`
`
`Page 00003
`
`

`
`Page 4
`
`
`
`134 S.Ct. 2347, 189 L.Ed.2d 296, 82 USLW 4508, 110 U.S.P.Q.2d 1976, 14 Cal. Daily Op. Serv. 6713, 2014 Daily
`Journal D.A.R. 7838, 24 Fla. L. Weekly Fed. S 870
`(Cite as: 134 S.Ct. 2347)
`
`291 Patents
` 291XIII Decisions on the Validity, Construction,
`and Infringement of Particular Patents
` 291k328 Patents Enumerated
` 291k328(2) k. Original utility. Most Cited
`Cases
`
`
`patent protection under 35 U.S.C. § 101 because they
`are directed to an abstract idea. The en banc Federal
`Circuit affirmed.
`
`
`Held : Because the claims are drawn to a pa-
`tent-ineligible abstract idea, they *2350 are not patent
`eligible under § 101. Pp. 2354 – 2360.
`
`
`5,970,479, 6,912,510, 7,149,720, 7,725,375. In-
`valid.
`
`
`*2349 Syllabus FN*
`
`
`
`
`
`FN* The syllabus constitutes no part of the
`opinion of the Court but has been prepared by
`the Reporter of Decisions for the conven-
`ience of the reader. See United States v. De-
`troit Timber & Lumber Co., 200 U.S. 321,
`337, 26 S.Ct. 282, 50 L.Ed. 499.
`
`Petitioner Alice Corporation is the assignee of
`several patents that disclose a scheme for mitigating
`“settlement risk,” i.e., the risk that only one party to an
`agreed-upon financial exchange will satisfy its obli-
`gation. In particular, the patent claims are designed to
`facilitate the exchange of financial obligations be-
`tween two parties by using a computer system as a
`third-party intermediary. The patents in suit claim (1)
`a method for exchanging financial obligations, (2) a
`computer system configured to carry out the method
`for exchanging obligations, and (3) a comput-
`er-readable medium containing program code for
`performing the method of exchanging obligations.
`
`
`Respondents (together, CLS Bank), who operate
`a global network that facilitates currency transactions,
`filed suit against petitioner, arguing that the patent
`claims at issue are invalid, unenforceable, or not in-
`fringed. Petitioner counterclaimed, alleging
`in-
`fringement. After Bilski v. Kappos, 561 U.S. 593, 130
`S.Ct. 3218, 177 L.Ed.2d 792, was decided, the District
`Court held that all of the claims were ineligible for
`
`(a) The Court has long held that § 101, which
`defines the subject matter eligible for patent protec-
`tion, contains an implicit exception for “ ‘[l]aws of
`nature, natural phenomena, and abstract ideas.’ ” As-
`sociation for Molecular Pathology v. Myriad Genet-
`ics, Inc., 569 U.S. ––––, ––––, 133 S.Ct. 2107, 2116,
`186 L.Ed.2d 124. In applying the § 101 exception, this
`Court must distinguish patents that claim the “
`‘buildin[g] block[s]’ ” of human ingenuity, which are
`ineligible for patent protection, from those that inte-
`grate the building blocks into something more, see
`Mayo Collaborative Services v. Prometheus Labora-
`tories, Inc., 566 U.S. ––––, ––––, 132 S.Ct. 1289,
`1303, 182 L.Ed.2d 321, thereby “transform[ing]”
`them into a patent-eligible invention, id., at ––––, 132
`S.Ct., at 1294. Pp. 2354 – 2355.
`
`
`(b) Using this framework, the Court must first
`determine whether the claims at issue are directed to a
`patent-ineligible concept. 566 U.S., at ––––, 132 S.Ct.,
`at ––––. If so, the Court then asks whether the claim's
`elements, considered both individually and “as an
`ordered combination,” “transform the nature of the
`claim” into a patent-eligible application. Id., at ––––,
`132 S.Ct., at 1297. Pp. 2355 – 2360.
`
`
`(1) The claims at issue are directed to a pa-
`tent-ineligible concept: the abstract idea of interme-
`diated settlement. Under “the longstanding rule that
`‘[a]n idea of itself is not patentable,’ ” Gottschalk v.
`Benson, 409 U.S. 63, 67, 93 S.Ct. 253, 34 L.Ed.2d
`273, this Court has found ineligible patent claims
`involving an algorithm for converting binary-coded
`decimal numerals into pure binary form, id., at 71–72,
`
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`
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`
`

`
`Page 5
`
`tical assurance that the process is more than a drafting
`effort designed to monopolize the [abstract idea] it-
`self.” Mayo, supra, at ––––, 132 S.Ct., at 1297. Pp.
`2357 – 2359.
`
`
`
`
`134 S.Ct. 2347, 189 L.Ed.2d 296, 82 USLW 4508, 110 U.S.P.Q.2d 1976, 14 Cal. Daily Op. Serv. 6713, 2014 Daily
`Journal D.A.R. 7838, 24 Fla. L. Weekly Fed. S 870
`(Cite as: 134 S.Ct. 2347)
`93 S.Ct. 253; a mathematical formula for computing
`“alarm limits” in a catalytic conversion process,
`Parker v. Flook, 437 U.S. 584, 594–595, 98 S.Ct.
`2522, 57 L.Ed.2d 451; and, most recently, a method
`for hedging against the financial risk of price fluctua-
`tions, Bilski, 561 U.S., at 599, 130 S.Ct. 3218. It fol-
`lows from these cases, and Bilski in particular, that the
`claims at issue are directed to an abstract idea. On their
`face, they are drawn to the concept of intermediated
`settlement, i.e., the use of a third party to mitigate
`settlement risk. Like the risk hedging in Bilski, the
`concept of intermediated settlement is “ ‘a funda-
`mental economic practice long prevalent in our system
`of commerce,’ ” ibid., and the use of a third-party
`intermediary (or “clearing house”) is a building block
`of the modern economy. Thus, intermediated settle-
`ment, like hedging, is an “abstract idea” beyond §
`101's scope. Pp. 2355 – 2357.
`
`
`(ii) Here, the representative method claim does no
`more than simply instruct the practitioner to imple-
`ment the abstract idea of intermediated settlement on a
`generic computer. Taking the claim elements sepa-
`rately, the function performed by the computer at each
`step—creating and maintaining “shadow” accounts,
`obtaining data, adjusting account balances, and issu-
`ing automated instructions—is “[p]urely ‘conven-
`tional.’ ” Mayo, 566 U.S., at ––––, 132 S.Ct., at 1298.
`Considered “as an ordered combination,” these com-
`puter components “ad[d] nothing ... that is not already
`present when the steps are considered separately.” Id.,
`at ––––, 132 S.Ct., at 1298. Viewed as a whole, these
`method claims simply recite the concept of interme-
`diated settlement as performed by a generic computer.
`They do not, for example, purport to improve the
`functioning of the computer itself or effect an im-
`provement in any other technology or technical field.
`An instruction to apply the abstract idea of interme-
`diated settlement using some unspecified, generic
`computer is not “enough ” to transform the abstract
`idea into a patent-eligible invention. Id., at ––––, 132
`S.Ct., at 1297. Pp. 2359 – 2360.
`
`
`(3) Because petitioner's system and media claims
`add nothing of substance to the underlying abstract
`idea, they too are patent ineligible under § 101. Peti-
`tioner conceded below that its media claims rise or fall
`with its method claims. And the system claims are no
`different in substance from the method claims. The
`method claims recite the abstract idea implemented on
`a generic computer; the system claims recite a handful
`of generic computer components configured to im-
`plement the same idea. This Court has long “warn[ed]
`... against” interpreting § 101 “in ways that make
`patent eligibility ‘depend simply on the draftsman's
`art.’ ” Mayo, supra, at ––––, 132 S.Ct., at 1294.
`
`(2) Turning to the second step of Mayo 's
`framework: The method claims, which merely require
`generic computer implementation, fail to transform
`that abstract idea into a patent-eligible invention. Pp.
`2357 – 2360.
`
`
`(i) “Simply appending conventional steps, speci-
`fied at a high level of generality,” to a method already
`“well known in the art” is not “enough ” to supply the
`“ ‘inventive concept’ ” needed to make this transfor-
`mation. Mayo, supra, at ––––, ––––, ––––, 132 S.Ct.,
`at 1300, 1297, 1294. The introduction of a computer
`into the claims does not alter the analysis. Neither
`stating an abstract idea “while adding the words ‘apply
`it,’ ” Mayo, supra, at ––––, 132 S.Ct., at 1294, nor
`limiting the use of an abstract idea “ ‘to a particular
`technological environment,’ ” Bilski, supra, at
`610–611, 130 S.Ct. 3218, is enough for patent eligi-
`bility. Stating an abstract idea while adding the words
`“apply it with a computer” simply combines those two
`steps, with the same deficient result. Wholly generic
`computer implementation is not generally the sort of
`“additional *2351 featur[e]” that provides any “prac-
`
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`
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`

`
`
`
`134 S.Ct. 2347, 189 L.Ed.2d 296, 82 USLW 4508, 110 U.S.P.Q.2d 1976, 14 Cal. Daily Op. Serv. 6713, 2014 Daily
`Journal D.A.R. 7838, 24 Fla. L. Weekly Fed. S 870
`(Cite as: 134 S.Ct. 2347)
`Holding that the system claims are patent eligible
`would have exactly that result. P. 2360.
`
`
`Page 6
`
`issue are drawn to the abstract idea of intermediated
`settlement, and that merely requiring generic com-
`puter implementation fails to transform that abstract
`idea into a patent-eligible invention. We therefore
`affirm the judgment of the United States Court of
`Appeals for the Federal Circuit.
`
`
`I
`A
`Petitioner Alice Corporation is the assignee of
`several patents that disclose schemes to manage cer-
`tain forms of financial risk.FN1 According to the spec-
`ification largely shared by the patents, the invention
`“enabl[es] the management of risk relating to speci-
`fied, yet unknown, future events.” App. 248. The
`specification further explains that the “invention re-
`lates to methods and apparatus, including electrical
`computers and data processing systems applied to
`financial matters and risk management.” Id., at 243.
`
`
`FN1. The patents at issue are United States
`Patent Nos. 5,970,479 (the '479 patent),
`6,912,510, 7,149,720, and 7,725,375.
`
`
`
`The 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 ex-
`change will satisfy its obligation. In particular, the
`claims are designed to facilitate the exchange of fi-
`nancial obligations between two parties by using a
`computer system as a third-party intermediary. Id., at
`383–384.FN2 The intermediary creates “shadow” credit
`and debit records (i.e., account ledgers) that mirror the
`balances in the parties' real-world accounts at “ex-
`change institutions” (e.g., banks). The intermediary
`updates the shadow records in real time as transactions
`are entered, allowing “only those transactions for
`which the parties' updated shadow records indicate
`sufficient resources to satisfy their mutual obliga-
`tions.” 717 F.3d 1269, 1285 (C.A.Fed.2013) (Lourie,
`J., concurring). At the end of the day, the intermediary
`instructs the relevant financial institutions to carry out
`
` 717 F.3d 1269, affirmed.
`
`
`
`THOMAS, J., delivered the opinion for a unan-
`imous Court. SOTOMAYOR, J., filed a concurring
`opinion, in which GINSBURG and BREYER, JJ.,
`joined.
`Carter G. Phillips, Washington, DC, for Petitioner.
`
`Mark Perry, Washington, DC, for Respondents.
`
`Donald B. Verrilli, Jr., Solicitor General, for the
`United States as amicus curiae, by special leave of the
`Court, supporting the respondents.
`
`Adam L. Perlman, Williams & Connolly LLP, Robert
`E. Sokohl, Sterne, Kessler, Goldstein & Fox PLLC,
`Carter G. Phillips, Counsel of Record, Jeffrey P.
`Kushan, Sidley Austin LLP, Washington, DC, Con-
`stantine L. Trela, Jr., Tacy F. Flint, Timothy R. Har-
`gadon, Benjamin M. Flowers, Sidley Austin LLP,
`Chicago, IL, for Petitioner.
`
`Mark A. Perry, Counsel of Record, Helgi C. Walker,
`Brian M. Buroker, Alexander N. Harris, Gibson, Dunn
`& Crutcher LLP, Washington, DC, for Respondents.
`
`For U.S. Supreme Court briefs, see:2014 WL 1101443
`(Reply.Brief)2014 WL 689549 (Resp.Brief)
`
`Justice THOMAS delivered the opinion of the Court.
`The patents at issue in this case disclose a com-
`puter-implemented scheme for mitigating “settlement
`risk” (i.e., the risk that *2352 only one party to a fi-
`nancial transaction will pay what it owes) by using a
`third-party intermediary. The question presented is
`whether these claims are patent eligible under 35
`U.S.C. § 101, or are instead drawn to a pa-
`tent-ineligible abstract idea. We hold that the claims at
`
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`

`
`
`
`134 S.Ct. 2347, 189 L.Ed.2d 296, 82 USLW 4508, 110 U.S.P.Q.2d 1976, 14 Cal. Daily Op. Serv. 6713, 2014 Daily
`Journal D.A.R. 7838, 24 Fla. L. Weekly Fed. S 870
`(Cite as: 134 S.Ct. 2347)
`the “permitted” transactions in accordance with the
`updated shadow records, ibid., thus mitigating the risk
`that only one party will perform the agreed-upon ex-
`change.
`
`
`Page 7
`
`the credit record and debit record of the
`respective parties in accordance with the
`adjustments of the said permitted transac-
`tions, the credits and debits being irrevo-
`cable, time invariant obligations placed on
`the exchange institutions.” App. 383–384.
`
`
`
`
`
`
`
`
`
`
`
`FN2. The parties agree that claim 33 of the
`'479 patent is representative of the method
`claims. Claim 33 recites:
`
`“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 predeter-
`mined 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 super-
`visory institution from the exchange in-
`stitutions;
`
`“(b) obtaining from each exchange insti-
`tution 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 in-
`stitution adjusting each respective party's
`shadow credit record or shadow debit rec-
`ord, 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 in-
`stitution instructing on[e] of the exchange
`institutions to exchange credits or debits to
`
`
`
`*2353 In sum, the patents in suit claim (1) the
`foregoing method for exchanging obligations (the
`method claims), (2) a computer system configured to
`carry out the method for exchanging obligations (the
`system claims), and (3) a computer-readable medium
`containing program code for performing the method
`of exchanging obligations (the media claims). All of
`the claims are implemented using a computer; the
`system and media claims expressly recite a computer,
`and the parties have stipulated that the method claims
`require a computer as well.
`
`
`B
`Respondents CLS Bank International and CLS
`Services Ltd. (together, CLS Bank) operate a global
`network that facilitates currency transactions. In 2007,
`CLS Bank filed suit against petitioner, seeking a de-
`claratory judgment that the claims at issue are invalid,
`unenforceable, or not infringed. Petitioner counter-
`claimed, alleging infringement. Following this Court's
`decision in Bilski v. Kappos, 561 U.S. 593, 130 S.Ct.
`3218, 177 L.Ed.2d 792 (2010), the parties filed
`cross-motions for summary judgment on whether the
`asserted claims are eligible for patent protection under
`35 U.S.C. § 101. The District Court held that all of the
`claims are patent ineligible because they are directed
`to the abstract idea of “employing a neutral interme-
`diary to facilitate simultaneous exchange of obliga-
`tions in order to minimize risk.” 768 F.Supp.2d 221,
`252 (D.C.2011).
`
`
`A divided panel of the United States Court of
`Appeals for the Federal Circuit reversed, holding that
`it was not “manifestly evident” that petitioner's claims
`are directed to an abstract idea. 685 F.3d 1341, 1352,
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`arguing that all of petitioner's claims are patent eligi-
`ble. Id., at 1327. Judges Linn and O'Malley filed a
`separate dissenting opinion reaching that same con-
`clusion. Ibid.
`
`
`
`
`134 S.Ct. 2347, 189 L.Ed.2d 296, 82 USLW 4508, 110 U.S.P.Q.2d 1976, 14 Cal. Daily Op. Serv. 6713, 2014 Daily
`Journal D.A.R. 7838, 24 Fla. L. Weekly Fed. S 870
`(Cite as: 134 S.Ct. 2347)
`1356 (2012). The Federal Circuit granted rehearing en
`banc, vacated the panel opinion, and affirmed the
`judgment of the District Court in a one-paragraph per
`curiam opinion. 717 F.3d, at 1273. Seven of the ten
`participating judges agreed that petitioner's method
`and media claims are patent ineligible. See id., at 1274
`(Lourie, J., concurring); id., at 1312–1313 (Rader,
`C.J., concurring in part and dissenting in part). With
`respect to petitioner's system claims, the en banc
`Federal Circuit affirmed the District Court's judgment
`by an equally divided vote. Id., at 1273.
`
`
`We granted certiorari, 571 U.S. ––––, 134 S.Ct.
`734, 187 L.Ed.2d 590 (2013), and now affirm.
`
`
`II
`[1] Section 101 of the Patent Act defines the
`subject matter eligible for patent protection. It pro-
`vides:
`
`
`“Whoever invents or discovers any new and
`useful process, machine, manufacture, or composi-
`tion 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.
`§ 101.
`
`
`
`“We have long held that this provision contains
`an important implicit exception: Laws of nature, nat-
`ural phenomena, and abstract ideas are not patenta-
`ble.” Association for Molecular Pathology v. Myriad
`Genetics, Inc., 569 U.S. ––––, ––––, 133 S.Ct. 2107,
`2116, 186 L.Ed.2d 124 (2013) (internal quotation
`marks and brackets omitted). We have interpreted §
`101 and its predecessors in light of this exception for
`more than 150 years. Bilski, supra, at 601–602, 130
`S.Ct. 3218; see also O'Reilly v. Morse, 15 How. 62,
`112–120, 14 L.Ed. 601 (1854); Le Roy v. Tatham, 14
`How. 156, 174–175, 14 L.Ed. 367 (1853).
`
`
`We have described the concern that drives this
`exclusionary principle as one of pre-emption. See,
`e.g., Bilski, supra, at 611–612, 130 S.Ct. 3218 (up-
`holding the patent “would pre-empt use of this ap-
`proach in all fields, and would effectively grant a
`monopoly over an abstract idea”). Laws of nature,
`natural phenomena, and abstract ideas are “ ‘ “the
`basic tools of scientific and technological work.” ’ ”
`Myriad, supra, at ––––, 133 S.Ct., at 2116.
`
`Writing for a five-member plurality, Judge Lourie
`concluded that all of the claims at issue are patent
`ineligible. In the plurality's view, under this Court's
`decision in Mayo Collaborative Services v. Prome-
`theus Laboratories, Inc., 566 U.S. ––––, 132 S.Ct.
`1289, 182 L.Ed.2d 321 (2012), a court must first
`“identif[y] the abstract idea represented in the claim,”
`and then determine “whether the balance of the claim
`adds ‘significantly more.’ ” 717 F.3d, at 1286. The
`plurality concluded that petitioner's claims “draw on
`the abstract idea of reducing settlement risk by ef-
`fecting trades through a third-party intermediary,” and
`that the use of a computer to maintain, adjust, and
`reconcile shadow accounts added nothing of substance
`to that abstract idea. Ibid.
`
`
`Chief Judge Rader concurred in part and dis-
`sented in part. In a part of the opinion joined only by
`Judge Moore, Chief Judge Rader agreed with the
`plurality that petitioner's method and media claims are
`drawn to an abstract idea. Id., at 1312–1313. In a part
`of the opinion joined by Judges Linn, Moore, and
`O'Malley, Chief Judge Rader would have held that the
`system claims are patent eligible because they involve
`computer “hardware”
`that
`is “specifically pro-
`grammed to solve a complex problem.” Id., at 1307.
`Judge Moore wrote a separate opinion dissenting in
`part, arguing that the system claims are patent eligible.
`Id., at 1313–1314. Judge *2354 Newman filed an
`opinion concurring in part and dissenting in part,
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`134 S.Ct. 2347, 189 L.Ed.2d 296, 82 USLW 4508, 110 U.S.P.Q.2d 1976, 14 Cal. Daily Op. Serv. 6713, 2014 Daily
`Journal D.A.R. 7838, 24 Fla. L. Weekly Fed. S 870
`(Cite as: 134 S.Ct. 2347)
`“[M]onopolization 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 pri-
`mary object of the patent laws. Mayo, supra, at ––––,
`132 S.Ct., at 1923; see U.S. Const., Art. I, § 8, cl. 8
`(Congress “shall have Power ... To promote the Pro-
`gress of Science and useful Arts”). We have “repeat-
`edly emphasized this ... concern that patent law not
`inhibit further discovery by improperly tying up the
`future use of” these building blocks of human inge-
`nuity. Mayo, supra, at ––––, 132 S.Ct., at 1301 (citing
`Morse, supra, at 113).
`
`
`III
`[5][6] In Mayo Collaborative Services v. Pro-
`metheus Laboratories, Inc., 566 U.S. ––––, 132 S.Ct.
`1289, 182 L.Ed.2d 321 (2012), we set forth a frame-
`work for distinguishing patents that claim laws of
`nature, natural phenomena, and abstract ideas from
`those that claim patent-eligible applications of those
`concepts. First, we determine whether the claims at
`issue are directed to one of those patent-ineligible
`concepts. Id., at ––––, 132 S.Ct., at 1296–1297. If so,
`we then ask, “[w]hat else is there in the claims before
`us?” Id., at ––––, 132 S.Ct., at 1297. To answer that
`question, we consider the elements of each claim both
`individually and “as an ordered combination” to de-
`termine whether the additional elements “transform
`the nature of the claim” into a patent-eligible applica-
`tion. Id., at ––––, 132 S.Ct., at 1298, 1297. We have
`described step two of this analysis as 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.” Id., at ––––, 132
`S.Ct., at 1294.FN3
`
`
`[2][3] At the same time, we tread carefully in
`construing this exclusionary principle lest it swallow
`all of patent law. Mayo, 566 U.S., at ––––, 132 S.Ct.,
`at 1293–1294. At some level, “all inventions ... em-
`body, use, reflect, rest upon, or apply laws of nature,
`natural phenomena, or abstract ideas.” Id., at ––––,
`132 S.Ct., at 1293. Thus, an invention is not rendered
`ineligible for patent simply because it involves an
`abstract concept. See Diamond v. Diehr, 450 U.S. 175,
`187, 101 S.Ct. 1048, 67 L.Ed.2d 155 (1981).
`“[A]pplication[s]” of such concepts “ ‘to a new and
`useful end,’ ” we have said, remain eligible for patent
`protection. Gottschalk v. Benson, 409 U.S. 63, 67, 93
`S.Ct. 253, 34 L.Ed.2d 273 (1972).
`
`
`[4] Accordingly, in applying the § 101 exception,
`we must distinguish between patents that claim the “
`‘buildin[g] block[s]’ ” of human ingenuity and those
`that integrate the building blocks into something more,
`Mayo, 566 U.S., at ––––, 132 S.Ct., at 1303, thereby
`“transform[ing]” them into a patent-eligible invention,
`id., at ––––, 132 S.Ct., at 1294. The former “would
`risk disproportionately tying up the use of the under-
`lying” ideas, *2355 id., at ––––, 132 S.Ct., at 1294,
`and are therefore ineligible for patent protection. The
`latter pose no comparable risk of pre-emption, and
`therefore remain eligible for the monopoly granted
`under our patent laws.
`
`
`FN3. Because the approach we made explicit
`in Mayo considers all claim elements, both
`individually and in combination, it is con-
`sistent with the general rule that patent
`claims “must be considered as a whole.”
`Diamond v. Diehr, 450 U.S. 175, 188, 101
`S.Ct. 1048, 67 L.Ed.2d 155 (1981); see
`Parker v. Flook, 437 U.S. 584, 594, 98 S.Ct.
`2522, 57 L.Ed.2d 451 (1978) (“Our approach
`... is ... not at all inconsistent with the view
`that a patent claim must be considered as a
`whole”).
`
`
`
`A
`[7] We must first determine whether the claims at
`issue are directed to a patent-ineligible concept. We
`conclude that they are: These claims are drawn to the
`abstract idea of intermediated settlement.
`
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`134 S.Ct. 2347, 189 L.Ed.2d 296, 82 USLW 4508, 110 U.S.P.Q.2d 1976, 14 Cal. Daily Op. Serv. 6713, 2014 Daily
`Journal D.A.R. 7838,