  United States Court of Appeals
      for the Federal Circuit
                ______________________

           CLS BANK INTERNATIONAL,
                 Plaintiff-Appellee,

                          AND

               CLS SERVICES LTD.,
           Counterclaim Defendant-Appellee,

                           v.

         ALICE CORPORATION PTY. LTD.,
               Defendant-Appellant.
              ______________________

                      2011-1301
                ______________________

    Appeal from the United States District Court for the
District of Columbia in No. 07-CV-974, Judge Rosemary
M. Collyer.
                 ______________________

                Decided: May 10, 2013
                ______________________

    MARK A. PERRY, Gibson, Dunn & Crutcher LLP, of
Washington, DC, argued for plaintiff-appellee and coun-
terclaim-defendant appellee on rehearing en banc. With
him on the brief were BRIAN M. BUROKER, MICHAEL F.
MURRAY and ALEXANDER N. HARRIS. Of counsel on the
brief was MICHAEL A. VALEK, of Dallas, Texas.
2            CLS BANK INTERNATIONAL   v. ALICE CORPORATION


    ADAM L. PERLMAN, Williams & Connolly, LLP, of
Washington, DC, argued for defendant-appellant on
rehearing en banc. With him on the brief were BRUCE R.
GENDERSON, RYAN T. SCARBOROUGH, STANLEY E. FISHER
and DAVID M. KRINSKY. Of counsel on the brief were
CONSTANTINE L. TRELA, JR., Sidley Austin, LLP, of Chica-
go, Illinois and ROBERT E. SOKOHL, Sterne, Kessler,
Goldstein & Fox, PLLC, of Washington, DC.

     NATHAN K. KELLEY, Deputy Solicitor, Office of the So-
licitor, United States Patent and Trademark Office, of
Alexandria, Virginia, argued for United States Patent and
Trademark Office, for amicus curiae on rehearing en
banc. With him on the brief were BERNARD J. KNIGHT,
JR., General Counsel, RAYMOND T. CHEN, Solicitor, SCOTT
C. WEIDENFELLER, Senior Counsel for Patent Law, and
THOMAS E. KRAUSE, Special Counsel for IP Litigation. Of
counsel on the brief were BETH S. BRINKMANN, Deputy
Assistant Attorney General, SCOTT R. MCINTOSH and
MARK R. FREEMAN, Attorneys, Appellate Staff, Civil
Division, United States Department of Justice, of Wash-
ington, DC.

    STEPHEN R. STITES, Bluemont, Virginia, as amicus cu-
riae on rehearing en banc.

    JACK E. HAKEN, Philips Intellectual Property and
Standards, of Briarcliff Manor, New York, for amicus
curiae, Koninklijke Philips Electronics NV on rehearing
en banc. With him on the brief were MICHAEL FUERCH,
PAUL IM, and DAVID SCHREIBER.

    PAUL R. JUHASZ, The Juhasz Law Firm, P.C., of Hou-
ston, Texas, for amicus curiae The Juhasz Law Firm,
P.C., on rehearing en banc.
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION          3
    CHARLES W. SHIFLEY, Banner & Witcoff, LTD., of Chi-
cago, Illinois, for amicus curiae The Intellectual Property
Law Association of Chicago on rehearing en banc.

   MICHAEL R. DZWONCZYK, Sughrue Mion, PLLC, of
Washington, DC, for amicus curiae Sigram Schindler
Beteiligungsgesellschaft mbH on rehearing en banc.

    JULIE P. SAMUELS, Electronic Frontier Foundation, of
San Francisco, California, for amici curiae Electronic
Frontier Foundation, et al. on rehearing en banc. With
her on the brief was MICHAEL BARCLAY.

    CHARLES R. MACEDO, Amster, Rothstein & Ebenstein
LLP, of New York, New York, for amicus curiae New York
Intellectual Property Law Association on rehearing en
banc. With him on the brief was MICHAEL J. KASDAN. Of
counsel on the brief was ANTHONY F. LO CICERO, New
York Intellectual Property Law Association, of Fort Lee,
New Jersey.

   JOHN D. VANDENBERG, Klarquist Sparkman, LLP, of
Portland, Oregon, for amicus curiae British Airways,
PLC, et al. on rehearing en banc.

   MATTHEW SCHRUERS, Computer & Communications
Industry Association, (CCIA) for amicus curiae Computer
& Communications Industry Association on rehearing en
banc.

    DARYL JOSEFFER, King & Spalding LLP, of Washing-
ton, DC, for amici curiae Google Inc., et al. on rehearing
en banc. With him on the brief was ADAM CONRAD, of
Charlotte, North Carolina.

   GEORGE L. GRAFF, of Briarcliff Manor, New York, for
amicus curiae Intellectual Property Owners Association
4            CLS BANK INTERNATIONAL   v. ALICE CORPORATION

on rehearing en banc. With him on the brief were
RICHARD F. PHILLIPS, ExxonMobil Chemical Company, of
Houston, Texas and KEVIN H. RHODES, 3M Innovative
Properties Company, of St. Paul Minnesota.

    STEVEN C. SEREBOFF, SoCal IP Law Group LLP, of
Westlake Village, California, for amicus curiae Conejo
Valley Bar Association on rehearing en banc. With him
on the brief were MARK A. GOLDSTEIN, JONATHAN PEARCE
and M. KALA SARVAIYA.

   PAUL D. CLEMENT, Bancroft PLLC, of Washington,
DC, for amicus curiae International Business Machines
Corporation on rehearing en banc. With him on the brief
was D. ZACHARY HUDSON. Of counsel on the brief were
MANNY W. SCHECTER and KENNETH R. CORSELLO, IBM
Corporation, of Armonk, New York.

   ANDREW J. PINCUS, Mayer Brown LLP, of Washington,
DC, for amicus curiae BSA, et al. on rehearing en banc.
With him on the brief was PAUL W. HUGHES.

    SUSAN M. DAVIES, Kirkland & Ellis LLP, of Washing-
ton, DC, for amici curiae The Clearing House Association
L.L.C., et al. on rehearing en banc. With her on the brief
was LIAM P. HARDY.

    PETER K. TRZYNA, Attorney at Law, of Chicago, Illi-
nois, for amici curiae Professor Lee Hollaar, et al. on
rehearing en banc.

   PETER J. BRANN, Brann & Isaacson, of Lewiston,
Maine, for amici curiae Internet Retailers on rehearing en
banc. With him on the brief were DAVID SWETNAM-
BURLAND and STACY O. STITHAM.
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION         5
    ROBERT P. GREENSPOON, Flachsbart & Greenspoon,
LLC, of Chicago, Illinois, for amici curiae Telecommunica-
tion Systems, Inc., et al. on rehearing en banc.

    JERRY R. SELINGER, Patterson & Sheridan, LLP, of
Dallas, Texas, for amicus curiae American Intellectual
Property Law Association on rehearing en banc. With
him on the brief was GERO MCCLELLAN. Of counsel on the
brief was JEFFREY I.D. LEWIS, American Intellectual
Property Law Association, of Arlington, Virginia.

     DAVID E. BOUNDY, Cantor Fitzgerald, L.P., of New
York, New York, for amici curiae, BGC Partners, Inc., et
al. on rehearing en banc. With him on the brief was GARY
A. ROSEN, Law Offices of Gary A. Rosen, P.C., of Ardmore,
Pennsylvania.

    CHARLES K. VERHOEVEN, Quinn Emanuel Urquhart &
Sullivan, of San Francisco, California, for amicus curiae
Bancorp Services, LLC, on rehearing en banc. With him
on the brief was DAVID A. PERLSON. Of counsel on the
brief was IAN S. SHELTON, of Los Angeles, California.

     DALE R. COOK, ICT Law & Technology LLC, of Seat-
tle, Washington, for amicus curiae Dale R. Cook on re-
hearing en banc. With him on the brief was STEVEN F.
BORSAND, Trading Technologies International, Inc., of
Chicago, Illinois.

    ANN M. MCCRACKIN, of Minneapolis, Minnesota, for
amicus curiae University of New Hampshire School of
Law Intellectual Property Clinic on rehearing en banc.
With her on the brief was J. JEFFREY HAWLEY, University
of New Hampshire, of Concord, New Hampshire.
                ______________________
6              CLS BANK INTERNATIONAL   v. ALICE CORPORATION
Before RADER, Chief Judge, NEWMAN, LOURIE, LINN, DYK,
PROST, MOORE, O’MALLEY, REYNA, and WALLACH, Circuit
                       Judges. *

           Opinion for the court filed PER CURIAM.

 Concurring opinion filed by LOURIE, Circuit Judge, in
which DYK, PROST, REYNA, and WALLACH, Circuit Judges,
                         join.

Concurring-in-part and dissenting-in-part opinion filed by
RADER, Chief Judge, LINN, MOORE, and O’MALLEY, Circuit
Judges, as to all but part VI of that opinion. RADER, Chief
 Judge, and MOORE, Circuit Judge, as to part VI of that
                          opinion.

Dissenting-in-part opinion filed by MOORE, Circuit Judge,
 in which RADER, Chief Judge, and LINN and O’MALLEY,
                  Circuit Judges, join.

Concurring-in-part and dissenting-in-part opinion filed by
                NEWMAN, Circuit Judge.

    Dissenting opinion filed by LINN and O’MALLEY, Circuit
                            Judges.

      Additional reflections filed by RADER, Chief Judge.

PER CURIAM.

     Upon consideration en banc, a majority of the court
affirms the district court’s holding that the asserted
method and computer-readable media claims are not
directed to eligible subject matter under 35 U.S.C. § 101.


      * Circuit Judge Taranto did not participate in this
decision.
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION          7
An equally divided court affirms the district court’s hold-
ing that the asserted system claims are not directed to
eligible subject matter under that statute.

                      AFFIRMED
  United States Court of Appeals
      for the Federal Circuit
                 ______________________

            CLS BANK INTERNATIONAL,
                  Plaintiff-Appellee,

                          AND

                CLS SERVICES LTD.,
            Counterclaim Defendant-Appellee,

                            v.

         ALICE CORPORATION PTY. LTD.,
               Defendant-Appellant.
              ______________________

                       2011-1301
                 ______________________

    Appeal from the United States District Court for the
District of Columbia in No. 07-CV-974, Judge Rosemary
M. Collyer.
                 ______________________

                 Decided: May 10, 2013
                 ______________________

LOURIE, Circuit Judge, concurring, with whom Circuit
Judges DYK, PROST, REYNA, and WALLACH join.

     Alice Corporation (“Alice”) appeals from the grant of
summary judgment in favor of declaratory judgment
plaintiffs CLS Bank International and CLS Services, Ltd.
(collectively, “CLS”) by the United States District Court
2             CLS BANK INTERNATIONAL      v. ALICE CORPORATION
for the District of Columbia holding that certain claims of
Alice’s U.S. Patents 5,970,479 (the “’479 patent”),
6,912,510 (the “’510 patent”), 7,149,720 (the “’720 pa-
tent”), and 7,725,375 (the “’375 patent”) are invalid under
35 U.S.C. § 101. CLS Bank Int’l v. Alice Corp., 768 F.
Supp. 2d 221 (D.D.C. 2011). On July 9, 2012, a panel of
this court reversed, holding that the claims at issue,
including claims drawn to methods, computer-readable
media, and systems, were all patent eligible under § 101.
CLS Bank Int’l v. Alice Corp., 685 F.3d 1341 (Fed. Cir.
2012), vacated, 484 F. App’x 559 (Fed. Cir. 2012). CLS
filed a petition for rehearing en banc, which was granted
on October 9, 2012. CLS Bank Int’l v. Alice Corp., 484 F.
App’x 559 (Fed. Cir. 2012).

    As described more fully below, we would affirm the
district court’s judgment in its entirety and hold that the
method, computer-readable medium, and corresponding
system claims before us recite patent-ineligible subject
matter under 35 U.S.C. § 101. 1

                       BACKGROUND

                     I. Alice’s Patents

    Alice, an Australian company, owns the ’479, ’510,
’720, and ’375 patents by assignment. The patents, which


    1    While Chief Judge Rader is correct to note that no
single opinion issued today commands a majority, seven
of the ten members, a majority, of this en banc court have
agreed that the method and computer-readable medium
claims before us fail to recite patent-eligible subject
matter. In addition, eight judges, a majority, have con-
cluded that the particular method, medium, and system
claims at issue in this case should rise or fall together in
the § 101 analysis.
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION            3
all derive from the same family and share substantially
the same specification, concern “the management of risk
relating to specified, yet unknown, future events.” ’479
patent col. 1, ll. 8–10. In particular, the patents relate to
a computerized trading platform used for conducting
financial transactions in which a third party settles
obligations between a first and a second party so as to
eliminate “counterparty” or “settlement” risk. CLS Bank,
768 F. Supp. 2d at 224. Settlement risk refers to the risk
to each party in an exchange that only one of the two
parties will actually pay its obligation, leaving the paying
party without its principal or the benefit of the counter-
party’s performance. Alice’s patents address that risk by
relying on a trusted third party to ensure the exchange of
either both parties’ obligations or neither obligation. Id.

     For example, when two parties agree to perform a
trade, in certain contexts there may be a delay between
the time that the parties enter a contractual agreement
obligating themselves to the trade and the time of settle-
ment when the agreed trade is actually executed. Ordi-
narily, the parties would consummate the trade by paying
or exchanging their mutual obligations after the interven-
ing period, but in some cases one party might become
unable to pay during that time and fail to notify the other
before settlement. Id. As disclosed in Alice’s patents, a
trusted third party can be used to verify each party’s
ability to perform before actually exchanging either of the
parties’ agreed-upon obligations. Id.; see also ’479 patent
col. 5 ll. 61–63 (“The invention also encompasses appa-
ratus and method dealing with the handling of contracts
at maturity, and specifically the transfer of entitlement.”).

    The claims currently before the court include claims
33 and 34 of the ’479 patent and all claims of the ’510,
’720, and ’375 patents. The relevant claims of the ’479
and ’510 patents recite methods of exchanging obligations
between parties, the claims of the ’720 patent are drawn
4             CLS BANK INTERNATIONAL   v. ALICE CORPORATION
to data processing systems, and the claims of the ’375
patents claim data processing systems as well as comput-
er-readable media containing a program code for directing
an exchange of obligations.

              II. District Court Proceedings

     On May 24, 2007, CLS filed suit against Alice seeking
a declaratory judgment of noninfringement, invalidity,
and unenforceability as to the ’479, ’510, and ’720 patents.
Alice answered and counterclaimed, alleging infringe-
ment. By the agreement of the parties, the district court
allowed limited initial discovery, addressing only the
questions of (i) the operations of CLS, and (ii) CLS’s
relationship with the accused CLS system. CLS Bank
Int’l v. Alice Corp., No. 07-cv-00974 (D.D.C. Feb. 21,
2008), ECF No. 24 (Scheduling Order).

     In March 2009, following limited discovery, CLS
moved for summary judgment on the bases that any
possible infringement could not be said to have occurred
in the United States and that Alice’s asserted claims were
drawn to ineligible subject matter and therefore invalid
under 35 U.S.C. § 101. Alice filed cross-motions on both
issues. The district court denied CLS’s motion as to
extraterritoriality on October 13, 2009, finding that CLS’s
alleged infringing acts fell within the reach of domestic
patent law. CLS Bank Int’l v. Alice Corp., 667 F. Supp. 2d
29, 33–38 (D.D.C. 2009). Regarding subject-matter eligi-
bility under § 101, the district court summarily denied the
parties’ motions on June 16, 2009, without prejudice to re-
filing, after the Supreme Court granted certiorari to
review our decision in In re Bilski, 545 F.3d 943 (Fed. Cir.
2008) (en banc), cert. granted sub. nom. Bilski v. Doll, 129
S. Ct. 2735 (2009).

     In the meantime, the ’375 patent issued, and Alice
filed amended counterclaims additionally asserting that
 CLS BANK INTERNATIONAL    v. ALICE CORPORATION              5
CLS infringed each claim of the ’375 patent. After the
Supreme Court issued its decision in Bilski v. Kappos, 130
S. Ct. 3218 (2010), the parties renewed their cross-
motions for summary judgment on the question of validity
under § 101, with CLS adding invalidity contentions
drawn to the newly issued ’375 patent. Along with the
parties’ briefing, the district court also had before it (i) the
asserted patents themselves, (ii) excerpts from the pa-
tents’ prosecution histories, (iii) various guidelines issued
by the United States Patent and Trademark Office
(“PTO”) regarding the application of § 101 during patent
examination, and (iv) a declaration submitted by Alice’s
expert Paul Ginsberg. In particular, Mr. Ginsberg ex-
plained the operation of Alice’s systems and methods, see
generally CLS Bank, 768 F. Supp. 2d at 224, and opined
that a person of skill in the art reading the asserted
patents would conclude that the claimed inventions must
be implemented electronically using “some type of compu-
ting processor and memory.” Ginsberg Decl., ECF No. 95-
3, Ex. 1 ¶ 41.

    The district court did not conduct claim construction
before reaching the merits of the § 101 issue, but the
parties agreed for purposes of deciding their summary
judgment motions that Alice’s claims should all be inter-
preted to require a computer including at least “a proces-
sor and memory.” CLS Bank, 768 F. Supp. 2d at 236; see
id. at 235–36 (“The Court has yet to construe the terms of
these claims . . . . [F]or purposes of these motions, CLS
has agreed to assume a construction of terms favorable to
Alice.”). With the parties’ assent, the district court as-
sumed that all of the asserted claims required electronic
implementation, noting consistent disclosures in the
patents’ specifications as well as the statements of Alice’s
expert, Mr. Ginsberg. Id. at 236.

    With that understanding of the claims, the district
court granted summary judgment in favor of CLS, holding
6            CLS BANK INTERNATIONAL   v. ALICE CORPORATION
each of the asserted claims of Alice’s patents invalid
under § 101. The district court concluded that Alice’s
method claims “are directed to an abstract idea of employ-
ing an intermediary to facilitate simultaneous exchange
of obligations in order to minimize risk.” Id. at 243.
Further, the district court held the asserted system claims
similarly ineligible, as those claims “would preempt the
use of the abstract concept of employing a neutral inter-
mediary to facilitate simultaneous exchange of obligations
in order to minimize risk on any computer, which is, as a
practical matter, how these processes are likely to be
applied.” Id. at 252. The asserted media claims failed on
the same ground as “directed to the same abstract concept
despite the fact they nominally recite a different category
of invention.” Id. at 255.

    Accordingly, the district court entered final judgment
in favor of CLS, and Alice timely appealed. We have
jurisdiction under 28 U.S.C. § 1295(a)(1).

                       DISCUSSION

                  I. Standard of Review

     We review the grant or denial of summary judgment
applying the law of the relevant regional circuit. Teva
Pharm. Indus. v. AstraZeneca Pharm. LP, 661 F.3d 1378,
1381 (Fed. Cir. 2011). The D.C. Circuit considers a dis-
trict court’s grant of summary judgment without defer-
ence. Theodore Roosevelt Conservation P’ship v. Salazar,
661 F.3d 66, 72 (D.C. Cir. 2011). We apply our own law,
however, with respect to issues of substantive patent law.
Aero Prods. Int’l, Inc. v. Intex Recreation Corp., 466 F.3d
1000, 1016 (Fed. Cir. 2006). Patent eligibility under § 101
presents an issue of law that we review de novo. Bancorp
Servs., LLC v. Sun Life Assurance Co. of Can., 687 F.3d
1266, 1273 (Fed. Cir. 2012).
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION            7
                      II. Section 101

A. Statutory Subject Matter and Common Law Exceptions

    “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 require-
ments of this title.” 35 U.S.C. § 101 (2006). Short and
unadorned, § 101 appears deceptively simple on its face,
yet its proper application to computer-implemented
inventions and in various other fields of technology has
long vexed this and other courts.

    The statute sets forth four broadly stated categories of
patent-eligible subject matter: processes, machines,
manufactures, and compositions of matter. As the Su-
preme Court has explained, Congress intended that the
statutory categories would be broad and inclusive to best
serve the patent system’s constitutional objective of
encouraging innovation. See Diamond v. Chakrabarty,
447 U.S. 303, 308–09 (1980) (“In choosing such expansive
terms as ‘manufacture’ and ‘composition of matter,’ modi-
fied by the comprehensive ‘any,’ Congress plainly contem-
plated that the patent laws would be given wide scope.”);
Bilski, 130 S. Ct. at 3225 (“Congress took this permissive
approach to patent eligibility to ensure that ‘ingenuity
should receive a liberal encouragement.’” (quoting
Chakrabarty, 447 U.S. at 308)).

     It is also important to recognize that § 101, while far-
reaching, only addresses patent eligibility, not overall
patentability. The statute directs that an invention that
falls within one of its four enumerated categories “may”
qualify for a patent; thus, inventions that are patent
eligible are not necessarily patentable. As § 101 itself
explains, the ultimate question of patentability turns on
whether, in addition to presenting a patent-eligible inven-
8             CLS BANK INTERNATIONAL   v. ALICE CORPORATION
tion, the inventor also satisfies “the conditions and re-
quirements of this title,” namely, the novelty, nonobvi-
ousness, and disclosure requirements of 35 U.S.C. §§ 102,
103, and 112, among others. See 35 U.S.C. § 101. Con-
gress’s broad approach to subject-matter eligibility en-
sures that the patent office doors remain open to most
inventions, but even so, those that gain entry still must
surmount various substantive and procedural hurdles
that stand between patent eligibility and a valid patent.
See Diamond v. Diehr, 450 U.S. 175, 191 (1981).

    While the categories of patent-eligible subject matter
recited in § 101 are broad, their scope is limited by three
important judicially created exceptions. “[L]aws of na-
ture, natural phenomena, and abstract ideas” are exclud-
ed from patent eligibility, id. at 185, because such
fundamental discoveries represent “the basic tools of
scientific and technological work,” Gottschalk v. Benson,
409 U.S. 63, 67 (1972). Thus, even inventions that fit
within one or more of the statutory categories are not
patent eligible if drawn to a law of nature, a natural
phenomenon, or an abstract idea. The underlying concern
is that patents covering such elemental concepts would
reach too far and claim too much, on balance obstructing
rather than catalyzing innovation. But danger also lies in
applying the judicial exceptions too aggressively because
“all inventions at some level embody, use, reflect, rest
upon, or apply laws of nature, natural phenomena, or
abstract ideas.” Mayo Collaborative Servs. v. Prometheus
Labs., Inc., 132 S. Ct. 1289, 1293 (2012). Taken too far,
the exceptions could swallow patent law entirely.

     Accordingly, the basic steps in a patent-eligibility
analysis can be summarized as follows. We must first ask
whether the claimed invention is a process, machine,
manufacture, or composition of matter. If not, the claim
is ineligible under § 101. If the invention falls within one
of the statutory categories, we must then determine
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION            9
whether any of the three judicial exceptions nonetheless
bars such a claim—is the claim drawn to a patent-
ineligible law of nature, natural phenomenon, or abstract
idea? If so, the claim is not patent eligible. Only claims
that pass both inquiries satisfy § 101.

    While simple enough to state, the patent-eligibility
test has proven quite difficult to apply. The difficulty lies
in consistently and predictably differentiating between,
on the one hand, claims that would tie up laws of nature,
natural phenomena, or abstract ideas, and, on the other,
claims that merely “embody, use, reflect, rest upon, or
apply” those fundamental tools. Mayo, 132 S. Ct. at 1293.
For example, deciding whether or not a particular claim is
abstract can feel subjective and unsystematic, and the
debate often trends toward the metaphysical, littered
with unhelpful analogies and generalizations. What is
needed is a consistent, cohesive, and accessible approach
to the § 101 analysis—a framework that will provide
guidance and predictability for patent applicants and
examiners, litigants, and the courts. As set forth below,
the Supreme Court’s foundational § 101 jurisprudence
offers the guideposts to such a system, one that turns
primarily on the practical likelihood of a claim preempt-
ing a fundamental concept. We would adopt this ap-
proach to address the abstractness of the specific
computer-implemented inventions presented in this case,
but it might also inform patent-eligibility inquiries aris-
ing in other contexts.

         B. Foundational Section 101 Precedents

                  1. Gottschalk v. Benson

    In Benson, the Supreme Court considered claims to
computer-implemented methods “for converting binary-
coded decimal (BCD) numerals into pure binary numer-
als.” 409 U.S. at 64. The claims each recited a series of
10            CLS BANK INTERNATIONAL   v. ALICE CORPORATION
data manipulation steps for effecting the indicated nu-
merical conversion and “purported to cover any use of the
claimed method in a general-purpose digital computer of
any type.” Id.

    Analyzing the claimed processes in view of its histori-
cal precedents, the Supreme Court concluded that the
abstract ideas exception to patent eligibility applied. The
Court identified the particular abstraction at issue as the
freestanding “algorithm” or “generalized formulation” for
performing BCD to pure binary conversion. Id. at 65.
Next, the Court measured the scope of the claims against
the scope of that overarching abstract idea. In practice,
the claims were “so abstract and sweeping as to cover
both known and unknown uses of the BCD to pure binary
conversion” and would thus reach every application of the
basic conversion algorithm, in contrast to earlier cases
concerning patent-eligible process claims that had been
cabined to discrete applications “sufficiently definite to
confine the patent monopoly within rather definite
bounds.” Id. at 68–69. Furthermore, even though the
claims required a computer, 2 the Court did not view that
as a meaningful limitation: “The mathematical formula
involved here has no substantial practical application
except in connection with a digital computer, which
means that if the judgment below is affirmed, the patent
would wholly pre-empt the mathematical formula and in
practical effect would be a patent on the algorithm itself.”



     2   Claim 8 required a computer on its face, but the
literal terms of claim 13 were not so limited. See Benson,
409 U.S. at 73–74. The CCPA, however, had interpreted
both claims as requiring a computer and had upheld them
on that basis, see In re Benson, 441 F.2d 682, 687–88
(CCPA 1971), and the Supreme Court appeared to adopt
that assumption.
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION           11
Id. at 71–72. Accordingly, the claims were held ineligible
for patenting under § 101.

                     2. Parker v. Flook

    Six years later, in Parker v. Flook, 437 U.S. 584
(1978), the Supreme Court again considered the patent
eligibility of a computerized process—in particular, a
method for updating alarm limits for continuously moni-
tored industrial process variables (e.g., temperature or
pressure) according to a disclosed mathematical formula.
See id. at 585–86. The claim required three steps: meas-
uring the present value of a process variable, using the
mathematical formula to calculate a new alarm limit in
view of the present value, and adjusting the previous
alarm limit to the newly calculated limit. Id.; see also id.
at 596–97 (claim 1). A further preamble limitation re-
stricted the claim to processes “comprising the catalytic
chemical conversion of hydrocarbons,” id. at 596, so the
claim did not cover “every conceivable application of the
formula,” id. at 586.

    Although the claim would not “wholly preempt” the
mathematical formula, id. at 589, the Court nonetheless
held that the claimed process fell under the abstract ideas
exception to patent eligibility. In its analysis, the Court
viewed the formula as an abstract principle and stated
that the case must “be considered as if the principle or
mathematical formula were well known.” Id. at 592. The
Court then asked whether, to confer patent eligibility, the
claim contained sufficient substance beyond the abstract
mathematical formula itself—that is, “some other in-
ventive concept in its application.” Id. at 594; see also id.
at 590 (“A competent draftsman could attach some form of
post-solution activity to almost any mathematical formula
. . . .”). Concluding that the field-of-use, monitoring,
adjusting, and computer limitations were trivial or “well
known” under such an analysis, the Court held that the
12            CLS BANK INTERNATIONAL   v. ALICE CORPORATION
claims were not patent eligible: “[I]f a claim is directed
essentially to a method of calculating, using a mathemati-
cal formula, even if the solution is for a specific purpose,
the claimed method is nonstatutory.” Id. at 594–95
(quoting In re Richman, 563 F.2d 1026, 1030 (CCPA
1977)).

                   3. Diamond v. Diehr

     The claims at issue in Diehr were drawn to processes
for curing synthetic rubber that included “the use of a
mathematical formula and a programmed digital comput-
er.” 450 U.S. at 177. The claimed methods included steps
for operating a rubber molding press that included con-
stantly determining the temperature inside the mold,
repetitively calculating the necessary cure time using a
mathematical formula known as the Arrhenius equation,
and opening the press whenever the elapsed cure time
equaled the calculated necessary cure time. See id. at 179
n.5.

    The Supreme Court held the claims to be patent eligi-
ble, a conclusion that was “not altered by the fact that in
several steps of the process a mathematical equation and
a programmed digital computer are used.” Id. at 185. In
contrast to Benson and Flook, the claims in Diehr em-
ployed a mathematical concept but did “not seek to pre-
empt the use of that equation. Rather, they [sought] only
to foreclose from others the use of that equation in con-
junction with all of the other steps in their claimed pro-
cess.” Id. at 187. In particular, the Court distinguished
Flook on the basis that the claim there provided no sub-
stantive details regarding the method’s actual perfor-
mance—rather, “‘[a]ll that it provides is a formula for
computing an updated alarm limit.’” See id. at 186–87
(quoting Flook, 437 U.S. at 586). In contrast, in Diehr,
the claimed process incorporating the Arrhenius equation
also called for steps including “constantly measuring the
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION           13
actual temperature inside the mold,” a step that was said
to be new in the art. See id. at 178–79.

    The Court also explained that a claim “does not be-
come nonstatutory simply because it uses a mathematical
formula, computer program, or digital computer” because
“an application of a law of nature or mathematical formu-
la to a known structure or process may well be deserving
of patent protection.” Id. at 187. Because the applicant
claimed a specific application, rather than an abstract
idea in isolation, the claims satisfied § 101.

                    4. Bilski v. Kappos

    Bilski concerned claims to processes for participants
in energy commodities markets to hedge against the risk
of price changes in those commodities. The claims recited
the hedging strategy as a series of steps involving trans-
actions between a commodity provider and commodity
consumers and between the commodity provider and
other market participants “having a counter-risk position”
to the consumers in order to balance risk; other claims
articulated the hedging strategy as “a simple mathemati-
cal formula.” 130 S. Ct. at 3223–24. The claims did not
require a computer.

    Applying Benson, Flook, and Diehr, the Supreme
Court held that the claims failed to recite a patent-eligible
process because they covered the abstract idea of hedging
against risk. “Allowing [the claims] would pre-empt use
of this approach in all fields, and would effectively grant a
monopoly over an abstract idea.” Id. at 3231. In addition,
the Court reiterated Flook’s admonition that such claims
cannot be made patent eligible by “limiting an abstract
idea to one field of use or adding token postsolution
components.” Id. The Court therefore affirmed the
rejection of the claims at issue under § 101.
14            CLS BANK INTERNATIONAL   v. ALICE CORPORATION
                  5. Mayo v. Prometheus

     The Supreme Court’s most recent guidance regarding
patent eligibility drew heavily on the foregoing precedents
in applying the “laws of nature” exception to claims
covering medical diagnostic methods. The claims in Mayo
recited methods for optimizing thiopurine administration
in a patient based on a natural correlation between the
therapeutic efficacy of a particular dose of a thiopurine
and the resulting concentration of thiopurine metabolites
in the patient’s blood. Too little metabolite and the dose
was insufficient; too much suggested that the dose should
be reduced to avoid toxicity. Mayo, 132 S. Ct. at 1294–95.
Accordingly, the claims recited the specific steps of admin-
istering the thiopurine drug and determining the result-
ing metabolite concentration in the patient’s blood,
wherein a concentration above or below predefined
thresholds indicated a need to adjust the drug dose. See
id. at 1295 (claim 1).

    The Supreme Court held that those claims failed the
§ 101 test for subject-matter eligibility. The Court began
its analysis by noting that the claims “set forth laws of
nature—namely, relationships between concentrations of
certain metabolites in the blood and the likelihood that a
dosage of a thiopurine drug will prove ineffective or cause
harm.” Id. at 1296. Therefore, the question was “whether
the claims do significantly more than simply describe
these natural relations”; did they “add enough” to the
natural law to render the claimed processes patent eligi-
ble? Id. at 1297. Examining the other limitations, the
Court concluded that the “administering” and “determin-
ing” steps were insufficiently limiting or inventive to
confer patent eligibility: “Anyone who wants to make use
of these [natural] laws must first administer a thiopurine
drug and measure the resulting metabolite concentra-
tions, and so the combination amounts to nothing signifi-
cantly more than an instruction to doctors to apply the
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION          15
applicable laws when treating their patients.” Id. at
1298. Because these additional steps were mere “routine,
conventional activity previously engaged in by scientists
who work in the field,” the Court concluded that they did
not transform the law of nature into a patent-eligible
application of that law. Id.

           C. An Integrated Approach to § 101

   Several common themes that run through the Su-
preme Court’s decisions should frame our analysis in this
and other § 101 cases.

    First and foremost is an abiding concern that patents
should not be allowed to preempt the fundamental tools of
discovery—those must remain “free to all . . . and reserved
exclusively to none.” Funk Bros. Seed Co. v. Kalo Inocu-
lant Co., 333 U.S. 127, 130 (1948). Preemption features
prominently in the Supreme Court’s recent § 101 deci-
sions, see Mayo, 132 S. Ct. at 1301 (“The Court has re-
peatedly emphasized . . . a concern that patent law not
inhibit further discovery by improperly tying up the
future use of laws of nature.”); Bilski, 130 S. Ct. at 3231
(concluding that the disputed claims “would pre-empt
[risk hedging] in all fields, and would effectively grant a
monopoly over an abstract idea”); Diehr, 450 U.S. at 187
(“Their process admittedly employs a well-known mathe-
matical equation, but they do not seek to pre-empt the use
of that equation.”); Benson, 409 U.S. at 72 (“[I]f the judg-
ment below is affirmed, the patent would wholly pre-empt
the mathematical formula and in practical effect would be
a patent on the algorithm itself.”), and traces back to the
earliest judicial decisions addressing subject-matter
eligibility, see, e.g., O’Reilly v. Morse, 56 U.S. 62, 113
(1853) (rejecting a claim that would have broadly con-
ferred “a monopoly” in the use of electromagnetism,
“however developed, for the purpose of printing at a
distance”). Guarding against the wholesale preemption of
16            CLS BANK INTERNATIONAL   v. ALICE CORPORATION
fundamental principles should be our primary aim in
applying the common law exceptions to § 101.

    To be clear, the proper focus is not preemption per se,
for some measure of preemption is intrinsic in the statu-
tory right granted with every patent to exclude competi-
tors, for a limited time, from practicing the claimed
invention. See 35 U.S.C. § 154. Rather, the animating
concern is that claims should not be coextensive with a
natural law, natural phenomenon, or abstract idea; a
patent-eligible claim must include one or more substan-
tive limitations that, in the words of the Supreme Court,
add “significantly more” to the basic principle, with the
result that the claim covers significantly less. See Mayo
132 S. Ct. at 1294. Thus, broad claims do not necessarily
raise § 101 preemption concerns, and seemingly narrower
claims are not necessarily exempt. What matters is
whether a claim threatens to subsume the full scope of a
fundamental concept, and when those concerns arise, we
must look for meaningful limitations that prevent the
claim as a whole from covering the concept’s every practi-
cal application. See id. at 1302 (“The laws of nature at
issue here are narrow laws that may have limited appli-
cations, but the patent claims that embody them nonethe-
less implicate this concern.”).

    Next, the cases repeatedly caution against overly for-
malistic approaches to subject-matter eligibility that
invite manipulation by patent applicants. Allowing the
determination of patent eligibility to “depend simply on
the draftsman’s art . . . would ill serve the principles
underlying the prohibition against patents for ‘ideas’ or
phenomena of nature.” Flook, 437 U.S. at 593. Thus,
claim drafting strategies that attempt to circumvent the
basic exceptions to § 101 using, for example, highly styl-
ized language, hollow field-of-use limitations, or the
recitation of token post-solution activity should not be
credited. See Bilski, 130 S. Ct. at 3230 (“[T]he prohibition
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION          17
against patenting abstract ideas ‘cannot be circumvented
by attempting to limit the use of the formula to a particu-
lar technological environment’ or adding ‘insignificant
postsolution activity.’” (quoting Diehr, 450 U.S. at 191–
92)); Flook, 437 U.S. at 590 (rejecting such an approach as
“exalt[ing] form over substance”). The Supreme Court’s
precedents require that we look past such devices when
analyzing a claim to consider its true practical effect with
respect to the purpose of § 101—preserving the “basic
tools” of scientific discovery for common use.

    Finally, the cases urge a flexible, claim-by-claim ap-
proach to subject-matter eligibility that avoids rigid line
drawing. Bright-line rules may be simple to apply, but
they are often impractical and counterproductive when
applied to § 101. Such rules risk becoming outdated in
the face of continual advances in technology—they risk
“freez[ing] process patents to old technologies, leaving no
room for the revelations of the new, onrushing technolo-
gy.” Benson, 409 U.S. at 71. Stringent eligibility formu-
las may also lead to misplaced focus, requiring courts to
“pose questions of such intricacy and refinement that they
risk obscuring the larger object of securing patents for
valuable inventions without transgressing the public
domain.” Bilski, 130 S. Ct. at 3227. Accordingly, the
Supreme Court has rejected calls for a categorical exclu-
sion of so-called business method claims and has held that
the formulaic “machine-or-transformation” test cannot be
the exclusive means for determining the patent eligibility
of process claims. Id. at 3227–29. What is needed is a
flexible, pragmatic approach that can adapt and account
for unanticipated technological advances while remaining
true to the core principles underlying the fundamental
exceptions to § 101.

    With these basic principles in mind, the following
analysis should apply in determining whether a comput-
er-implemented claim recites patent-eligible subject
18           CLS BANK INTERNATIONAL   v. ALICE CORPORATION
matter under § 101 or falls into the common law exception
for abstract ideas.

     The first question is whether the claimed invention
fits within one of the four statutory classes set out in
§ 101. Assuming that condition is met, the analysis turns
to the judicial exceptions to subject-matter eligibility. A
preliminary question in applying the exceptions to such
claims is whether the claim raises § 101 abstractness
concerns at all. Does the claim pose any risk of preempt-
ing an abstract idea? In most cases, the answer plainly
will be no. Cf. Honeywell Inc. v. Sperry Rand Corp., No.
4-67-cv-138, 180 USPQ 673, 1973 WL 903 (D. Minn. Oct.
19, 1973) (early computer hardware patents).

    Where bona fide § 101 concerns arise, however, it is
important at the outset to identify and define whatever
fundamental concept appears wrapped up in the claim so
that the subsequent analytical steps can proceed on a
consistent footing. Section 101 is concerned as much with
preserving narrow “basic tools” as it is with abstract
concepts that have far-reaching implications—for exam-
ple, risk hedging or transmitting information at a dis-
tance using electricity—and the breadth of acceptable
exclusion may vary accordingly. See Mayo, 132 S. Ct. at
1302–03. In short, one cannot meaningfully evaluate
whether a claim preempts an abstract idea until the idea
supposedly at risk of preemption has been unambiguously
identified. Although not required, conducting a claim
construction analysis before addressing § 101 may be
especially helpful in this regard by facilitating a full
understanding of what each claim entails. See Bancorp,
687 F.3d at 1273–74.

    The § 101 inquiry next proceeds to the requisite
preemption analysis. With the pertinent abstract idea
identified, the balance of the claim can be evaluated to
determine whether it contains additional substantive
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION            19
limitations that narrow, confine, or otherwise tie down
the claim so that, in practical terms, it does not cover the
full abstract idea itself. See Mayo, 132 S. Ct. at 1300
(discussing a patent-eligible process claim that involved a
law of nature but included additional steps “that confined
the claims to a particular, useful application of the princi-
ple”); Bilski, 130 S. Ct. at 3231 (rejecting claims that “add
[too little] to the underlying abstract principle”); Diehr,
450 U.S. at 187 (“[T]hey do not seek to pre-empt the use of
that equation. Rather, they seek only to foreclose from
others the use of that equation in conjunction with all of
the other steps in their claimed process.”).

    The requirement for substantive claim limitations be-
yond the mere recitation of a disembodied fundamental
concept has “sometimes” been referred to as an “inventive
concept.” See Mayo, 132 S. Ct. at 1294 (citing Flook, 437
U.S. at 594). We do not read the Court’s occasional use of
that language in the § 101 context as imposing a require-
ment that such limitations must necessarily exhibit
“inventiveness” in the same sense as that term more
commonly applies to two of the statutory requirements for
patentability, i.e., novelty and nonobviousness. See 35
U.S.C. §§ 102, 103. The phrase “inventive concept” origi-
nated with Flook, yet the Court began its discussion of
§ 101 in that case by stating that the question of patent-
eligible subject matter “does not involve the familiar
issues of novelty and obviousness that routinely arise
under §§ 102 and 103.” 437 U.S. at 588. The Court has
since reiterated that those separate inquiries do not bear
on the question of subject-matter eligibility under § 101.
Diehr, 450 U.S. at 188–89 (“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 patent-
able subject matter.”); id. at 191 (“A rejection on either of
these [anticipation or obviousness] grounds does not affect
the determination that respondents’ claims recited subject
20            CLS BANK INTERNATIONAL    v. ALICE CORPORATION
matter which was eligible for patent protection under
§ 101.”); see also Mayo, 132 S. Ct. at 1298–1300, 1302
(holding was consistent with Diehr and Flook and did not
“depart from case law precedent”).

    An “inventive concept” in the § 101 context refers to a
genuine human contribution to the claimed subject mat-
ter. “The underlying notion is that a scientific principle . .
. reveals a relationship that has always existed.” Flook,
437 U.S. at 593 n.15. From that perspective, a person
cannot truly “invent” an abstract idea or scientific truth.
He or she can discover it, but not invent it. Accordingly,
an “inventive concept” under § 101—in contrast to what-
ever fundamental concept is also represented in the
claim—must be “a product of human ingenuity.” See
Chakrabarty, 447 U.S. at 309.

     In addition, that human contribution must represent
more than a trivial appendix to the underlying abstract
idea. The § 101 preemption analysis centers on the
practical, real-world effects of the claim. See, e.g., Mayo,
132 S. Ct. at 1294 (“[A] process that focuses upon the use
of a natural law [must] also contain other elements . . .
sufficient to ensure that the patent in practice amounts to
significantly more than a patent upon the natural law
itself.”); Bilski, 130 S. Ct. at 3231 (rejecting claims that
would “effectively grant a monopoly over an abstract
idea”); Benson, 409 U.S. at 71–72 (“[T]he patent . . . in
practical effect would be a patent on the algorithm it-
self.”). Limitations that represent a human contribution
but are merely tangential, routine, well-understood, or
conventional, or in practice fail to narrow the claim rela-
tive to the fundamental principle therein, cannot confer
patent eligibility.

    For example, the “administering” and “determining”
steps in Mayo might have appeared to be concrete limita-
tions representing true human contributions to the
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION          21
claimed methods; it is difficult to see how giving a par-
ticular man-made drug to a patient or drawing and test-
ing blood could be considered purely abstract or
preordained. Yet the Court held that those steps failed to
render the claims patent eligible because, as a practical
matter, they were necessary to every practical use of what
it found to be a natural law and therefore were not truly
limiting. Mayo, 132 S. Ct. at 1298 (“Anyone who wants to
make use of these laws must first administer a thiopurine
drug and measure the resulting metabolite concentrations
. . . .”); see also Benson, 409 U.S. at 71 (noting that the
“mathematical formula involved here has no substantial
practical application except in connection with a digital
computer”). Also in Mayo, the Court instructed that the
added steps, apart from the natural law itself, must
amount to more than “well-understood, routine, conven-
tional activity previously engaged in by researchers in the
field.” 132 S. Ct. at 1294. Similarly, token or trivial
limitations, see Diehr, 450 U.S. at 191–92 (stating that
“insignificant post-solution activity will not transform an
unpatentable principle into a patentable process”), or
vague limitations cast in “highly general language,” Mayo,
132 S. Ct. at 1302, have failed to satisfy § 101. Finally,
bare field-of-use limitations cannot rescue a claim from
patent ineligibility where the claim as written still effec-
tively preempts all uses of a fundamental concept within
the stated field. Bilski, 130 S. Ct. at 3230 (discussing
Flook and Diehr). Whether a particular claim satisfies
the § 101 standard will vary based on the balance of
factors at play in each case, and the fact that there is no
easy bright-line test simply emphasizes the need for the
PTO and the courts to apply the flexible analysis above to
the facts at hand.

    Thus, the Supreme Court used the language “routine”
and “conventional” in Mayo to indicate what qualities
added to a natural law do not create patent-eligible sub-
ject matter. See Mayo, 132 S. Ct. at 1298. We do not
22            CLS BANK INTERNATIONAL    v. ALICE CORPORATION
therefore understand that language to be confused with
novelty or nonobviousness analyses, which consider
whether particular steps or physical components together
constitute a new or nonobvious invention. Analyzing
patent eligibility, in contrast, considers whether steps
combined with a natural law or abstract idea are so
insignificant, conventional, or routine as to yield a claim
that effectively covers the natural law or abstract idea
itself.

     Two other considerations are worth noting with re-
spect to the § 101 analysis. First, some have argued that
because § 101 is a “threshold test,” Bilski, 130 S. Ct. at
3225, district courts must always consider subject-matter
eligibility first among all possible bases for finding inva-
lidity. That is not correct. District courts are rightly
entrusted with great discretion to control their dockets
and the conduct of proceedings before them, including the
order of issues presented during litigation. See, e.g.,
Amado v. Microsoft Corp., 517 F.3d 1353, 1358 (Fed. Cir.
2008) (“District courts . . . are afforded broad discretion to
control and manage their dockets, including the authority
to decide the order in which they hear and decide issues
pending before them.”). In addition, district courts may
exercise their discretion to begin elsewhere when they
perceive that another section of the Patent Act might
provide a clearer and more expeditious path to resolving a
dispute. See MySpace, Inc. v. GraphOn Corp., 672 F.3d
1250, 1258–62 (Fed. Cir. 2012); Dennis Crouch & Robert
P. Merges, Operating Efficiently Post-Bilski by Ordering
Patent Doctrine Decision-Making, 25 Berkeley Tech. L.J.
1673 (2010).

    Second, it bears remembering that all issued patent
claims receive a statutory presumption of validity. 35
U.S.C. § 282; Microsoft Corp. v. i4i Ltd. P’ship, 131 S. Ct.
2238 (2011). And, as with obviousness and enablement,
that presumption applies when § 101 is raised as a basis
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION          23
for invalidity in district court proceedings. See OSRAM
Sylvania, Inc. v. Am. Induction Techs., Inc., 701 F.3d 698,
706 (Fed. Cir. 2012) (obviousness); Nat’l Recovery Techs.,
Inc. v. Magnetic Separation Sys., Inc., 166 F.3d 1190,
1195 (Fed. Cir. 1999) (enablement).

                          *   *   *

     Applying the above considerations to assess the pa-
tent eligibility of the specific computer-implemented
claims at issue in this appeal, we conclude that the dis-
trict court correctly held that the asserted claims drawn
to methods, computer-readable media, and systems are
not patent eligible and are hence invalid under § 101.

                 III. The Patents in Suit

     In this case, Alice has asserted four patents against
CLS. As described, the asserted patents share substan-
tially the same specification and disclose and claim com-
puterized methods, computer-readable media, and
systems that are useful for conducting financial transac-
tions using a third party to settle obligations between a
first and second party so as to mitigate “settlement risk.”
Briefly, the asserted claims are as follows: claims 33 and
34 of the ’479 patent recite methods; all claims of the ’510
patent also recite methods; all claims of the ’720 patent
recite data processing systems; and the claims of the ’375
patent recite either data processing systems (claims 1–38
and 42–47) or computer-readable storage media having a
computer program stored therein (claims 39–41). CLS
contends that the asserted claims fall into the abstract
ideas exception to § 101 and are therefore invalid as
directed to patent-ineligible subject matter.
24             CLS BANK INTERNATIONAL   v. ALICE CORPORATION
                      A. Method Claims

    Claim 33 of the ’479 patent is representative of the
asserted method claims:
     33. A method of exchanging obligations as be-
     tween 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 compris-
     ing 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 institu-
          tion 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 adjust-
          ing each respective party's shadow credit rec-
          ord 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 ones of the exchange institutions
          to exchange credits or debits to the credit rec-
          ord and debit record of the respective parties
          in accordance with the adjustments of the said
          permitted transactions, the credits and debits
          being irrevocable, time invariant obligations
          placed on the exchange institutions.
’479 patent col. 65 ll. 23–50. The claim thus recites a
method for facilitating a previously arranged exchange
between two parties requiring the use of “shadow” records
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION            25
maintained by a third-party “supervisory institution.”
Briefly, the claimed process requires the supervisory
institution to create shadow records for each party that
mirror the parties’ real-world accounts held at their
respective “exchange institutions.” At the start of each
day, the supervisory institution updates its shadow
records to reflect the value of the parties’ respective
accounts. Transactions are then referred to the supervi-
sory institution for settlement throughout the day, and
the supervisory institution responds to each in sequence
by adjusting the shadow records and permitting only
those transactions for which the parties’ updated shadow
records indicate sufficient resources to satisfy their mutu-
al obligations. At the end of each day, the supervisory
institution irrevocably instructs the exchange institutions
to carry out the permitted transactions. Although claim
33 does not expressly recite any computer-based steps, 3
the parties have agreed that the recited shadow records
and transactions require computer implementation. CLS
Bank, 768 F. Supp. 2d at 236.

    Claim 33 plainly recites a process. The issue present-
ed then becomes whether that process amounts to no
more than a patent-ineligible abstract idea. As described,
the first step in that analysis requires identifying the
abstract idea represented in the claim. The methods
claimed here draw on the abstract idea of reducing set-
tlement risk by effecting trades through a third-party
intermediary (here, the supervisory institution) empow-
ered to verify that both parties can fulfill their obligations
before allowing the exchange—i.e., a form of escrow. CLS


    3  The method claims of the ’510 patent state that
the supervisory institution “electronically adjust[s]” the
shadow records. E.g., ’510 patent col. 64 ll. 11–12.
26            CLS BANK INTERNATIONAL   v. ALICE CORPORATION
describes that concept as “fundamental and ancient,” but
the latter is not determinative of the question of abstract-
ness. Even venerable concepts, such as risk hedging in
commodity transactions, see Bilski, 130 S. Ct. at 3231,
were once unfamiliar, just like the concepts inventors are
unlocking at the leading edges of technology today. But
whether long in use or just recognized, abstract ideas
remain abstract. The concept of reducing settlement risk
by facilitating a trade through third-party intermediation
is an abstract idea because it is a “disembodied” concept,
In re Alappat, 33 F.3d 1526, 1544 (Fed. Cir. 1994) (en
banc), a basic building block of human ingenuity, unteth-
ered from any real-world application. Standing alone,
that abstract idea is not patent-eligible subject matter.

    The analysis therefore turns to whether the balance of
the claim adds “significantly more.” Apart from the idea
of third-party intermediation, the claim’s substantive
limitations require creating shadow records, using a
computer to adjust and maintain those shadow records,
and reconciling shadow records and corresponding ex-
change institution accounts through end-of-day transac-
tions.   None of those limitations adds anything of
substance to the claim.

    First, the requirement for computer implementation
could scarcely be introduced with less specificity; the
claim lacks any express language to define the computer’s
participation. In a claimed method comprising an ab-
stract idea, generic computer automation of one or more
steps evinces little human contribution. There is no
specific or limiting recitation of essential, see SiRF Tech.,
Inc. v. Int’l Trade Comm’n, 601 F.3d 1319, 1332–33 (Fed.
Cir. 2010), or improved computer technology, see Research
Corp. Techs., Inc. v. Microsoft Corp., 627 F.3d 859, 865,
868–69 (Fed. Cir. 2010), and no reason to view the com-
puter limitation as anything but “insignificant post-
solution activity” relative to the abstract idea, see Fort
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION           27
Props., Inc. v. Am. Master Lease LLC, 671 F.3d 1317,
1323–24 (Fed. Cir. 2012). Furthermore, simply append-
ing generic computer functionality to lend speed or effi-
ciency to the performance of an otherwise abstract
concept does not meaningfully limit claim scope for pur-
poses of patent eligibility. Bancorp, 687 F.3d at 1278;
Dealertrack, Inc. v. Huber, 674 F.3d 1315, 1333 (Fed. Cir.
2012); Fort Props., 671 F.3d at 1323–24. That is particu-
larly apparent in this case. Because of the efficiency and
ubiquity of computers, essentially all practical, real-world
applications of the abstract idea implicated here would
rely, at some level, on basic computer functions—for
example, to quickly and reliably calculate balances or
exchange data among financial institutions. At its most
basic, a computer is just a calculator capable of perform-
ing mental steps faster than a human could. Unless the
claims require a computer to perform operations that are
not merely accelerated calculations, a computer does not
itself confer patent eligibility. In short, the requirement
for computer participation in these claims fails to supply
an “inventive concept” that represents a nontrivial, non-
conventional human contribution or materially narrows
the claims relative to the abstract idea they embrace.

    Nor does requiring the supervisory institution to cre-
ate and adjust a “shadow credit record” and a “shadow
debit record” narrow the claims from the realm of abstrac-
tion. With the term “shadow record,” the claim uses
extravagant language to recite a basic function required
of any financial intermediary in an escrow arrangement—
tracking each party’s obligations and performance.
Viewed properly as reciting no more than the necessary
tracking activities of a supervisory institution, the steps
relating to creating a “shadow record” and then obtaining
and adjusting its balance are insignificant “‘[pre]-solution
activity,’” Mayo, 132 S. Ct. at 1298 (alteration in original)
(quoting Flook, 437 U.S. at 590), and ancillary “data-
gathering steps,” CyberSource Corp. v. Retail Decisions,
28            CLS BANK INTERNATIONAL    v. ALICE CORPORATION
Inc., 654 F.3d 1366, 1370 (Fed. Cir. 2011), and therefore
add nothing of practical significance to the underlying
idea of reducing settlement risk through intermediation.

    Finally, providing end-of-day instructions to the ex-
change institutions to reconcile the parties’ real-world
accounts with the day’s accumulated adjustments to their
shadow records is a similarly trivial limitation that does
not distinguish the claimed method. According to the
claim, each permitted transaction during the day prompts
corresponding shadow record adjustments, which the
exchange institutions must honor as “irrevocable” pay-
ment obligations. E.g., ’479 patent col. 65 ll. 36–50.
Whether the instructions are issued in real time, every
two hours, or at the end of every day, there is no indica-
tion in the record that the precise moment chosen to
execute those payments makes any significant difference
in the ultimate application of the abstract idea.

    In sum, there is nothing in the asserted method
claims that represents “significantly more” than the
underlying abstract idea for purposes of § 101. But for
the implied requirement for computer implementation,
the broad, non-technical method claims presented here
closely resemble those in Bilski, which also explained a
“basic concept of . . . protecting against risk.” 130 S. Ct. at
3231. And, as described, adding generic computer func-
tions to facilitate performance provides no substantial
limitation and therefore is not “enough” to satisfy § 101.
As in Bilski, upholding Alice’s claims to methods of finan-
cial intermediation “would pre-empt use of this approach
in all fields, and would effectively grant a monopoly over
an abstract idea.” Id. Consequently, the method claims
are drawn to patent-ineligible subject matter and invalid
under § 101.

    We note that, while other opinions of judges in this
case use different language and reasoning, two other
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION             29
judges, in addition to those joining this opinion, join in the
result of patent ineligibility as to Alice’s asserted method
claims.

          B. Computer-Readable Medium Claims

    Claims 39–41 of the ’375 patent are so-called “Beaure-
gard claims,” named for In re Beauregard, 53 F.3d 1583
(Fed. Cir. 1995). Claims in Beauregard format formally
recite a tangible article of manufacture—a computer-
readable medium, such as a computer disk or other data
storage device—but such claims also require the device to
contain a computer program for directing a computer to
carry out a specified process. Claim 39 of the ’375 patent
reads:
    39. A computer program product comprising a
    computer readable storage medium having com-
    puter readable program code embodied in the me-
    dium for use by a party to exchange an obligation
    between a first party and a second party, the
    computer program product comprising:
    program code for causing a computer to send a
        transaction from said first party relating to an
        exchange obligation arising from a currency
        exchange transaction between said first party
        and said second party; and
    program code for causing a computer to allow
        viewing of information relating to processing,
        by a supervisory institution, of said exchange
        obligation, wherein said processing includes
        (1) maintaining information about a first ac-
        count for the first party, independent from a
        second account maintained by a first exchange
        institution, and information about a third ac-
        count for the second party, independent from
        a fourth account maintained by a second ex-
        change institution; (2) electronically adjusting
30            CLS BANK INTERNATIONAL   v. ALICE CORPORATION
       said first account and said third account, in
       order to effect an exchange obligation arising
       from said transaction between said first party
       and said second party, after ensuring that
       said first party and/or said second party have
       adequate value in said first account and/or
       said third account, respectively; and (3) gen-
       erating an instruction to said first exchange
       institution and/or said second exchange insti-
       tution to adjust said second account and/or
       said fourth account in accordance with the ad-
       justment of said first account and/or said third
       account, wherein said instruction being an ir-
       revocable, time invariant obligation placed on
       said first exchange institution and/or said sec-
       ond exchange institution.
’375 patent col. 68 ll. 5–35 (emphasis added).

    Claim 39 thus nominally recites as its subject matter
a physical device—a “computer readable storage medium”
that would fall into a § 101 category separate from the
methods discussed above and would at first blush seem
less susceptible to abstractness concerns. But under
§ 101 we must look past drafting formalities and let the
true substance of the claim guide our analysis. Here,
although the claim’s preamble appears to invoke a physi-
cal object, the claim term “computer readable storage
medium” is stated in broad and functional terms—
incidental to the claim—and every substantive limitation
presented in the body of the claim (as well as in depend-
ent claims 40 and 41) pertains to the method steps of the
program code “embodied in the medium.” Therefore,
claim 39 is not “truly drawn to a specific computer reada-
ble medium, rather than to the underlying method” of
reducing settlement risk using a third-party intermedi-
ary. CyberSource, 654 F.3d at 1374–75 (internal quota-
tion marks omitted). Despite their Beauregard format,
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION           31
Alice’s “computer readable medium claims” are thus
equivalent to the methods they recite for § 101 purposes.
In other words, they are merely method claims in the
guise of a device and thus do not overcome the Supreme
Court’s warning to avoid permitting a “competent drafts-
man” to endow abstract claims with patent-eligible status.

    Of course, all claims are normally to be considered
separately, but discrete claims reciting subject matter
only nominally from different statutory classes may
warrant similar substantive treatment under § 101 when,
in practical effect, they cover the same invention. That
may be particularly apparent where, as here, a claim
presents a physical recitation of an abstract method, and
parallel claims from the same patent family claim that
same abstract method in the same or similar terms. So
considered, claims 39–41 of the ’375 patent fail the pa-
tent-eligibility test for the same reasons as the cognate
method claims discussed above. The “program code” of
claim 39 “caus[es] a computer” to perform a method of
escrow that is indistinguishable from that recited in claim
33 of the ’479 patent, and no less abstract. Accordingly,
claims 39–41 of the ’375 patent are invalid under § 101.
As with the method claims, two other judges of this court,
in addition to those joining this opinion, similarly con-
clude that the computer-readable medium claims are not
patent eligible.

                    C. System Claims

    The remaining claims in this appeal recite “data pro-
cessing systems” configured to enable the exchange of
mutual obligations through an intermediary—in these
claims, the computer system itself. Before addressing
these claims in particular, we again note that our col-
leagues on the court, other than those joining this opinion,
have agreed that, at least in this case, the method, medi-
um, and system claims should be considered together for
32             CLS BANK INTERNATIONAL   v. ALICE CORPORATION
purposes of § 101. Three other judges on this court—for a
total of eight—have so concluded.

    Claim 1 of the ’720 patent is representative of the con-
tested system claims:
     1. A data processing system to enable the ex-
     change of an obligation between parties, the sys-
     tem comprising:
     a data storage unit having stored therein infor-
         mation about a shadow credit record and
         shadow debit record for a party, independent
         from a credit record and debit record main-
         tained by an exchange institution; and
     a computer, coupled to said data storage unit, that
         is configured to (a) receive a transaction;
         (b) electronically adjust said shadow credit
         record and/or said shadow debit record in or-
         der to effect an exchange obligation arising
         from said transaction, allowing only those
         transactions that do not result in a value of
         said shadow debit record being less than a
         value of said shadow credit record; and
         (c) generate an instruction to said exchange
         institution at the end of a period of time to ad-
         just said credit record and/or said debit record
         in accordance with the adjustment of said
         shadow credit record and/or said shadow debit
         record, wherein said instruction being an ir-
         revocable, time invariant obligation placed on
         said exchange institution.
’720 patent col. 65 ll. 42–61 (emphases added). As is
apparent, the claim recites a computerized system config-
ured to carry out a series of steps that mirror Alice’s
method claims—maintaining shadow records, allowing
only those transactions supported by adequate value in
the shadow records, adjusting the shadow records pursu-
ant to such transactions, and later instructing exchange
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION           33
institutions to execute the allowed transactions. Indeed,
Alice’s method and system claims use similar and often
identical language to describe those actions. Compare id.
col. 65 ll. 44–61, with ’479 patent col. 65 ll. 28–50. The
system claims are different, however, in that they also
recite tangible devices as system components, including at
least “a computer” and “a data storage unit.” Other
claims specify additional components, such as a “first
party device” and a “communications controller.” See, e.g.,
’375 patent col. 66 ll. 65–66. Similar to the computer
readable medium claims, the system claims are formally
drawn to physical objects and therefore raise a question
whether they deserve to be evaluated differently under
the abstract ideas exception from the accompanying
method claims discussed above. Careful analysis shows
that they do not.

     For some system claims, the abstract ideas exception
may indeed be plainly inapplicable, and such claims will
face little difficulty passing through the § 101 filter. But
applying a presumptively different approach to system
claims generally would reward precisely the type of clever
claim drafting that the Supreme Court has repeatedly
instructed us to ignore. As illustrated by the obvious
parallels between the method and system claims now
before us, it is often a straightforward exercise to trans-
late a method claim into system form, and vice versa.
That much has long been recognized. See In re Johnston,
502 F.2d 765, 773 (CCPA 1974) (Rich, J., dissenting)
(noting that “[e]very competent draftsman” knows how to
cast method claims “in machine system form”). Thus,
when § 101 issues arise, the same analysis should apply
regardless of claim format: Does the claim, in practical
effect, place an abstract idea at risk of preemption? And,
if so, do the limitations of the claim, including any com-
puter-based limitations, add “enough” beyond the abstract
idea itself to limit the claim to a narrower, patent-eligible
application of that idea? Or, is it merely a Trojan horse
34           CLS BANK INTERNATIONAL   v. ALICE CORPORATION
designed to enable abstract claims to slide through the
screen of patent eligibility?

    The computer-based limitations recited in the system
claims here cannot support any meaningful distinction
from the computer-based limitations that failed to supply
an “inventive concept” to the related method claims. The
shadow record and transaction limitations in Alice’s
method claims require “a computer,” CLS Bank, 768 F.
Supp. 2d at 236, evidently capable of calculation, storage,
and data exchange. The system claims are little different.
They set forth the same steps for performing third-party
intermediation and provide for computer implementation
at an incrementally reduced, though still striking level of
generality. Instead of wholly implied computer limita-
tions, the system claims recite a handful of computer
components in generic, functional terms that would
encompass any device capable of performing the same
ubiquitous calculation, storage, and connectivity functions
required by the method claims.

    For example, method claim 33 of the ’479 patent re-
quires “creating a shadow credit record and a shadow
debit record for each stakeholder party to be held inde-
pendently by a supervisory institution from the exchange
institutions.” ’479 patent col. 65 ll. 28–31. In system
claim 26 of the ’375 patent, which is among the system
claims that recite the most computer hardware, “a data
storage unit” performs the analogous function. That
claim recites “a data storage unit having stored therein
(a) information about a first account for a first party,
independent from a second account maintained by a first
exchange institution, and (b) information about a third
account for a second party, independent from a fourth
account maintained by a second exchange institution.”
’375 patent col. 67 ll. 1–7.
 CLS BANK INTERNATIONAL    v. ALICE CORPORATION             35
      Likewise, other steps of method claim 33 include
(i) “for every transaction . . . 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,” and
(ii) “instructing ones of the exchange institutions to ex-
change credits or debits . . . in accordance with the ad-
justments of the said permitted transactions.” ’479 patent
col. 65 ll. 36–48. Similarly, system claim 26 recites:

    [A] computer, coupled to said data storage unit
    and said communications controller, that is con-
    figured to (a) receive a transaction from said first
    party device via said communications controller;
    (b) electronically adjust said first account and said
    third account . . . after ensuring that said first
    party and/or said second party have adequate val-
    ue in said first account and/or said third account,
    respectively; and (c) generate an instruction to
    said first exchange institution and/or said second
    exchange institution to adjust said second account
    and/or said fourth account in accordance with the
    adjustment of said first account and/or said third
    account . . . .

’375 patent col. 67 ll. 8–23.

    Despite minor differences in terminology, e.g., first
and third “independent” accounts instead of “shadow”
records, the asserted method and system claims require
performance of the same basic process. Although the
system claims associate certain computer components
with some of the method steps, none of the recited hard-
ware offers a meaningful limitation beyond generally
linking “the use of the [method] to a particular technologi-
cal environment,” that is, implementation via computers.
Bilski, 130 S. Ct. at 3230 (quoting Diehr, 450 U.S. at 191)
36            CLS BANK INTERNATIONAL   v. ALICE CORPORATION
(internal quotation marks omitted); see Mayo, 132 S. Ct.
at 1301 (“[The Court in Benson] held that simply imple-
menting a mathematical principle on a physical machine,
namely a computer, was not a patentable application of
that principle.”). For all practical purposes, every general-
purpose computer will include “a computer,” “a data
storage unit,” and “a communications controller” that
would be capable of performing the same generalized
functions required of the claimed systems to carry out the
otherwise abstract methods recited therein.

    Therefore, as with the asserted method claims, 4 such
limitations are not actually limiting in the sense required
under § 101; they provide no significant “inventive con-
cept.” The system claims are instead akin to stating the
abstract idea of third-party intermediation and adding
the words: “apply it” on a computer. See Mayo, 132 S. Ct.
at 1294. That is not sufficient for patent eligibility, and
the system claims before us fail to define patent-eligible
subject matter under § 101, just as do the method and
computer-readable medium claims.

    One of the separate opinions in this case, concurring
in part in the judgment, takes aim at this opinion, assert-
ing that the system claims here are simply claims to a
patent-eligible machine, a tangible item one can put on
one’s desk. Machines are unquestionably eligible for


     4  To be clear, the fact that one or more related
method claims has failed under § 101, as here, does not
dictate that all associated system claims or even all
associated method claims must suffer the same fate. For
example, a system claim that builds on the same abstract
idea as a patent-ineligible method may well incorporate
sufficient additional limitations, computer-based or
otherwise, to transform that idea into a patent-eligible
application. But that is not the case here.
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION          37
patenting, states the opinion, although the system claims
here clearly track the method claims that the separate
opinion concedes are not patent eligible.

     That conclusion is surely correct as an abstract propo-
sition. A particular computer system, composed of wires,
plastic, and silicon, is no doubt a tangible machine. But
that is not the question. The question we must consider is
whether a patent claim that ostensibly describes such a
system on its face represents something more than an
abstract idea in legal substance. Claims to computers
were, and still are, eligible for patent. No question should
have arisen concerning the eligibility of claims to basic
computer hardware under § 101 when such devices were
first invented. But we are living and judging now (or at
least as of the patents’ priority dates), and have before us
not the patent eligibility of specific types of computers or
computer components, but computers that have routinely
been adapted by software consisting of abstract ideas, and
claimed as such, to do all sorts of tasks that formerly were
performed by humans. And the Supreme Court has told
us that, while avoiding confusion between § 101 and
§§ 102 and 103, merely adding existing computer technol-
ogy to abstract ideas—mental steps—does not as a matter
of substance convert an abstract idea into a machine.

    That is what we face when we have a series of claims
to abstract methods and computers fitted to carry out
those methods. We are not here faced with a computer
per se. Such are surely patent-eligible machines. We are
faced with abstract methods coupled with computers
adapted to perform those methods. And that is the fallacy
of relying on Alappat, as the concurrence in part does.
Not only has the world of technology changed, but the
legal world has changed. The Supreme Court has spoken
since Alappat on the question of patent eligibility, and we
must take note of that change. Abstract methods do not
38           CLS BANK INTERNATIONAL   v. ALICE CORPORATION
become patent-eligible machines by being clothed in
computer language.

                      CONCLUSION

    As described, we agree with the district court and
conclude that the asserted method, computer-readable
medium, and system claims of Alice’s ’479, ’510, ’720, and
’375 patents are invalid under § 101 for failure to recite
patent-eligible subject matter.
  United States Court of Appeals
      for the Federal Circuit
                ______________________

           CLS BANK INTERNATIONAL,
                 Plaintiff-Appellee,

                          AND

               CLS SERVICES LTD.,
           Counterclaim Defendant-Appellee,

                           v.

         ALICE CORPORATION PTY. LTD.,
               Defendant-Appellant.
              ______________________

                      2011-1301
                ______________________

    Appeal from the United States District Court for the
District of Columbia in No. 07-CV-974, Judge Rosemary
M. Collyer.
                 ______________________

RADER, Chief Judge, LINN, MOORE, and O’MALLEY, Circuit
Judges, as to all but part VI, concurring-in-part and
dissenting-in-part. RADER, Chief Judge, and MOORE,
Circuit Judge, as to part VI. 1



   1   No portion of any opinion issued today other than
our Per Curiam Judgment garners a majority. The court
is evenly split on the patent eligibility of the system
2             CLS BANK INTERNATIONAL    v. ALICE CORPORATION
    This court again addresses questions regarding patent
eligible subject matter. After consideration of the Patent
Act and case law precedents, we would reverse the district
court’s holding that the asserted system claims are not
patent eligible. Chief Judge Rader and Judge Moore
would, however, affirm the district court’s conclusion that
the asserted method and media claims are not eligible for
patenting. Judges Linn and O’Malley write separately as
to these latter claims. Accordingly, we would remand for
additional proceedings consistent with this opinion.

                              I

    Alice Corporation (Alice) owns U.S. Patent Nos.
5,970,479 (the ’479 Patent), 6,912,510 (the ’510 Patent),
7,149,720 (the ’720 Patent), and 7,725,375 (the ’375 Pa-
tent). Generally, these patents relate to methods and a
computerized system for exchanging obligations in which
a trusted third party settles obligations between a first
and second party in order to eliminate “settlement risk.”
Settlement risk is the risk that only one party will meet
its payment obligation. In simple terms, the invention
eliminates this risk with a trusted third party that ex-
changes either both or neither party’s obligation.

     Alice’s expert testified by declaration that “[w]hen ob-
ligations arise from a trade made between two parties,
e.g., a trade of stock or a trade of foreign currency, typical-
ly, there is a gap in time between when the obligation


claims. Although a majority of the judges on the court
agree that the method claims do not recite patent eligible
subject matter, no majority of those judges agrees as to
the legal rationale for that conclusion. Accordingly,
though much is published today discussing the proper
approach to the patent eligibility inquiry, nothing said
today beyond our judgment has the weight of precedent.
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION           3
arises and when the trade is ‘settled.’” Alice Corp. Pty.
Ltd.’s Renewed Cross-Motion for Partial Summary Judg-
ment as to Subject Matter Eligibility, Declaration of
Stanley E. Fisher, Exhibit 1, Declaration of Paul Ginsberg
at ¶ 21, CLS Bank Int’l v. Alice Corp., 768 F. Supp. 2d 221
(D.D.C. 2011) (No. 1:07-cv-974), ECF No. 95-3 (Ginsberg
Decl.) “In a number of financial contexts, the process of
exchanging obligations, or settlement, is separate from
the process of entering into a contract to perform a trade.”
Id. For example, if two banks want to exchange currency,
they would agree to make a transaction but would post-
pone the actual exchange until confirmation of the price—
typically two days later. After that, both banks would
“settle” the trade by paying their predetermined amounts
to each other. But the time delay presents a risk that one
bank would, at settlement time, no longer have sufficient
funds to satisfy its obligations.

    The asserted patent claims—claims 33 and 34 of the
’479 Patent, and all claims of the ’510, ’720, and ’375
Patents—seek to minimize this risk. The relevant claims
of the ’479 and ’510 Patents are method claims. The
claims of the ’720 and ’375 Patents are system and prod-
uct (media) claims.

    In May 2007, CLS Bank International and CLS Ser-
vices Ltd. (collectively, CLS Bank) sued Alice, seeking a
declaration that the asserted claims are invalid, unen-
forceable, or otherwise not infringed. In August 2007,
Alice counterclaimed, alleging that CLS Bank infringed
claims 33 and 34 of the ’479 Patent, and all claims of the
’510 and ’720 Patents. The U.S. filing dates of the patents
range from 1993 to 2005, with claims to priority going
back even earlier.

   The parties filed cross-motions for summary judgment
on whether the asserted claims were eligible subject
matter under Section 101. In May 2010, the ’375 Patent
4             CLS BANK INTERNATIONAL   v. ALICE CORPORATION
issued to Alice, and Alice soon filed amended counter-
claims asserting that CLS Bank also infringed all of its
claims. After the Supreme Court decided Bilski v. Kap-
pos, 130 S. Ct. 3218 (2010) (Bilski), the parties renewed
their cross-motions for summary judgment, with CLS
Bank asserting that the newly-added ’375 Patent also did
not claim eligible subject matter under Section 101.

    The district court granted CLS Bank’s motion for
summary judgment and denied Alice's cross-motion. The
district court held that no asserted claim contained patent
eligible subject matter. CLS Bank Int’l v. Alice Corp., 768
F. Supp. 2d 221 (D.D.C. 2011), vacated, 484 F. App’x 559
(Fed. Cir. 2012). Alice timely appealed, and this court has
jurisdiction under 28 U.S.C. § 1295(a)(1). A panel of this
court reversed. CLS Bank Int’l v. Alice Corp., 685 F.3d
1341 (Fed. Cir. 2012). CLS Bank filed a petition for
rehearing en banc. In its order granting en banc recon-
sideration, this court invited the parties and others to
address two questions:

    a. What test should the court adopt to determine
    whether a computer-implemented invention is a
    patent ineligible “abstract idea”; and when, if ev-
    er, does the presence of a computer in a claim lend
    patent eligibility to an otherwise patent-ineligible
    idea?

    b. In assessing patent eligibility under 35 U.S.C.
    § 101 of a computer-implemented invention,
    should it matter whether the invention is claimed
    as a method, system, or storage medium; and
    should such claims at times be considered equiva-
    lent for § 101 purposes?

CLS Bank Int’l v. Alice Corp., 484 F. App’x. 559 (Fed. Cir.
2012).
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION             5
                              II

    We begin with the text of the statute. See Diamond v.
Diehr, 450 U.S. 175, 182 (1981); see also Bilski, 130 S. Ct.
at 3225; In re Alappat, 33 F.3d 1526, 1542 (Fed. Cir. 1994)
(en banc). Section 101 provides:

    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.

Section 100(b) further provides that the “term ‘process’
means process, art or method, and includes a new use of a
known process, machine, manufacture, composition of
matter, or material.”

     To understand these provisions in context, the Su-
preme Court has advised that the “new” requirement in
Section 101 is now governed by Section 102. Diehr, 450
U.S. at 189; see S. Rep. No. 82-1979, at 6 (1952) (“Section
102 . . . includes, in effect, an amplification and definition
of ‘new’ in section 101.”) (S. Rep. 82-1979). Similarly, as
shown below, whether a new process, machine, and so on
is “inventive” is not an issue under Section 101; the
condition for “more” than novelty is contained only in
Section 103. Thus, so long as the “conditions and re-
quirements” of patentability are met, a person who in-
vents or discovers a useful process, or an improvement to
one, may obtain a patent—and may do so even if the
process includes only a new use of an old machine. See
Bilski, 130 S. Ct. at 3225; Alappat, 33 F.3d at 1542.

    Underscoring its breadth, Section 101 both uses ex-
pansive categories and modifies them with the word
“any.” In “choosing such expansive terms . . . modified by
the comprehensive ‘any,’ Congress plainly contemplated
6             CLS BANK INTERNATIONAL   v. ALICE CORPORATION
that the patent laws would be given wide scope.” Bilski,
130 S. Ct. at 3225 (quoting Diamond v. Chakrabarty, 447
U.S. 303, 308 (1980) (some internal quotation marks
omitted)).

     Defining one of those expansive categories, Section
100(b) confirms the statute’s intended breadth. At first
examination, the Act’s definition of “process” to include a
new use of a known machine seems superfluous. After
all, if “any” process may be patented under Section 101,
Section 100(b) seems wholly unnecessary. An examina-
tion of the context for adding Section 100(b) informs the
analysis of Section 101. Specifically, the 1952 amend-
ments added Section 100(b) to ensure that doubts about
the scope of a “process” under the pre-1952 version of the
patent statute would not be read into the new Act. P.J.
Federico, 2 Commentary on the New Patent Act, reprinted
in 75 J. Pat. & Trademark Off. Soc’y 161, 177 (1993)
(Federico’s Commentary) (“Remarks have appeared in a
few decisions and elsewhere that new uses are not pa-
tentable. . . . [I]f such remarks are interpreted to mean
that a new use or application of an old machine, manufac-
ture or composition cannot result in anything patentable
then such statements are not and have never been an
accurate statement of the law.”); Hearing Before Sub-


    2   P.J. Federico, one of the 1952 Patent Act’s “princi-
pal authors,” was also a chief patent examiner. Hodosh v.
Block Drug Co., 833 F.2d 1575, 1578 (Fed. Cir. 1987).
Federico's Commentary constitutes “an invaluable insight
into the intentions of the drafters of the Act.” Symbol
Techs., Inc. v. Lemelson Med., 277 F.3d 1361, 1366 (Fed.
Cir. 2002); see also George M. Sirilla & Hon. Giles S. Rich,
35 U.S.C. . . . 103: From Hotchkiss to Hand to Rich, the
Obvious Patent Law Hall-of-Famers, 32 J. Marshall L.
Rev. 437, 509 (1999) (discussing Federico’s and Judge
Rich’s role as the drafters of the 1952 Act).
 CLS BANK INTERNATIONAL    v. ALICE CORPORATION             7
comm. No. 3 of the Comm. on the Judiciary, at 37 (1951)
(1951 Hearings) (Federico testifying that the “definition of
‘process’ has been added . . . to clarify the present law as
to certain types of methods as to which some doubts have
been expressed . . . .”). The 1952 Act shows that the
“primary significance” of adding Section 100(b) was to
make clear that a method was not “vulnerable to attack,
on the ground of not being within the field of patentable
subject matter, merely because it may recite steps con-
ventional from a procedural standpoint and the novelty
resides in the recitation of a particular substance, which
is old as such, used in the process.” Federico’s Commen-
tary at 177; see S. Rep. No. 82-1979, at 17 (“The . . . defini-
tion clarifies the status of processes or methods which
involve merely the new use of a known process, machine,
manufacture, composition of matter, or material; they are
processes or methods under the statute and may be
patented provided the conditions of patentability are
satisfied.”).

    In addition, in testimony requested by the Committee,
P.J. Federico, a chief patent examiner at the United
States Patent & Trademark Office (Patent Office), ex-
plained that under the proposed amendment a machine or
manufacture may include “anything that is under the sun
that is made by man.” 1951 Hearings at 37; see S. Rep.
No. 82-1979, at 5 (stating the same principle: so long as
the conditions of patentability are met, anything made by
man is patentable). The Supreme Court summarized the
intent and meaning of these changes when it quoted and
approved this famous statement. See Diehr, 450 U.S. at
182.

    Indeed, to achieve these ends, the 1952 Act did not
merely rely on the breadth of Section 101 and the expand-
ed definition of “process” in Section 100(b), but also added
the words “or discovered” to the definition of “invention”
in Section 100(a). By definition, Congress made it irrele-
8             CLS BANK INTERNATIONAL   v. ALICE CORPORATION
vant whether a new process, machine, and so on was
“discovered” rather than “invented.” Both inventions and
discoveries are eligible for patenting. This addition
confirmed the principle articulated again in Section 103
that an invention “shall not be negated by the manner in
which [it] . . . was made.” 35 U.S.C. § 103. The language
of the Act shows that the authors of the 1952 Act wanted
that principle incorporated into the eligibility section of
the Act as well as the patentability sections.

    One final point confirming the breadth of Section 101
is the 1952 Act’s deliberate decision to place the substan-
tive requirement for “invention” in Section 103. Before
1952, the courts had used phrases including “creative
work,” “inventive faculty,” and “flash of creative genius”
which compared the existing invention to some subjective
notion of sufficient “inventiveness” as the test for patent-
ability—by definition a hindsight analysis. See Giles S.
Rich, Principles of Patentability, 28 Geo. Wash. L. Rev.
393, 404 (1960). These standardless terms and tests
created wildly disparate approaches to determine suffi-
ciency for “invention.” Id. at 403–04. Judge Rich ob-
served that with “invention” as the test, “judges did
whatever they felt like doing according to whatever it was
that gave the judge his feelings—out of the evidence
coupled with his past mental conditioning—and then
selected those precedents which supported his conclu-
sions.” Sirilla, 32 J. Marshall L. Rev. at 501 (internal
quotation marks omitted).

    The 1952 Act focused its central purpose on correcting
this systemic problem. “One of the great technical weak-
nesses of the patent system” prior to 1952 was “the lack of
a definitive yardstick as to what is invention.” Victor L.
Edwards, Cong. Research Serv., Efforts to Establish a
Statutory Standard for Invention, at 2 (1958) (Study on
Standard for Invention). As Judge Rich testified at the
beginning of this legislative effort in 1948, “the matter of
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION           9
defining invention” was “what we are trying to get away
from.” Id. at 4. As Federico put it, “invention” was “an
unmeasurable quantity having different meanings for
different persons.” Federico’s Commentary at 183 (mak-
ing the statements in the context of explaining why
Congress added Section 103); Principles of Patentability,
28 Geo. Wash. L. Rev. at 407 (“The drafters of the present
statute did their best to take out of the law the undefina-
ble concept of ‘invention.’ Whether lawyers will now take
advantage of the terminology . . . and stop talking non-
sense is up to them.”).

    After deliberate effort, the 1952 Act replaced any need
for an “invention” or “inventiveness” measure with an
objective test for “obviousness” in Section 103. See Dann
v. Johnston, 425 U.S. 219, 225-26 (1976) (explaining that
although “an exercise of the inventive faculty” had been
used as a judicial test, “it was only in 1952 that Congress,
in the interest of uniformity and definiteness, articulated
the requirement in a statute, framing it as a requirement
of ‘nonobviousness.’” (internal quotation marks and
footnote omitted)). The official “Revision Notes” explain
that Section 103 became an “explicit statement” of the
“holding of patents invalid by the courts[] on the ground of
lack of invention.” S. Rep. No. 82-1979, at 18; see Federi-
co’s Commentary at 180 (explaining that one of the two
major changes made by the 1952 amendments was “in-
corporating a requirement for invention in section 103.”
(internal quotation marks omitted)); Study for Statutory
Standard of Invention (extensively reviewing Congres-
sional efforts to redefine “invention,” which culminated in
adoption of Section 103). Thus, the central thrust of the
1952 Act removed “unmeasurable” inquiries into “inven-
tiveness” and instead supplied the nonobviousness re-
quirement of Section 103.

    After enactment of the 1952 Act, both of its principal
architects recognized the significance of the elimination of
10            CLS BANK INTERNATIONAL   v. ALICE CORPORATION
a subjective test for “invention.” Judge Rich, a House
Committee architect of the 1952 Act and later an es-
teemed jurist, applauded the fact that the Patent Act of
1952 makes no “reference to ‘invention’ as a legal re-
quirement.” Principles of Patentability, 28 Geo. Wash. L.
Rev. at 405 (emphasis omitted). Judge Rich emphasized
that using “the past tense in referring to” what “used to be
called the requirement of ‘invention’” could not be over-
emphasized. Id. (emphasis in original). Federico ex-
pressed the same sentiments. See Federico’s Commentary
at 182-83 (explaining that while perhaps the word “in-
vented” in the prior patent act may have been the source
of judicial demand for more than just novelty, Section 103
replaced any requirement for “invention”).

    Contemporaneous commentators also recognized that
any need for “invention” had been rejected in favor of
nonobviousness. See generally, Karl B. Lutz, The New
1952 Patent Statute, 35 J. Pat. Off. Soc’y 155, 157-58
(1953) (explaining that courts had long ago decided that
novelty was not enough and had disagreed on how to
determine how much more was necessary, but that that
issue was now addressed solely by Section 103); Dean O.S.
Colclough, A New Patent Act—But the Same Basic Prob-
lem, 35 J. Pat. Off. Soc’y 501, 510 (1953) (explaining that
the “condition of inventiveness has been expressed in a
variety of ways by the courts,” but the “new provision on
inventiveness” in Section 103 was intended to replace and
codify prior law). And indeed the courts, including this
court, implemented the new statute carefully and reli-
giously. See Graham v. John Deere Co., 383 U.S. 1, 14
(1966) (“Section 103, for the first time in our statute,
provides a condition which exists in the law and has
existed for more than 100 years, but only by reason of
decisions of the courts.” (internal quotation marks omit-
ted)); W.L. Gore & Assocs., Inc v. Garlock, Inc., 721 F.2d
1540, 1548 (Fed. Cir. 1983) (Markey, C.J.) (recognizing
the district court improperly relied upon one step of a
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION            11
multi-step process to determine nonobviousness); Gardner
v. TEC Sys., Inc., 725 F.2d 1338, 1349–50 (Fed. Cir. 1984)
(recognizing that Section 103 sets forth the standard, and
so “synergism” of a known combination is not required).
Thus, any requirement for “inventiveness” beyond sec-
tions 102 and 103 is inconsistent with the language and
intent of the Patent Act.

     With an eye to the statutory language and its back-
ground, the Supreme Court recognized Section 101 as “a
‘dynamic provision designed to encompass new and un-
foreseen inventions.’” Bilski, 130 S. Ct. at 3227 (quoting
J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred Int’l, Inc., 534
U.S. 124, 135 (2001)). Indeed, the broad interpretation of
Section 101 has constitutional underpinnings.          “The
subject-matter provisions of the patent law have been cast
in broad terms to fulfill the constitutional and statutory
goal of promoting ‘the Progress of . . . the useful Arts . . .
.’” Chakrabarty, 447 U.S. at 315.

    In sum, any analysis of subject matter eligibility for
patenting must begin by acknowledging that any new and
useful process, machine, composition of matter, or manu-
facture, or an improvement thereof, is eligible for patent
protection. While a claim may not later meet the rigorous
conditions for patentability, Section 101 makes these
broad categories of claimed subject matter eligible for that
consideration.

                             III

     We turn now to the limited exceptions to the broad
statutory grant in Section 101 which the Supreme Court
has identified: “‘[l]aws of nature, natural phenomena, and
abstract ideas’” are not patent eligible. Mayo Collabora-
tive Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1293
(2012) (quoting Diehr, 450 U.S. at 185); see also Bilski,
130 S. Ct. at 3225. The motivation for the exceptions to
12            CLS BANK INTERNATIONAL   v. ALICE CORPORATION
eligibility is to prevent the “monopolization” of the “basic
tools of scientific and technological work,” which “might
tend to impede innovation more than it would tend to
promote it.” Prometheus, 132 S. Ct. at 1293 (internal
quotation marks omitted).

                A. Scope of the Exception

                      1. Generally

    As the Supreme Court has explained, the relevant in-
quiry under the exceptions is whether the claim covers
merely an abstract idea, law of nature, or natural phe-
nomenon; or whether the claim covers a particular appli-
cation of an abstract idea, law of nature, or natural
phenomenon. See Prometheus, 132 S. Ct. at 1294 (“[T]o
transform an unpatentable law of nature into a patent-
eligible application of such a law, one must do more than
simply state the law of nature while adding the words
‘apply it.’” (emphasis in original)); Bilski, 130 S. Ct. at
3230 (“[W]hile an abstract idea, law of nature, or mathe-
matical formula could not be patented, an application of a
law of nature or mathematical formula to a known struc-
ture or process may well be deserving of patent protec-
tion.” (emphasis in original) (internal quotation marks
omitted)); Diehr, 450 U.S. at 187 (“It is now commonplace
that an application of a law of nature or mathematical
formula to a known structure or process may well be
deserving of patent protection.” (emphasis in original));
Gottschalk v. Benson, 409 U.S. 63, 67 (1972) (“He who
discovers a hitherto unknown phenomenon of nature has
no claim to a monopoly of it which the law recognizes. If
there is to be invention from such a discovery, it must
come from the application of the law of nature to a new
and useful end.” (emphasis added) (internal quotation
marks omitted)).
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION           13
    The claims are key to this patent eligibility inquiry. A
court must consider the asserted claim as a whole when
assessing eligibility:

        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 particu-
    larly true in a process claim because a new combi-
    nation of steps in a process may be patentable
    even though all the constituents of the combina-
    tion were well known and in common use before
    the combination was made.

Diehr, 450 U.S. at 188 (emphasis added). And, a court
must consider the actual language of each claim. The
majority in Diehr rejected the minority’s approach ignor-
ing portions of the claims: “[i]n order for the dissent to
reach its conclusion it is necessary for it to read out of
respondents’ patent application all the steps in the
claimed process which it determined were not novel or
‘inventive.’ That is not the purpose of the § 101 inquiry . .
. .” Id. at 193 n.15 (citations omitted).

    Any claim can be stripped down, simplified, general-
ized, or paraphrased to remove all of its concrete limita-
tions, until at its core, something that could be
characterized as an abstract idea is revealed. Such an
approach would “if carried to its extreme, make all inven-
tions unpatentable because all inventions can be reduced
to underlying principles of nature which, once known,
make their implementation obvious.” Id. at 189 n.12; see
also Prometheus, 132 S. Ct. at 1293. A court cannot go
hunting for abstractions by ignoring the concrete, palpa-
ble, tangible limitations of the invention the patentee
actually claims.
14             CLS BANK INTERNATIONAL   v. ALICE CORPORATION
    Different claims will have different limitations; each
must be considered as actually written. The inquiry is a
practical one to determine whether the claim, as a whole
with all of its limitations, in effect covers a patent ineligi-
ble abstract idea or a patent eligible application of that
idea. Thus, while the analysis will be different for each
claim based on its particular limitations, the form of the
analysis remains the same.

    The claims in O’Reilly v. Morse, 56 U.S. (15 How.) 62
(1854), and a case described therein, illustrate the distinc-
tion between a patent ineligible abstract idea and a
practical application of an idea. The “difficulty” in Morse
arose with the claim in which Morse

     d[id] not propose to limit [him]self to the specific
     machinery or parts of machinery described in
     the . . . specification and claims; the essence of
     [his] invention being the use of the motive power
     of the electric or galvanic current . . . however de-
     veloped for marking or printing intelligible char-
     acters, signs, or letters, at any distances . . . .

Id. at 112 (internal quotation marks omitted). In consid-
ering Morse’s claim, the Supreme Court referred to an
earlier English case that distinguished ineligible claims to
a “principle” from claims “applying” that principle:

     [I]t seems that the court at first doubted, whether
     it was a patent for any thing more than the dis-
     covery that hot air would promote the ignition of
     fuel better than cold. And if this had been the
     construction, the court, it appears, would have
     held his patent to be void; because the discovery of
     a principle in natural philosophy or physical sci-
     ence, is not patentable.
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION              15
         But after much consideration, it was finally
    decided that this principle must be regarded as
    well known, and that the plaintiff had invented a
    mechanical mode of applying it to furnaces; and
    that his invention consisted in interposing a heat-
    ed receptacle, between the blower and the fur-
    nace, and by this means heating the air after it
    left the blower, and before it was thrown into the
    fire. Whoever, therefore, used this method of
    throwing hot air into the furnace, used the process
    he had invented, and thereby infringed his patent,
    although the form of the receptacle or the me-
    chanical arrangements for heating it, might be
    different from those described by the patentee.

Id. at 116. The claim in Morse itself was impermissible
because it covered “‘an effect produced by the use of
electro-magnetism, distinct from the process or machinery
necessary to produce it.’” The Telephone Cases, 126 U.S.
1, 534 (1888) (quoting Morse, 56 U.S. (15 How.) at 120).
This was in contrast to a sustained claim that was limited
to:

    making use of the motive power of magnetism,
    when developed by the action of such current or
    currents, substantially as set forth in the . . . de-
    scription, . . . as means of operating or giving mo-
    tion to machinery, which may be used to imprint
    signals upon paper or other suitable material, or
    to produce sounds in any desired manner, for the
    purpose of telegraphic communication at any dis-
    tances.

Id. (first ellipsis added, second ellipsis in original) (quot-
ing Morse, 56 U.S. (15 How.) at 85). “‘The effect of [Morse]
was, therefore, that the use of magnetism as a motive
power, without regard to the particular process with
which it was connected in the patent, could not be
16            CLS BANK INTERNATIONAL   v. ALICE CORPORATION
claimed, but that its use in that connection could.’”
Benson, 409 U.S. at 68 (quoting The Telephone Cases, 126
U.S. at 534).

    These examples illustrate that the inquiry under the
abstract ideas exception deals not merely with breadth,
because the “hot air” claims were broad and covered many
“mechanical arrangements” but yet found patent eligible.
The concern, which has become clearer through the
Supreme Court’s more recent precedents, is whether the
claim seeks to patent an idea itself, rather than an appli-
cation of that idea.

                2. Meaningful limitations

     The relevant inquiry must be whether a claim in-
cludes meaningful limitations restricting it to an applica-
tion, rather than merely an abstract idea.              See
Prometheus, 132 S. Ct. at 1297 (“[D]o the patent claims
add enough to their statements of the correlations to allow
the processes they describe to qualify as patent-eligible
processes that apply natural laws?” (emphasis in origi-
nal)); see also Fort Props., Inc. v. Am. Master Lease LLC,
671 F.3d 1317, 1323 (Fed. Cir. 2012) (“[T]o impart patent-
eligibility to an otherwise unpatentable process under the
theory that the process is linked to a machine, the use of
the machine must impose meaningful limits on the
claim’s scope.” (internal quotation marks omitted)). An
abstract idea is one that has no reference to material
objects or specific examples—i.e., it is not concrete. See
Merriam-Webster’s Collegiate Dictionary 5 (11th ed.
2003) (defining abstract as “disassociated from any specif-
ic instance . . . expressing a quality apart from an object
<the word poem is concrete, poetry is [abstract]>”). A
claim may be premised on an abstract idea—the question
for patent eligibility is whether the claim contains limita-
tions that meaningfully tie that idea to a concrete reality
or actual application of that idea.
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION            17
    Indeed, the Supreme Court repeatedly has stated that
a claim touching upon a natural phenomenon, abstract
idea, or law of nature is not, for that reason alone, ineligi-
ble for patenting. The Supreme Court clarified the “com-
monplace” principle “that an application of a law of
nature or mathematical formula to a known structure . . .
may well be deserving of patent protection.” Diehr, 450
U.S. at 187 (emphasis in original). For these reasons, a
claim does not become ineligible simply because it applies
a basic tool. Id.; see Prometheus, 132 S. Ct. at 1294 (ex-
plaining that the fact that a claim uses a basic tool does
not mean it is not eligible for patenting). The struggle is
in drawing the line between claims that are and are not
meaningfully limited; fortunately, the Supreme Court’s
own cases provide the guideposts for doing so.

     First, we know a claim is not meaningfully limited if
it merely describes an abstract idea or simply adds “apply
it.” See Prometheus, 132 S. Ct. at 1294, 1297. The broad
claim in Morse provides a striking example of this. We
also know that, if a claim covers all practical applications
of an abstract idea, it is not meaningfully limited. See id.
at 1301-02. For example, “[a]llowing petitioners to patent
risk hedging would pre-empt use of this approach in all
fields, and would effectively grant a monopoly over an
abstract idea.” Bilski, 130 S. Ct. at 3231 (emphasis
added). While this concept is frequently referred to as
“pre-emption,” it is important to remember that all pa-
tents “pre-empt” some future innovation in the sense that
they preclude others from commercializing the invention
without the patentee’s permission. Pre-emption is only a
subject matter eligibility problem when a claim preempts
all practical uses of an abstract idea. For example, the
claims in Benson “purported to cover any use of the
claimed method in a general-purpose digital computer of
any type.” 409 U.S. at 64 (emphasis added). The claims
were not allowed precisely because they pre-empted
essentially all uses of the idea:
18            CLS BANK INTERNATIONAL   v. ALICE CORPORATION
          It is conceded that one may not patent an
     idea. But in practical effect that would be the re-
     sult if the formula for converting [binary-coded
     decimal] numerals to pure binary numerals were
     patented in this case. The mathematical formula
     involved here has no substantial practical applica-
     tion except in connection with a digital computer,
     which means that . . . the patent would wholly
     pre-empt the mathematical formula and in practi-
     cal effect would be a patent on the algorithm it-
     self.

Id. at 71-72 (emphasis added). When the steps of the
claim “must be taken in order to apply the [abstract idea]
in question,” the claim is essentially no different from
saying apply the abstract idea. Prometheus, 132 S. Ct. at
1299-1300. It is not the breadth or narrowness of the
abstract idea that is relevant, but whether the claim
covers every practical application of that abstract idea. 3

    And, we know that, even if a claim does not wholly
pre-empt an abstract idea, it still will not be limited
meaningfully if it contains only insignificant or token pre-
or post-solution activity—such as identifying a relevant
audience, a category of use, field of use, or technological
environment. See Prometheus, 132 S. Ct. at 1297-98,
1300-01; Bilski, 130 S. Ct. at 3230-31; Diehr, 450 U.S. at



     3  The pre-emption analysis must also recognize that
the Patent Act does not halt or impede academic research,
without commercial ends, to test, confirm, or improve a
patented invention. See Sawin v. Guild, 21 F. Cas. 554,
555 (C.C.D. Mass. 1813) (No. 12,391) (Story, J.) (in-
fringement does not occur when the invention is used “for
the mere purpose of philosophical experiment, or to
ascertain the verity and exactness of the specification”).
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION          19
191-92 & n.14; Parker v. Flook, 437 U.S. 584, 595 n.18
(1978).

     Finally, the Supreme Court has told us that a claim is
not meaningfully limited if its purported limitations
provide no real direction, cover all possible ways to
achieve the provided result, or are overly-generalized. See
Prometheus, 132 S. Ct. at 1300 (“[S]imply appending
conventional steps, specified at a high level of generality,
to laws of nature, natural phenomena, and abstract ideas
cannot make those laws, phenomena, and ideas patenta-
ble.”); Fort Props., 671 F.3d at 1323 (“Such a broad and
general limitation does not impose meaningful limits on
the claim’s scope.” (internal quotation marks omitted)).
For example, in Prometheus, “the ‘determining’ step tells
the doctor to determine the level of the relevant metabo-
lites in the blood, through whatever process the doctor or
the laboratory wishes to use.” 132 S. Ct. at 1297. Diehr
explained that the application in Flook “did not purport to
explain how these other variables were to be determined,
nor did it purport to contain any disclosure relating to the
chemical processes at work, the monitoring of process
variables, or the means of setting off an alarm or adjust-
ing an alarm system,” and that “[a]ll that it provides is a
formula for computing an updated alarm limit.” Diehr,
450 U.S. at 186-87 (footnote omitted) (internal quotation
marks omitted).

    Just as the Supreme Court has told us when a claim
likely should not be deemed meaningfully limited, it has
also given us examples of meaningful limitations which
likely remove claims from the scope of the Court’s judicial-
ly created exceptions to Section 101. Thus, a claim is
meaningfully limited if it requires a particular machine
implementing a process or a particular transformation of
matter. See Bilski, 130 S. Ct. at 3227 (“This Court’s
precedents establish that the machine-or-transformation
test is a useful and important clue . . . for determining
20            CLS BANK INTERNATIONAL   v. ALICE CORPORATION
whether some claimed inventions are processes under
§ 101.”); see also Prometheus, 132 S. Ct. at 1302-03; Diehr,
450 U.S. at 184, 192. A claim also will be limited mean-
ingfully when, in addition to the abstract idea, the claim
recites added limitations which are essential to the inven-
tion. In those instances, the added limitations do more
than recite pre- or post-solution activity, they are central
to the solution itself. And, in such circumstances, the
abstract idea is not wholly pre-empted; it is only pre-
empted when practiced in conjunction with the other
necessary elements of the claimed invention. See Diehr,
450 U.S. at 187 (“[T]he respondents here do not seek to
patent a mathematical formula. Instead, they seek
patent protection for a process of curing synthetic rubber.
Their process admittedly employs a well-known mathe-
matical equation, but they do not seek to pre-empt the use
of that equation. Rather, they seek only to foreclose from
others the use of that equation in conjunction with all of
the other steps in their claimed process.”); see also Prome-
theus, 132 S. Ct. at 1298-99 (discussing Diehr, 450 U.S.
175). 4

            3. Computer-specific limitations

    When assessing computer implemented claims, while
the mere reference to a general purpose computer will not


     4   Judge Lourie’s opinion concludes that the system
claims are not patent eligible in part because it is now
routine for computers to perform the functions de-
scribed—because the world has changed, as the opinion
puts it. Lourie Op. at 37. Using what has become routine
in 2013 to determine what was inherent in a concept in
the early 1990s injects hindsight into the eligibility analy-
sis and fails to recognize that patent eligibility, like all
statutory patentability questions, is to be measured as of
the filing date. See, e.g., 35 U.S.C. §§ 102, 103.
 CLS BANK INTERNATIONAL    v. ALICE CORPORATION            21
save a method claim from being deemed too abstract to be
patent eligible, the fact that a claim is limited by a tie to a
computer is an important indication of patent eligibility.
See Bilski, 130 S. Ct. at 3227. This is true both because
its tie to a machine moves it farther away from a claim to
no more than an idea and because that same tie makes it
less likely that the claims will pre-empt all practical
applications of the idea.

     The key to this inquiry is whether the claims tie the
otherwise abstract idea to a specific way of doing some-
thing with a computer, or a specific computer for doing
something; if so, they likely will be patent eligible, unlike
claims directed to nothing more than the idea of doing
that thing on a computer. While no particular type of
limitation is necessary, meaningful limitations may
include the computer being part of the solution, being
integral to the performance of the method, or containing
an improvement in computer technology. See SiRF Tech.,
Inc. v. Int’l Trade Comm’n, 601 F.3d 1319, 1332-33 (Fed.
Cir. 2010) (noting that “a machine,” a GPS receiver, was
“integral to each of the claims at issue” and “place[d] a
meaningful limit on the scope of the claims”). A special
purpose computer, i.e., a new machine, specially designed
to implement a process may be sufficient. See Alappat, 33
F.3d at 1544 (“Although many, or arguably even all, of the
means elements recited in claim 15 represent circuitry
elements that perform mathematical calculations, which
is essentially true of all digital electrical circuits, the
claimed invention as a whole is directed to a combination
of interrelated elements which combine to form a machine
for converting discrete waveform data samples into anti-
aliased pixel illumination intensity data to be displayed
on a display means. This is not a disembodied mathemat-
ical concept which may be characterized as an ‘abstract
idea,’ but rather a specific machine to produce a useful,
concrete, and tangible result.” (footnotes omitted)); see
also id. at 1545 (“We have held that such programming
22            CLS BANK INTERNATIONAL   v. ALICE CORPORATION
creates a new machine, because a general purpose com-
puter in effect becomes a special purpose computer once it
is programmed to perform particular functions pursuant
to instructions from program software.”).

    At bottom, where the claim is tied to a computer in
such a way that the computer plays a meaningful role in
the performance of the claimed invention, and the claim
does not pre-empt virtually all uses of an underlying
abstract idea, the claim is patent eligible.

           B. What the Exception Is Not About

    In specifying what the scope of the abstract idea ex-
ception to patent eligibility is, it is also important to
specify what the analysis is not. Flook suggested that an
abstract idea is to be “treated as though it were a familiar
part of the prior art.” 437 U.S. at 592. Prometheus used
the language of “inventive concept” to describe the “other
elements or a combination of elements . . . sufficient to
ensure that the patent in practice amounts to significant-
ly more than a patent upon the natural law itself” and
described purported limitations as “routine” or “conven-
tional.” 132 S. Ct. at 1294, 1298-99. Such language
should not be read to conflate principles of patent eligibil-
ity with those of validity, however. Nor should it be read
to instill an “inventiveness” or “ingenuity” component into
the inquiry.

    The eligibility inquiry is not an inquiry into obvious-
ness, novelty, enablement, or any other patent law con-
cept. Each section plays a different role and no one
section is more important than any other. Section 112 of
Title 35 protects the public by ensuring that patents fully
disclose, enable, and particularly claim the invention.
Sections 102 and 103 ensure that the public is free to use
what was previously known and the obvious variants
thereof. The Section 101 eligibility inquiry determines
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION            23
whether a claim is limited meaningfully to permissible
subject matter, as distinct from the validity requirements
of the other sections.

    The Supreme Court repeatedly has cautioned against
conflating the analysis of the conditions of patentability in
the Patent Act with inquiries into patent eligibility. See
Diehr, 450 U.S. at 190 (“The question therefore of wheth-
er a particular invention is novel is wholly apart from
whether the invention falls into a category of statutory
subject matter.” (internal quotation marks omitted)); see
also Prometheus, 132 S. Ct. at 1304 (recognizing that “to
shift the patent-eligibility inquiry entirely to [§§ 102, 103,
and 112] risks creating significantly greater legal uncer-
tainty, while assuming that those sections can do work
that they are not equipped to do”). Because a new combi-
nation of old steps is patentable, as is a new process using
an old machine or composition, subject matter eligibility
must exist even if it was obvious to use the old steps with
the new machine or composition. Otherwise the eligibility
analysis ignores the text of sections 101 and 100(b), and
reads Section 103 out of the Patent Act.

    The Supreme Court’s reference to “inventiveness” in
Prometheus must be read as shorthand for its inquiry into
whether implementing the abstract idea in the context of
the claimed invention inherently requires the recited
steps. Thus, in Prometheus, the Supreme Court recog-
nized that the additional steps were those that anyone
wanting to use the natural law would necessarily use. See
Prometheus, 132 S. Ct. at 1298. If, to implement the
abstract concept, one must perform the additional step,
then the step merely separately restates an element of the
24            CLS BANK INTERNATIONAL   v. ALICE CORPORATION
abstract idea, and thus does not further limit the abstract
concept to a practical application. 5

                C. Nature of Our Inquiry

    Because we are assessing judicially created exceptions
to a broad statutory grant, one of the principles that must
guide our inquiry is that judge-made exceptions to proper-
ly enacted statutes are to be narrowly construed. Indeed,
the Supreme Court has cautioned that, to avoid improper
narrowing by courts of congressional enactments, resort
to judge-made exceptions to statutory grants must be
rare. See, e.g., W. Union Tel. Co. v. Lenroot, 323 U.S. 490,
514 (1945) (“[T]he judicial function does not allow us to
disregard that which Congress has plainly and constitu-
tionally decreed and to formulate exceptions which we
think, for practical reasons, Congress might have made
had it thought more about the problem.”); United States v.
Rutherford, 442 U.S. 544, 559 (1979) (“Whether, as a
policy matter, an exemption should be created is a ques-
tion for legislative judgment, not judicial inference.”).




     5  Judge Lourie’s opinion takes the reference to an
“inventive concept” in Prometheus and imbues it with a
life that is neither consistent with the Patent Act’s de-
scription of Section 101 nor with the totality of Supreme
Court precedent regarding the narrow exceptions thereto.
He concludes that “inventive concept” must refer to a
“genuine human contribution to the claimed subject
matter.” Lourie Op. at 20. He, thus, injects an “ingenui-
ty” requirement into the abstract exception inquiry. It is
inconceivable to us that the Supreme Court would choose
to undo so much of what Congress tried to accomplish in
the 1952 Patent Act, and to do so by the use of one phrase
in one opinion.
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION           25
    Congress drafted Section 101 broadly and clearly, and
anything beyond a narrow exception would be impermis-
sibly in tension with the statute’s plain language and
design. See Chakrabarty, 447 U.S. at 308 (“In choosing
such expansive terms as ‘manufacture’ and ‘composition
of matter,’ modified by the comprehensive ‘any,’ Congress
plainly contemplated that the patent laws would be given
wide scope.”); id. at 315 (“Broad general language is not
necessarily ambiguous when congressional objectives
require broad terms.”); cf. Bilski, 130 S. Ct. at 3226 (“This
Court has not indicated that the existence of these well-
established exceptions gives the Judiciary carte blanche to
impose other limitations that are inconsistent with the
text and the statute’s purpose and design.”). As the
Supreme Court has made clear, too broad an interpreta-
tion of these exclusions from the statutory grant of Sec-
tion 101 “could eviscerate patent law.” Prometheus, 132
S. Ct. at 1293. It is particularly important that Section
101 not be read restrictively to exclude “unanticipated
inventions” because the most beneficial inventions are
“often unforeseeable.” See Chakrabarty, 447 U.S. at 316;
see also J.E.M. Ag Supply, 534 U.S. at 135 (describing
Section 101 as “a dynamic provision designed to encom-
pass new and unforeseen inventions.”). Broad inclusivity
is the Congressional goal of Section 101, not a flaw.
Judicially created exceptions must not be permitted to
thwart that goal.

     Mindful of these admonitions, we turn to CLS Bank’s
contention that the presumption of validity should not
apply to patent eligibility challenges. CLS Bank contends
that the presumption of validity only applies to statutory
bases for invalidating a patent—35 U.S.C. Sections 102,
103, 112, and 251. Thus, although the Supreme Court
invalidated the patent before it in Prometheus because it
fell within one of the exceptions to patent eligibility—the
law of nature exception—CLS Bank contends that the
Section 101 inquiry does not involve the presumption of
26           CLS BANK INTERNATIONAL   v. ALICE CORPORATION
validity in the same way the statutory bases for invalidity
do. We disagree. 6

    Before issuing a patent, the Patent Office rejects
claims if they are drawn to ineligible subject matter, just
as it rejects claims if not compliant with Sections 102,
103, or 112. Thus, when a patent issues, it does so after
the Patent Office assesses and endorses its eligibility
under Section 101, just as it assesses and endorses its
patentability under the other provisions of Title 35. See
Microsoft Corp. v. i4i Ltd. P’ship, 131 S. Ct. 2238, 2242,
(2011) (“Congress has set forth the prerequisites for
issuance of a patent, which the PTO must evaluate in the
examination process. To receive patent protection a
claimed invention must, among other things, fall within
one of the express categories of patentable subject matter,
§ 101, and be novel, § 102, and nonobvious, § 103.”). We
see no reason not to apply the same presumption of validi-
ty to that determination as we do to the Patent Office’s
other patentability determinations.

    Because we believe the presumption of validity ap-
plies to all challenges to patentability, including those
under Section 101 and the exceptions thereto, we find
that any attack on an issued patent based on a challenge
to the eligibility of the subject matter must be proven by
clear and convincing evidence. Cf. Microsoft, 31 S. Ct. at
2242 (“We consider whether § 282 requires an invalidity
defense to be proved by clear and convincing evidence.
We hold that it does.”). We believe, moreover, that appli-


     6  In its reply brief, CLS Bank intimates that the
presumption of validity does not apply because a chal-
lenge to patent eligibility is not a listed defense to in-
fringement under 35 U.S.C. § 282(b). This issue, however,
was not fully briefed by the parties and, accordingly, we
do not address it.
 CLS BANK INTERNATIONAL    v. ALICE CORPORATION            27
cation of this presumption and its attendant evidentiary
burden is consistent with the Supreme Court’s admoni-
tion to cabin the judicially created exceptions to Section
101 discussed above.

                             ***

    With these principles in mind, we turn to the specific
claims here. We start with the system claims, which all
four of us agree are patent-eligible.

                              IV

    At the outset, a computer-implemented invention is
eligible for patenting under Section 101. Computers are
“machines.”     Machines are expressly eligible subject
matter under Section 101. Having said that, however,
were it not for software, programmable computers would
be useless. A computer without software collects dust, not
data. The operation of the software changes the comput-
er, altering its ability to perform one function or another
as the software indicates. This court long ago recognized
that a computer programmed to perform a specific func-
tion is a new machine with individualized circuitry creat-
ed and used by the operation of the software. See
Alappat, 33 F.3d at 1545. The combination of machine
and software “creates a new machine, because a general
purpose computer in effect becomes a special purpose
computer once it is programmed to perform particular
functions pursuant to instructions from program soft-
ware.” Id.; see Morse, 56 U.S. (15 How.) at 113 (“[H]e says
he does not confine his claim to the machinery or parts of
machinery, which he specifies . . . .”); cf. Bilski, 130 S. Ct.
at 3227 (an important clue that a claim embracing an
abstract idea is patent eligible is if its use is tied to a
machine).
28            CLS BANK INTERNATIONAL   v. ALICE CORPORATION
    The combination of new software and a computer ma-
chine accomplishes wonders by reducing difficult process-
es—like determining where someone is on the earth,
instantly translating Chinese to English, or performing
hundreds of functions in a hand-held device called a
“smart phone”—into a series of simple steps. For exam-
ple, the Supreme Court upheld precisely this kind of
combination for the computer-implemented parameters to
run a rubber press—breaking the known steps into tiny
mathematical calculations that advanced a known func-
tion beyond prior capabilities. See Diehr, 450 U.S. at 179.
Indeed, much of the innovative energy and investment of
the past few decades have focused on software improve-
ments that have produced revolutions in modern life,
including the “smart phone.”

    Nonetheless we must examine whether, despite fall-
ing within the plain language of Section 101, clear and
convincing evidence shows that a claim to a computer-
implemented invention is barred from patent eligibility by
reason of the narrow judicial prohibition against claiming
an abstract idea. In Bilski, the Court analyzed whether,
and under what circumstances, a method claim’s tie to a
machine could make it a practical application of the
underlying idea, and thus patent-eligible. The Court
explained that a machine tie, though not required, is a
“useful and important clue” that a method claim is pa-
tent-eligible. Bilski, 130 S. Ct. at 3227. If tying a method
to a machine can be an important indication of patent-
eligibility, it would seem that a claim embodying the
machine itself, with all its structural and functional
limitations, would rarely, if ever, be an abstract idea. Cf.
Diehr, 450 U.S. at 187.

    Indeed, in theory, an inventor could claim a machine
combination with circuitry, transistors, capacitors, and
other tangible electronic components precisely arrayed to
accomplish the function of translating Chinese to English.
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION          29
These complex interrelated machine components would
squarely fit within the terms of Section 101 and involve
nothing theoretical, highly generalized, or otherwise
abstract. The fact that innovation has allowed these
machines to move from vacuum-tube-filled specialized
mechanical behemoths, to generalized machines changed
by punch cards, to electronically programmable machines
that can fit in the palm of your hand, does not render
them abstract. 7

    Analyzing each asserted system claim as a whole, as
we are required to do, demonstrates that each does not
claim anything abstract in its machine embodiments.
Especially in light of the fact that this appeal involves
summary judgment of invalidity, and so requires clear
and convincing evidence of invalidity, for the following
reasons we would reverse the district court.


   7     We must disagree with Judge Lourie that a com-
puter must do something other than what a computer
does before it may be considered a patent-eligible inven-
tion. See Lourie Op. at 27 (“At its most basic, a computer
is just a calculator capable of performing mental steps
faster than a human could. Unless the claims require a
computer to perform operations that are not merely
accelerated calculations, a computer does not itself confer
patent eligibility.”). Everything done by a computer can
be done by a human. Requiring a computer to do some-
thing that a human could not would mean that computer
implementation could never produce patent eligibility. If
a computer can do what a human can in a better, specifi-
cally limited way, it could be patent eligible. Indeed, even
an increase in speed alone may be sufficient to result in a
meaningful limitation; if a computer can perform a pro-
cess that would take a human an entire lifetime, a claim
covering that solution should be sufficiently limited to be
patent eligible.
30            CLS BANK INTERNATIONAL   v. ALICE CORPORATION
                             V

      Claim 26 of the ’375 Patent is typical of Alice’s sys-
tem claims and recites:

     A data processing system to enable the exchange
     of an obligation between parties, the system com-
     prising:

          a communications controller,

          a first party device, coupled to said commu-
        nications controller,

          a data storage unit having stored therein

            (a) information about a first account for a
            first party, independent from a second ac-
            count maintained by a first exchange in-
            stitution, and

            (b) information about a third account for a
            second party, independent from a fourth
            account maintained by a second exchange
            institution; and

        a computer, coupled to said data storage unit
        and said communications controller, that is
        configured to

            (a) receive a transaction from said first
            party device via said communications con-
            troller;

            (b) electronically adjust said first account
            and said third account in order to effect an
            exchange obligation arising from said
            transaction between said first party and
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION             31
           said second party after ensuring that said
           first party and/or said second party have
           adequate value in said first account and/or
           said third account, respectively; and

           (c) generate an instruction to said first ex-
           change institution and/or said second ex-
           change institution to adjust said second
           account and/or said fourth account in ac-
           cordance with the adjustment of said first
           account and/or said third account, wherein
           said instruction being an irrevocable, time
           invariant obligation placed on said first
           exchange institution and/or said second
           exchange institution.

’375 Patent claim 26 (emphases added).

    Even viewed generally, the claim covers the use of a
computer and other hardware specifically programed to
solve a complex problem. Specifically, the claimed data
processing system is limited to an implementation of the
invention that includes at least four separate structural
components: a computer, a first party device, a data
storage unit, and a communications controller coupled via
machine components to the computer and the first party
device. The claim further limits the system by requiring a
structural configuration that “receive[s],” “electronically
adjust[s],” and “generate[s]” according to the specific
requirements of the system. These are traditional hard-
ware claims and the ’375 Patent discloses at least thirty-
two figures which provide detailed algorithms for the
software with which this hardware is to be programmed.

    Lest it be said that these structural and functional
limitations are mere conventional post-solution activity
that is not integral to the performance of the claimed
system, the specification explains implementation of the
32            CLS BANK INTERNATIONAL    v. ALICE CORPORATION
recited special purpose computer system. It states, for
example, that the “core of the system hardware is a
collection of data processing units.” ’375 Patent col. 7 ll.
22–23. Each processing unit “is operably connected
with . . . one or more mass data storage units . . . to store
all data received from stakeholders, and other data relat-
ing to all other software operations generating or retriev-
ing stored information.” Id. col. 7 ll. 39–43. The
specification also explains that the communications
controllers “effect communications between the processing
units . . . and the various external hardware devices used
by the stakeholders to communicate data or instructions
to or from the processing units.” Id. col. 7 ll. 46–52. The
computer can connect to the communications controller by
means of another machine, a modem. Id. col. 7 ll. 57–60.

     The specification also includes numerous flowcharts
that provide algorithm support for the functions recited in
the claims. Each processor in the claimed system runs
applications software that is written to implement the
algorithms in Figures 8 to 16 and 18 to 40. See id. col. 7
ll. 26–31. As just one example, the system performs the
algorithm depicted in Figure 16 (shown below) to confirm
that parties are able to exchange obligations (“matched
order confirmation”). See, e.g., id. col. 20 l. 54 – col. 21 l.
18.
CLS BANK INTERNATIONAL   v. ALICE CORPORATION   33
34            CLS BANK INTERNATIONAL   v. ALICE CORPORATION
     The specification states that the confirmation algo-
rithm includes the step of “creating transactions in the
payment shadow file.” Id. col. 20 ll. 62–64. This step
corresponds to blocks 1624 and 1625 in Figure 16. After
creating these transactions, the system “checks that
‘consideration payment’ was effected successfully” (block
1626 in Figure 16), which requires determining whether
the required consideration amount is available in the
payment shadow file. Id. col. 20 l. 64–col. 21 l. 1. If there
is insufficient consideration, the matched order is rejected
(block 1627). Id. col. 21 ll. 1–4. This portion of the speci-
fication thus provides algorithm support for the “electron-
ically adjust” element of claim 26, in which the system
adjusts accounts “after ensuring that said first party
and/or said second party have adequate value in” their
accounts. Id. claim 26.

    Labeling this system claim an “abstract concept”
wrenches all meaning from those words, and turns a
narrow exception into one which may swallow the expan-
sive rule (and with it much of the investment and innova-
tion in software). Nor is claim 26 even the narrowest,
most detailed claim on appeal. The patents at issue
contain dependent claims which include additional struc-
tural and functional limitations that render the system
even more concrete. Claim 36, for example, further
comprises “means for allowing said first party to acquire
an item from said second party, wherein the exchange
obligation relates to said item.” This means-plus-function
element is limited to the specific algorithms that the
specification teaches as performing the recited function.
Dependent claim 37 limits the data processing system to
one that “further compris[es] a second party device,
wherein said computer is further configured to receive a
transaction from said second party device via said com-
munications controller.” This adds a fifth structure, the
second party device, to the required system.
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION            35
     The ’720 Patent’s claims recite similar structure and
programming. The claims recite a data processing system
comprising a data storage unit coupled to a computer.
See, e.g., ’720 Patent claim 1. The computer is configured
(programmed) to perform the “receive,” “electronically
adjust,” and “generate” functions. Id. Certain dependent
claims add additional structural and functional limita-
tions that show even more clearly that the claims are
directed to a concrete and practical application of any
underlying idea. Claims 27, 59, 67, 79, and 84, for exam-
ple, limit the system to one with “means for allowing said
first party to acquire an item from said second party.”
The specific structure and functions recited in these
claims, which are integral to performing the invention,
show that the ’720 Patent’s claims are directed to practi-
cal applications of the underlying idea and thus are
patent-eligible.

    The claims do not claim only an abstract concept
without limitations that tie it to a practical application.
Confirming this, someone can use an escrow arrangement
in many other applications, without computer systems,
and even with computers but in other ways without
infringing the claims. See Appellant’s En Banc Resp. Br.
40. Nor is this simply a case where a claim has been
limited to a particular field. Cf. Bilski, 130 S. Ct. at 3231.
Indeed, because they require a machine, the claims can-
not be infringed even in this field, and even if a human
performs the claimed steps through a combination of
physical or mental steps. It would be improper for the
court to ignore these limitations and instead attempt to
identify some “gist” or “heart” of the invention. See Diehr,
450 U.S. at 188 (it is improper to dissect the claims; they
must be considered as a whole); Aro Mfg. Co. v. Converti-
ble Top Replacement Co., 365 U.S. 336, 345 (1961)
(“[T]here is no legally recognizable or protected ‘essential’
element, ‘gist’ or ‘heart’ of the invention.”).
36            CLS BANK INTERNATIONAL   v. ALICE CORPORATION
    We next test the additional elements in addition to
any abstract idea of an escrow present in the claim. The
recited steps are not inherent in the process of using an
escrow. One can conduct an escrow without a data pro-
cessing system that includes a data storage unit coupled
to a computer which has been modified by software to
receive transactions, adjust records, and generate elec-
tronic instructions according to specific structural limita-
tions in both software and hardware formats. These
structural elements are additional steps to an escrow, not
inherent in it.

    Further, we detect no clear and convincing evidence in
this record that as of the critical time the steps recited
were used commonly in computer implemented prior art
practicing the abstract concept implicated here. As ex-
plained above, whether the additional steps were routine
in some other context is not the inquiry: a combination of
old processes is patent eligible subject matter. 35 U.S.C.
§ 100(b). As discussed above, nonobviousness is not an
issue under Section 101; neither is “invention.” Instead,
the question is whether these steps are inherent in an
escrow. This record contains no clear and convincing
evidence to that effect. Instead, much of the information
relied upon by CLS Bank is not even “prior art,” especially
given that some claims may have priority to the early
1990’s. See Respondent’s Br. at 28. A use of a computer
is not inherent in an escrow, and the record gives no
reason to conclude that use of machines in the specific
claimed system would “involve well-understood, routine,
conventional activity previously engaged in by research-
ers in the field.” Prometheus, 132 S. Ct. at 1294. Rapid
changes in computer and telecommunication technology
occurred in the early 1990’s. While apparently routine at
the present time to use computers to perform instantane-
ous international financial transactions, this court will
not engage in the hindsight error of speculating about the
state of that technology over twenty years ago.
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION           37
     Finally, these limitations are not stated at a high lev-
el of generality. These system limitations do not recite
only using the steps of an escrow as applied to a particu-
lar field of commerce. Because of the number and speci-
ficity of the structural limitations, these claims have
narrow, if any, relevant pre-emptive effect. Under Section
101, even a process made up of old processes is patent
eligible; so too must be a new machine made to perform
even old processes.

    The claims here are analogous to those found patent
eligible in Diehr. The claims related to a method that
used a machine, an abstract idea, and other steps to cure
rubber. See Diehr, 450 U.S. at 179 n.5. The examiner
rejected the claims because he deemed the additional
steps were “conventional and necessary to the process.”
Id. at 180-81 (internal quotation marks omitted). Those
steps included steps that sound utterly old and routine:
“heating said mold,” “comparing” data, “constantly deter-
mining the temperature of the mold,” “repetitively calcu-
lating,” and “opening the press.” Id. at 179 n.5. Indeed,
even the Arrhenius equation was well-known in the art,
but in combination was eligible.

    The Supreme Court acknowledged these fact findings
about the known status of various elements of the claim
in Diehr, but it nonetheless reversed. It stated that the
claims were patent eligible because they were “drawn to
an industrial process for the molding of rubber products.”
Id. at 192–93. In doing so, the Court explained that the
claims “describe[d] a process of curing rubber beginning
with the loading of the mold and ending with the opening
of the press and the production of a synthetic rubber
product.” Id. at 193 n.15. Indeed, the computer system
supplied the speed, accuracy, reliability, and automaticity
that enhanced and applied the known rubber molding
process and formulae. Moreover, as the Supreme Court
also explained in Bilski, a method linked to a machine
38            CLS BANK INTERNATIONAL   v. ALICE CORPORATION
exhibits a “useful and important clue” that even the
process alone (let alone a system claim that expressly
recites complex machine combinations) is patent-eligible.
Bilski, 130 S. Ct. at 3227.

    Here, the claim recites a machine and other steps to
enable transactions. The claim begins with the machine
acquiring data and ends with the machine exchanging
financial instructions with other machines. The “abstract
idea” present here is not disembodied at all, but is instead
integrated into a system utilizing machines. In sum, the
system claims are indistinguishable from those in Diehr.
For these reasons, the system claims are not directed to
patent ineligible subject matter. We would therefore
reverse the summary judgment of invalidity for ineligibil-
ity of the system claims and remand them for further
consideration.

                            VI

   Claim 33 of the ’479 Patent is representative of the
method claims and recites:

         A method of exchanging obligations as be-
     tween 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 compris-
     ing the steps of:

        (a) creating a shadow credit record and a
        shadow debit record for each stakeholder par-
        ty 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;
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION             39
        (c) for every transaction resulting in an ex-
        change obligation, the supervisory institution
        adjusting each respective party’s shadow cred-
        it record or shadow debit record, allowing only
        these [sic] 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 institu-
        tion instructing one of the exchange institu-
        tions to exchange credits or debits to the
        credit record and debit record of the respective
        parties in accordance with the adjustments of
        the said permitted transactions, the credits
        and debits being irrevocable, time invariant
        obligations placed on the exchange institu-
        tions.

’479 Patent col. 65 ll. 23–50. Alice concedes that claims
39 to 41 of the ’375 Patent rise or fall with the method
claims, and so we will not separately analyze them.
Petitioner’s Br. 50 n.3.

     At the outset, the invention claims a “process.” By
definition, a process is statutory subject matter under
Section 101—whether or not the recited elements are
“old.” 35 U.S.C. § 100(b). Thus, the inquiry shifts to seek
clear and convincing evidence that the claim, nonetheless,
is ineligible for patenting because it falls within one of the
judicial exceptions. Here, the question asks whether the
claim is abstract.

     The claim describes the general and theoretical con-
cept of using a neutral intermediary in exchange transac-
tions to reduce risk that one party will not honor the deal,
i.e., an escrow arrangement. The record in this case
40            CLS BANK INTERNATIONAL   v. ALICE CORPORATION
shows that this area of art has used the fundamental
concept of an intermediary in this context for centuries, if
not longer. See Petitioners’ Br. 36. Thus, this claim
embodies elements of abstractness which propel this court
into a further examination of its eligibility. Obviously,
the claim does not simply state “use an escrow.” Conse-
quently, we must determine whether the recited steps are
inherent in an escrow and claimed at a high level of
generality, such that in fact the claim is not to a practical
application of the concept of an escrow, but in effect
claims the abstract concept of an escrow. If this claim
exhibits those infirmities, it is likely to also exhibit a
broad pre-emptive effect. Thus, we turn to the additional
limitations.

    The first claimed step involves creating shadow credit
and debit records for the parties to the transaction. This
highly generalized step is nothing but a recitation of a
step inherent in the concept of an escrow. Further, the
record again shows that bookkeepers have long kept track
of accounts in this fashion as a basic form of bookkeeping.
Appellant’s Br. 39 (citing Richard A. Brown, A History of
Accounting and Accountants 93 (1905)). The step is not
just predominant in the prior art, but an inherent part of
any escrow arrangement.

     The second claimed step involves obtaining the values
for the previously created accounts to allow for their later
manipulation. This generalized step is also inherent in
the concept of an escrow. To determine the credit to one
party and the debit to the other requires a starting place
for the adjustments. Cf. Bilski, 130 S. Ct. at 3231 (hold-
ing claim not directed to patent-eligible subject matter
because establishing “inputs” for the equation required
done according to well-known techniques). This step only
recites another inherent feature of an escrow. Similarly,
the third step involves adjusting the account balances to
reflect the parties’ trading activity. The fourth step
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION          41
likewise adds nothing beyond the well-known procedures
used in the concept of an escrow: an instruction to pay or
deduct funds is made. Again, the record shows that an
intermediary cannot perform an escrow arrangement
without either paying or ordering someone to pay the
proper amounts.

    Thus, each step individually recites merely a general
step inherent within the concept of an escrow, using a
third party intermediary in this fashion. While the claim
certainly limits use of an escrow to the context of this
particular field, that attempted limitation is not enough.
Cf. Bilski, 130 S. Ct. at 3231 (stating that “limiting an
abstract idea to one field of use or adding token post-
solution components did not make the concept patenta-
ble”); see Flook, 437 U.S. at 586 (explaining that other
steps in the process did not limit the claim to a particular
application, even though they applied generally to hydro-
carbon conversion processes).

    Finally, we note that the method claims do not men-
tion a computer. CLS Bank, 768 F. Supp. 2d at 236.
Even so, the district court assumed “the single fact” that
the “method claims are implemented by computer . . . .”
Id. Putting to the side whether this construction was
correct, see Phillips v. AWH Corp., 415 F.3d 1303, 1323
(Fed. Cir. 2005) (en banc) (courts generally should not
read limitations from the specification into a claim), even
assuming the method claims require use of a computer in
some unspecified way, this implicit reference to computer
“implementation” is not, by itself, enough.

    To sum up, the claim as a whole embraces using an
escrow to avoid risk of one party’s inability to pay—an
abstract concept. Viewed as a whole, the claim is indis-
tinguishable from the claim in Bilski, 130 S. Ct. at 3231.
Viewed individually, the recited elements only recite the
steps inherent in that concept (stated at a high level of
42           CLS BANK INTERNATIONAL   v. ALICE CORPORATION
generality) and implement those steps according to meth-
ods long used in escrows according to the record in this
case. As explained, the attempt to limit the escrow con-
cept to a particular field is not sufficient. See id. Thus,
like Judge Lourie, we would hold the method claims in
this case are not eligible under Section 101, but would do
so for different reasons than he articulates.

                           VII

    For the reasons stated above, Chief Judge Rader and
Judges Linn, Moore, and O’Malley would reverse the
district court’s determination that the system claims
address subject matter that is not patent eligible. Chief
Judge Rader and Judge Moore, however, would affirm the
district court’s conclusion that the method and media
claims are patent ineligible. Chief Judge Rader and
Judge Moore, thus, dissent in part and concur in part in
the judgment the court enters today.

     Judges Linn and O’Malley believe that, if the method
claims could be interpreted as in part VI, they would be
patent ineligible. But, for the reasons stated in their
separate opinion, they believe that, as properly construed
on this record and in this procedural posture, the method
claims are patent eligible. Accordingly, they dissent from
all aspects of the judgment the court enters today.

    With these results in mind, all four of us would re-
mand for further consideration of the conditions and
requirements of the Patent Act and further proceedings,
as appropriate.
  United States Court of Appeals
      for the Federal Circuit
                 ______________________

            CLS BANK INTERNATIONAL,
                  Plaintiff-Appellee,

                          AND

               CLS SERVICES LTD.,
           Counterclaim-Defendant-Appellee,

                            v.

          ALICE CORPORATION PTY. LTD,
                Defendant-Appellant.
               ______________________

                       2011-1301
                 ______________________

    Appeal from the United States District Court for the
District of Columbia in Case No. 07-CV-0974, Judge
Rosemary M. Collyer.
                ______________________

                 Decided: May 10, 2013
                 ______________________


Dissenting-in-part opinion filed by MOORE, Circuit Judge,
in which RADER, Chief Judge, and LINN and O’MALLEY,
Circuit Judges, join.
    I am concerned that the current interpretation of
§ 101, and in particular the abstract idea exception, is
2                               CLS BANK v. ALICE CORP.
causing a free fall in the patent system. The Supreme
Court has taken a number of our recent decisions and, in
each instance, concluded that the claims at issue were not
patent-eligible. See Bilski, Prometheus, Myriad (under
consideration). Today, several of my colleagues would
take that precedent significantly further, lumping togeth-
er the asserted method, media, and system claims, and
holding that they are all patent-ineligible under § 101.
Holding that all of these claims are directed to no more
than an abstract idea gives staggering breadth to what is
meant to be a narrow judicial exception. And let’s be
clear: if all of these claims, including the system claims,
are not patent-eligible, this case is the death of hundreds
of thousands of patents, including all business method,
financial system, and software patents as well as many
computer implemented and telecommunications patents.1



    1    If all of the claims of these four patents are
ineligible, so too are the 320,799 patents which were
granted from 1998-2011 in the technology area “Electrical
Computers, Digital Processing Systems, Information
Security, Error/Fault Handling.” See U.S. Patent &
Trademark Office, Selected Technology Report, available
at
http://www.uspto.gov/web/offices/ac/ido/oeip/taf/ec_dps_is_
efh.htm. Every patent in this technology category covers
inventions directed to computer software or to hardware
that implements software. In 2011 alone, 42,235 patents
were granted in this area. Id. This would render
ineligible nearly 20% of all the patents that actually
issued in 2011. If the reasoning of Judge Lourie’s opinion
were adopted, it would decimate the electronics and
software industries.      There are, of course, software,
financial system, business method and telecom patents in
other technology classes which would also be at risk. So
this is quite frankly a low estimate. There has never been
 CLS BANK V. ALICE CORP.                                   3
My colleagues believe that the trajectory the Supreme
Court has set for § 101 requires us to conclude that all of
the claims at issue here are directed to unpatentable
subject matter. Respectfully, my colleagues are wrong.
    To get to their conclusion, my colleagues trample upon
a mountain of precedent that requires us to evaluate each
claim as a whole when analyzing validity. As the Su-
preme Court recognized in Bilski, whether a claim is tied
to a machine is “an important and useful tool” for as-
sessing that it is directed to patent eligible subject matter.
Bilski v. Kappos, 130 S. Ct. 3218, 3227 (2010). The
claimed data processing system at issue here does not
incorporate a machine into the claim in a manner that
would constitute insignificant pre- or post-solution activi-
ty. These claims are to a system of tangible machine
components with limited specialized functions pro-
grammed consistent with detailed algorithms disclosed in
the patent. How can this system, with its first party
device, data storage unit, second party device, computer,
and communications controller, be an “abstract idea”?
Although these claims could certainly be challenged under
§ 102 or § 103 or even § 112, no contortion of the term
“abstract idea” can morph this physical system into an
abstract idea.
    Our court is irreconcilably fractured over these sys-
tem claims and there are many similar cases pending
before our court and the district courts. It has been a very
long time indeed since the Supreme Court has taken a
case which contains patent eligible claims. This case
presents the opportunity for the Supreme Court to distin-
guish between claims that are and are not directed to
patentable subject matter. For the reasons explained
herein, I write separately to explain why the system


a case which could do more damage to the patent system
than this one.
4                                CLS BANK v. ALICE CORP.
claims at issue are directed to patent eligible subject
matter.
                            I.
    Although the Supreme Court’s recent decisions in
Prometheus and Bilski do not address system claims, they
certainly provide guidance on the abstract idea exception.
In Bilski, the Court held that claims directed to a method
of hedging risk in the energy market were not patent-
eligible because they covered no more than an abstract
idea. 130 S. Ct. at 3231. The Court held that while the
machine-or-transformation test is not the “sole test” for
deciding whether an invention is patent eligible, it “is a
useful and important clue.” Id. at 3227. Bilski makes
clear the Court’s view that a method claim may be patent-
eligible under § 101 even if it is not tied in any way to a
machine. Id. The Court reasoned that requiring a ma-
chine tie would risk stifling innovation by “creat[ing]
uncertainty as to the patentability of software, advanced
diagnostic medicine techniques, and inventions based on
linear programming, data compression, and the manipu-
lation of digital signals.” Id.
    Although the Court held that a machine tie is not nec-
essary, it explained that a method claim’s recitation of
machine limitations is a “useful and important clue” that
the claim is patent-eligible. Id. This is because incorpo-
rating machine elements, such as computer hardware,
helps to limit the claim to a practical application of any
underlying idea. It is true that, if the machine is mere
insignificant post-solution activity or data gathering
antecedent to performance of a claimed method, then its
incorporation into a claim to an otherwise patent-
ineligible abstract idea would not be sufficient to avoid
the abstract idea exception to patent-eligibility. See Mayo
Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct.
1289, 1301 (2012); Bilski, 130 S. Ct. at 3231. But if
meaningfully tying a method to a machine can be an
 CLS BANK V. ALICE CORP.                                  5
important indication of patent-eligibility, how can a claim
to the machine itself, with all its structural and functional
limitations, not be patent-eligible?
    In Prometheus, the Court held that claims directed to
a method of optimizing therapeutic efficacy of a drug were
not patent-eligible. Prometheus, 132 S. Ct. at 1305. The
Court, however, also cautioned that “too broad an inter-
pretation” of the abstract idea exception to § 101 “could
eviscerate patent law” because “all inventions at some
level embody, use, reflect, rest upon, or apply laws of
nature, natural phenomena, or abstract ideas.” Id. at
1293. The Court thus reiterated the rule from Diehr that,
although an abstract idea itself is not patent-eligible, “an
application of a law of nature or mathematical formula to
a known structure or process may well be deserving of
patent protection.” Id. at 1293-94. This distinction
between an abstract idea and its application reflects a
delicate balance between promoting innovation through
patents and preventing monopolization of the basic tools
of scientific and technological work. Id. at 1293, 1301-02.
The key question is thus whether a claim recites a suffi-
ciently concrete and practical application of an abstract
idea to qualify as patent-eligible.
    Prometheus instructs us to answer this question by
determining whether a process involving a natural law or
abstract idea also contains an “inventive concept,” which
it defined as “other elements or a combination of ele-
ments . . . sufficient to ensure that the patent in practice
amounts to significantly more than a patent upon the
natural law itself.” Id. at 1294. The Court reiterated that
the “inventive concept” must be something more than
limiting the invention to a particular technological envi-
ronment or adding data-gathering steps or other insignifi-
cant post-solution activity. Id. at 1294, 1299. In other
words, “one must do more than simply state the law of
nature while adding the words ‘apply it.’” Id. at 1294.
This language is a reminder of the long-understood prin-
6                                CLS BANK v. ALICE CORP.
ciple that adding insignificant pre- or post-solution activi-
ty to an abstract idea does not make the claim any less
abstract.      See, e.g., Diehr, 450 U.S. at 191-92
(“[I]nsignificant post-solution activity will not transform
an unpatentable principle into a patentable process.”);
Parker v. Flook, 437 U.S. 584, 590 (1978) (“The notion
that post-solution activity, no matter how conventional or
obvious in itself, can transform an unpatentable principle
into a patentable process exalts form over substance.”).
    My colleagues erroneously apply Prometheus’s “in-
ventive concept” language by stripping away all known
elements from the asserted system claims and analyzing
only whether what remains, as opposed to the claim as a
whole, is an abstract idea. See Lourie Op. at 35-36. From
this flawed analysis, they conclude that “the system
claims are little different” from the asserted method
claims. Lourie Op. at 34. This approach is inconsistent
with the 1952 Patent Act, and years of Supreme Court,
CCPA, and Federal Circuit precedent that abolished the
“heart of the invention” analysis for patentability.
    Moreover, my colleagues’ analysis imbues the § 101
inquiry with a time-dependency that is more appropriate-
ly the province of §§ 102 and 103. It is true that the
analyses of patent-eligibility under § 101 and novelty
under § 102 may sometimes overlap. See Prometheus, 132
S. Ct. at 1304. But § 101 is not a moving target—claims
should not become abstract simply through the passage of
time. Under my colleagues’ approach, however, a system
claim that passes § 101 when the patent issues could later
magically transform into an abstract idea simply because
certain computer hardware elements no longer seem
inventive.
    Bilski and Prometheus follow on a long line of Su-
preme Court cases that distinguish between machine
claims and method claims on the basis that a machine
covers an application of any underlying idea rather than
 CLS BANK V. ALICE CORP.                                  7
the idea itself. For example, although a claim’s statutory
class is not dispositive of the § 101 inquiry, the Supreme
Court explained in Burr v. Duryee that a machine is a
concrete thing, not an idea:
   A machine is a concrete thing, consisting of parts,
   or of certain devices and combinations of devices.
   The principle of a machine is properly defined to
   be ‘its mode of operations,’ or that peculiar combi-
   nation of devices which distinguish it from other
   machines. A machine is not a principle or an idea.
68 U.S. (1 Wall.) 531, 570 (1863) (emphases added). The
Court explained that, “[b]ecause the law requires a pa-
tentee to explain the mode of operation of his peculiar
machine, which distinguishes it from others, it does not
authorize a patent for a ‘mode of operations as exhibited
in a machine.’” Id. In other words, the requirement of
specifying the particular limitations and structure of a
claimed machine meaningfully limits the claim, such that
it amounts to more than the principle or idea that it
embodies. The Court later reiterated this distinction,
stating that “[a] machine is a thing. A process is an act,
or a mode of acting. The one is visible to the eye,—an
object of perpetual observation. The other is a conception
of the mind, seen only by its effects when being executed
or performed.” Expanded Metal Co. v. Bradford, 214 U.S.
366, 384 (1909) (quoting Tilghman v. Proctor, 102 U.S.
707, 728 (1880)).
    Our court, sitting en banc, applied these principles to
hold patent-eligible a claim that would read on a general
purpose computer programmed to carry out the opera-
tions recited in the claim. In re Alappat, 33 F.3d 1526,
1545 (Fed. Cir. 1994) (en banc). We stated that, although
many of the means-plus-function elements recited in the
only asserted independent claim represent circuitry
elements that perform mathematical calculations, “the
claimed invention as a whole is directed to a combination
8                               CLS BANK v. ALICE CORP.
of interrelated elements which combine to form a ma-
chine” for performing the invention’s anti-aliasing tech-
nique. Id. at 1544. We explained that “[t]his is not a
disembodied mathematical concept which may be charac-
terized as an ‘abstract idea,’ but rather a specific ma-
chine.” Id. The patent applicant admitted that its claim
“would read on a general purpose computer programmed
to carry out the claimed invention.” Id. at 1545. We
nonetheless held that the claim was patent-eligible under
§ 101, explaining that “such programming creates a new
machine, because a general purpose computer in effect
becomes a special purpose computer once it is pro-
grammed to perform particular functions pursuant to
instructions from program software.”      Id. (emphasis
added). Judge Lourie’s opinion completely repudiates
Judge Rich’s approach in Alappat. The two are not recon-
cilable.
    The Supreme Court has never cast doubt on the pa-
tentability of claims such as those at issue in In re
Alappat or the system claims at issue in this case. In-
deed, Alappat’s reasoning is completely consistent with
Bilski, Prometheus, and the Supreme Court’s other § 101
cases. Unlike a claim reciting a method and simply
saying “apply it” on a general purpose computer, a system
claim’s structural limitations restrict the claimed machine
by requiring certain physical components. These concrete
elements are precisely the sort of “inventive concept” that
meaningfully limits the claim, preventing it from “tying
up” the underlying abstract idea itself. Although the
individual components themselves may not be new or
innovative, the particular combination of components
recited in the claim results in a brand new machine—a
special purpose computer. Id.
    Some simple examples illustrate these principles.
Even though the concept of addition is an abstract idea,
the first calculator that could perform addition was a
patent-eligible machine under § 101. If someone subse-
 CLS BANK V. ALICE CORP.                                   9
quently discovered that, by rewiring the calculator, it
could perform addition and subtraction (both abstract
mathematical concepts), the improved calculator would
similarly be patent-eligible. The act of modifying the
circuitry of a known device such that it is configured to
apply an abstract idea does not transform it into an
abstract idea. If the subsequent inventor were able to
reprogram the calculator to perform subtraction (rather
than rewire it), it would still be directed to patent-eligible
subject matter. That is what software does—it effectively
rewires a computer, making it a special purpose device
capable of performing operations it was not previously
able to perform. Both the software and the computer
running the software are patentable subject matter and
should pass through the § 101 gate.
    The parties in this case agree that if someone sought
to patent a general purpose computer, it would satisfy
§ 101 (although it may fail § 102 or § 103). Why, then,
would claiming the same computer with specific pro-
gramming (thus creating a special purpose computer),
transform a patent-eligible machine into a patent-
ineligible abstract idea? A claim to a computer running
particular software is no less a claim to a computer.
    None of this is to suggest that system claims may
never be abstract, or that merely adding a computer to a
method step can transform a patent-ineligible claim into
one that satisfies § 101. But a claim to a structurally
defined machine is more than a method claim rewritten in
system form. It is a practical application of the underly-
ing idea, limited to the specific hardware recited and the
algorithms disclosed to perform the recited functions.
                             III.
    The only way to determine if Alice’s asserted system
claims are merely directed to an abstract idea is to ana-
lyze each claim as a whole, looking at the language of the
claims. Claim 1 of the ’375 patent, for example, recites:
10                                CLS BANK v. ALICE CORP.
     A data processing system to enable the exchange
     of an obligation between parties, the system com-
     prising:
     a first party device,
     a data storage unit having stored therein
         (a) information about a first account for a first
         party, independent from a second account
         maintained by a first exchange institution,
         and
         (b) information about a third account for a
         second party, independent from a fourth ac-
         count maintained by a second exchange insti-
         tution;
     and a computer, coupled to said data storage unit,
     that is configured to
         (a) receive a transaction from said first party
         device;
         (b) electronically adjust said first account and
         said third account in order to effect an ex-
         change obligation arising from said transac-
         tion between said first party and said second
         party after ensuring that said first party
         and/or said second party have adequate value
         in said first account and/or said third account,
         respectively; and
         (c) generate an instruction to said first ex-
         change institution and/or said second ex-
         change institution to adjust said second
         account and/or said fourth account in accord-
         ance with the adjustment of said first account
         and/or said third account, wherein said in-
         struction being an irrevocable, time invariant
         obligation placed on said first exchange insti-
 CLS BANK V. ALICE CORP.                                 11
        tution and/or said second exchange institu-
        tion.
’375 patent claim 1 (emphases added).
    The claimed data processing system recites three
structural components: a computer, a first party device,
and a data storage device. The specification describes the
invention: the “core of the system hardware is a collection
of data processing units.” ’375 patent col.7 ll.22-23. Each
processing unit is operably connected to one or more mass
data storage units. Id. col.7 ll.39-43.
    The claimed data processing system is further limited
to one that is configured to perform certain functions in a
particular fashion: “receive a transaction from said first
party device,” “electronically adjust” the parties’ accounts,
and “generate an instruction.” The specification discloses
numerous flow diagrams in Figures 8-16 and 18-40 that
provide algorithm support for the software that performs
these functions. ’375 patent col.7 ll.29-33. The “flow
charts in FIGS. 8 to 16 depict the processing flow of the
matching system for primary product orders submitted by
ordering party stakeholders . . . .” Id. col.16 ll.42-44.
More specifically, Figures 11-15 provide an explanation of
the process through which counterparties are matched
(“order matching”). Id. col.17 ll.55-56. Figure 15 depicts
the process of identifying a potential counterparty from a
short list, and is a useful example of the level of detail
that the specification provides regarding the claimed
functions:
12                              CLS BANK v. ALICE CORP.




     The specification explains that this algorithm includes
the steps of checking to make sure the counterparty short
list is not empty and, if it is not, identifying the lowest
priced counterparty on the short list. ’375 patent col.19
ll.55-63. This corresponds to blocks 1560 and 1570 in
 CLS BANK V. ALICE CORP.                                 13
Figure 15. The system does this based on the counterpar-
ty’s bid price (PRICE (SID)). Id. col.19 l.63-col.20 l.2. The
system rejects matches in which the counterparty’s bid
price is greater than the ordering party’s maximum price
(block 1612). Id. col.20 ll.8-11. The system then checks
the order against all of the applicable limits and calcu-
lates the portion of the order which will not violate the
counterparty limits (blocks 1590, 1602, 1604, and 1606).
Id. col.20 ll.18-37. If some portion of the order is matched,
the system notes the identification of the matching coun-
terparty and confirms the matched order using the pro-
cess detailed in Figure 16 (the “matched order
confirmation” process). Id. col.20 ll.41-49. The process
depicted in Figure 15 and described in the specification is
just one of the processes included in the claim element
“receive a transaction from said first party device.”
    Looking at these hardware and software elements, it
is impossible to conclude that this claim is merely an
abstract idea. It is a pure system claim, directed to a
specific machine configured to perform certain functions.
Indeed, the computer covered by this claim is a tangible
item that you could pick up and put on your desk. It is
not a method claim simply disguised as a machine claim,
nor does it incorporate the computer elements in an
insignificant way. The asserted data processing systems
claimed in the ’720 and ‘375 patents recite additional
structural limitations (including a second party device
and a communications controller). And the dependent
claims (which are also asserted and must be analyzed
individually) limit the computer system even further.
Some recite a “means for allowing said first party to
acquire an item from said second party, wherein the
exchange obligation relates to said item.” See, e.g., ’375
patent claims 11, 24, and 36; see also ’720 patent claims
27, 59, 67, 79, and 84. These claims expressly cover only
the algorithm disclosed as a means for performing the
acquisition, or equivalents thereof. See, e.g., Aristocrat
14                             CLS BANK v. ALICE CORP.
Techs. Austl. Pty Ltd. v. Int’l Game Tech., 521 F.3d 1328,
1333 (Fed. Cir. 2008). Judge Lourie’s opinion does not
individually analyze any of these claims. If these claims
do not clear the § 101 hurdle, then the abstract idea
exception will be an insurmountable bar for innovators of
software, financial systems and business methods, as well
as for those in the telecommunications field. Every soft-
ware patent makes a computer perform different func-
tions—that is the purpose of software. Each software
program creates a special purpose machine, a machine
which did not previously exist (assuming the software is
novel). The machine ceases to be a general purpose
computer when it is running the software. It does not,
however, by virtue of the software it is running, become
an abstract idea.
     It bears repeating that the computer limitations in
these claims are not insignificant pre- or post-solution
activity. Nor does this conclusion “exalt form over sub-
stance” or allow the “draftsman’s art” to dictate patent-
eligibility. Prometheus, 132 S. Ct. at 1294. These are not
just method claims masquerading as system claims—they
are detailed, specific claims to a system of particular
hardware programmed to perform particular functions.
The computer in the system claims is the entire detailed
“solution,” without which it would be impossible to
achieve the invention’s purpose. The Bilski court ex-
plained that substantial machine limitations would be a
“useful and important clue” that method claims are
patent-eligible. See Bilski, 130 S. Ct. at 3227. These
claims are far more limited. They cover the machine
itself; the machine is the invention.
    It is important to remember that, regardless of
whether we hold these claims to be patent-eligible, they
may well fail to meet the other requirements for patent
protection. Taking a known or abstract idea and simply
putting it on a computer is likely not entitled to patent
protection. Section 102’s novelty or § 103’s nonobvious-
 CLS BANK V. ALICE CORP.                                15
ness requirements are the means to challenge a system
claim that does no more than take a familiar, well known
concept and put it on a computer. Or, if the claim is to a
machine whose precise structure or method of operation is
not sufficiently detailed (think perpetual motion ma-
chine), then § 112 would prevent patentability. When you
walk up to the § 101 gate holding a computer in your
arms (or software for that matter), you should not be
rejected because your computer is an abstract idea.
    For the reasons given above, I believe that Alice’s as-
serted system claims are patent-eligible under § 101. I
would thus reverse the district court’s judgment with
respect to those claims.
  United States Court of Appeals
      for the Federal Circuit
                 ______________________

            CLS BANK INTERNATIONAL,
                  Plaintiff-Appellee,

                          AND

                CLS SERVICES LTD.,
            Counterclaim Defendant-Appellee,

                            v.

         ALICE CORPORATION PTY. LTD.,
               Defendant-Appellant.
              ______________________

                       2011-1301
                 ______________________

    Appeal from the United States District Court for the
District of Columbia in No. 07-CV-974, Judge Rosemary
M. Collyer.
                 ______________________

NEWMAN, Circuit Judge, concurring in part, dissenting in
part.
     The ascendance of section 101 as an independent
source of litigation, separate from the merits of patenta-
bility, is a new uncertainty for inventors. The court, now
rehearing this case en banc, hoped to ameliorate this
uncertainty by providing objective standards for section
101 patent-eligibility. Instead we have propounded at
least three incompatible standards, devoid of consensus,
2             CLS BANK INTERNATIONAL   v. ALICE CORPORATION
serving simply to add to the unreliability and cost of the
system of patents as an incentive for innovation. With
today’s judicial deadlock, the only assurance is that any
successful innovation is likely to be challenged in oppor-
tunistic litigation, whose result will depend on the ran-
dom selection of the panel.
    Reliable application of legal principles underlies the
economic incentive purpose of patent law, in turn imple-
menting the benefits to the public of technology-based
advances, and the benefits to the nation of industrial
activity, employment, and economic growth. Today’s
irresolution concerning section 101 affects not only this
court and the trial courts, but also the PTO examiners
and agency tribunals, and all who invent and invest in
new technology. The uncertainty of administrative and
judicial outcome and the high cost of resolution are a
disincentive to both innovators and competitors.
                             I
                     TODAY’S IMPASSE
    In deciding to rehear the patent dispute between CLS
Bank and Alice Corporation, the en banc court undertook
to remedy distortions flowing from inconsistent precedent
on section 101. This remedial effort has failed. This
failure undoubtedly reflects the difficulty of the question;
I suggest that it also demonstrates that an all-purpose
bright-line rule for the threshold portal of section 101 is
as unavailable as it is unnecessary. Experience over two
centuries of United States patent law supports this con-
clusion.
    Section 101 is not the appropriate vehicle for deter-
mining whether a particular technical advance is patent-
able; that determination is made in accordance with the
rigorous legal criteria of patentability. Contrary to the
diverse protocols offered by my colleagues, it is not neces-
sary, or appropriate, to decide whether subject matter is
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION           3
patentable in order to decide whether it is eligible to be
considered for patentability.
    This section 101 issue appears to have its foundation
in a misunderstanding of patent policy, for the debate
about patent eligibility under section 101 swirls about
concern for the public’s right to study the scientific and
technologic knowledge contained in patents. The premise
of the debate is incorrect, for patented information is not
barred from further study and experimentation in order
to understand and build upon the knowledge disclosed in
the patent.
    Judicial clarification is urgently needed to restore the
understanding that patented knowledge is not barred
from investigation and research. The debate involving
section 101 would fade away, on clarification of the right
to study and experiment with the knowledge disclosed in
patents.
    These issues have arisen in connection with today’s
newest fields of science and technology; that is, computer-
based and related advances, and advances in the biologi-
cal sciences. These fields have spawned today’s dominant
industries, and produced spectacular benefits. I have
seen no competent analysis of how these technologies and
industries would be affected by a fundamental reduction
in patent-eligibility. Dramatic innovations, and public
and economic benefits, have been achieved under the
patent law as it has existed.
    Thus I write separately to propose that the court re-
solve the present impasse by returning to the time-tested
principles of patent law. I propose that the court reaffirm
three basic principles relating to section 101, as follows:
1. The court should hold that section 101 is an
inclusive statement of patent-eligible subject mat-
ter– I propose that the court reaffirm that patent-eligible
subject matter is as stated in the patent statute. The
4             CLS BANK INTERNATIONAL    v. ALICE CORPORATION
court should acknowledge the statutory purpose of section
101, to provide an inclusive listing of the “useful arts.”
Then, upon crossing this threshold into the patent system,
examination of the particular subject matter on the
substantive criteria of patentability will eliminate claims
that are “abstract” or “preemptive,” on application of the
laws of novelty, utility, prior art, obviousness, description,
enablement, and specificity. There is no need for an all-
purpose definition of “abstractness” or “preemption,” as
heroically attempted today.
2. The court should hold that the form of the claim
does not determine section 101 eligibility– I propose
that the court make clear that patent eligibility does not
depend on the form of the claim, whether computer-
implemented innovations are claimed as a method or a
system or a storage medium, whether implemented in
hardware or software. Patent eligibility does not turn on
the ingenuity of the draftsman. The differences among
my colleagues’ views of this aspect simply add to the
instability and uncertainty of patenting and enforcement.
3. The court should confirm that experimental use
of patented information is not barred– Misunder-
standing of this principle appears to be the impetus for
the current debate, for the popular press, and others who
know better, have stated that patented subject matter
cannot be further studied. This theory is presented to
support section 101 ineligibility, on the reasoning that
important discoveries should be ineligible for patenting so
that they can be further studied. I propose that the court
reaffirm the long-standing rule that study and experi-
mentation are not infringement, whether the experimen-
tation is for basic or applied purposes.
    On adoption of these principles the law of section 101
will be stabilized, and patentability can continue to be
determined in accordance with statute and precedent.
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION            5
                             II
     EXPERIMENTAL USE OF PATENTED INFORMATION
    I start with this issue, for the misperception that
study of patented subject matter is precluded, has placed
a misdirected spin on section 101.
    The idea that experimentation with patented infor-
mation is restricted is the basis of the view that patenting
inhibits scientific advance. For example, the Court stated
in Mayo Collaborative Servs. v. Prometheus Labs., Inc.,
132 S. Ct. 1289, 1301 (2012) that “there is a danger that
the grant of patents that tie up their use will inhibit
future innovation premised upon them, a danger that
becomes acute when a patented process amounts to no
more than an instruction to ‘apply the natural law,’ or
otherwise forecloses more future invention than the
underlying discovery could reasonably justify.”
    However, the Court has recognized that “[t]he federal
patent system thus embodies a carefully crafted bargain
for encouraging the creation and disclosure of new, useful,
and unobvious advances in technology and design in
return for the exclusive right to practice the invention for
a period of years.” Bonito Boats, Inc. v. Thunder Craft
Boats, Inc., 489 U.S. 141, 150–51 (1989). See J.E.M. Ag
Supply, Inc. v. Pioneer Hi-Bred Int’l, Inc., 534 U.S. 124,
142 (2001) (“The disclosure required by the Patent Act is
‘the quid pro quo of the right to exclude.’”); Kewanee Oil
Co. v. Bicron Corp., 416 U.S. 470, 484 (1974) (same).
    This disclosure is available to produce further ad-
vance, on further study and experimentation. The Court
long ago recognized that the scientific and technological
information in patents may be studied, evaluated, tested,
improved upon, compared, etc., as explained by Justice
Story in Whittemore v. Cutter:
   It could never have been the intention of the legis-
   lature to punish a man, who constructed such a
6             CLS BANK INTERNATIONAL   v. ALICE CORPORATION
    machine merely for philosophical[1] experiments,
    or for the purpose of ascertaining the sufficiency
    of the machine to produce its described effects.
29 F. Cas. 1120, 1121 (C.C.D. Mass. 1813). The Court
reiterated this principle in Graham v. John Deere Co.,
referring to the “inherent requisites in a patent system”:
    Innovation, advancement, and things which add
    to the sum of useful knowledge are inherent req-
    uisites in a patent system which by constitutional
    command must “Promote the Progress of . . . use-
    ful Arts.” This is the standard expressed in the
    Constitution and it may not be ignored.
383 U.S. 1, 6 (1966) (ellipses in original). The reference to
“useful knowledge” cannot mean that the knowledge
disclosed in patents is untouchable for seventeen years.
     The Federal Circuit has reaffirmed that “patenting
does not deprive the public of the right to experiment with
and improve upon the patented subject matter.” In re
Rosuvastatin Patent Litig., 703 F.3d 511, 527 (Fed. Cir.
2012). However, in Embrex, Inc. v. Service Engineering
Corp., 216 F.3d 1343, 1349 (Fed. Cir. 2000), the court
stated that the experimental use defense was “very nar-
row” and unavailable when “the inquiry has definite,
cognizable, and not insubstantial commercial purpose,”
the concurrence adding that “neither the statute nor any
past Supreme Court precedent gives any reason to excuse
infringement because it was committed with a particular
purpose or intent, such as for scientific experimentation,”
id. at 1353. Precedent does not support this theory.



    1   “Philosophical” means “scientific” in the language
of that era. Integra Lifescience I, Ltd. v. Merck KGaA, 331
F.3d 860, 874–75 n.8 (Fed. Cir. 2003) (Newman, J., dis-
senting).
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION              7
    The right to study and experiment, to evaluate and
improve upon the information in patents was discussed by
our predecessor Court of Claims in Ordnance Engineering
Corp. v. United States, 84 Ct. Cl. 1 (1936) and in Chester-
feld v. United States, 159 F. Supp. 371 (Ct. Cl. 1958), the
court explaining that experimentation does not infringe
the patent. Factual distinctions may arise, as in Pitcairn
v. United States, 212 Ct. Cl. 168 (1976), where the Court
of Claims held that of 2200 infringing helicopters, the use
of 93 helicopters for testing or demonstration was not an
“experimental use,” as compared with the truly “experi-
mental helicopters” that the patentee did not accuse of
infringement.
    Scholars have explained this essential policy of patent
systems, whereby patented information adds to the body
of knowledge, and the right to exclude does not prohibit
further study of patented technology. See Rebecca S.
Eisenberg, Patents and the Progress of Science: Exclusive
Rights and Experimental Use, 56 U. Chi. L. Rev. 1017,
1022 (1989):
   If the public had absolutely no right to use the
   disclosure without the patent holder’s consent un-
   til after the patent expired, it would make little
   sense to require that the disclosure be made freely
   available to the public at the outset of the patent
   term. The fact that the patent statute so plainly
   facilitates unauthorized uses of the invention
   while the patent is in effect suggests that some
   such uses are to be permitted.
See Janice M. Mueller, The Evanescent Experimental Use
Exemption from United States Patent Infringement Liabil-
ity: Implications for University and Nonprofit Research
and Development, 56 Baylor L. Rev. 917, 921 (2004):
   The publication of information about a new inven-
   tion in the form of an issued patent is of little use
   to society if that information is effectively kept ‘on
8            CLS BANK INTERNATIONAL   v. ALICE CORPORATION
    ice’ for seventeen-eighteen years by means of a pa-
    tent owner’s unchecked right to exclude others
    from use for any purpose.
See also Katherine J. Strandburg, What Does the Public
Get? Experimental Use and the Patent Bargain, 2004 Wis.
L. Rev. 81 (2004) (distinguishing between infringing and
non-infringing uses of information disclosed in patents, by
differentiating between permissible “experimenting on”
patented inventions, and impermissible “experimenting
with” things that are patented); Andrew S. Baluch, Relat-
ing the Two Experimental Uses in Patent Law: Inventor’s
Negation and Infringer’s Defense, 87 B.U. L. Rev. 213
(2007) (proposing that the right of experimental use by
others balances the experimental use exception to
§102(b)).
    Patents do not prevent experimentation with patented
subject matter, whether the purpose is scientific
knowledge or commercial potential. To hold otherwise
would be to deny a foundation of the system of patents.
However, the popular press has accepted the theory that
experimentation is barred for patented subject matter, 2 as
have my colleagues, who cite that position as grounds for
restricting eligibility under section 101. 3


    2   See, e.g., Adam Liptak, Supreme Court to Look at
a Gene Issue, N.Y. Times, Nov. 30, 2012 (“Myriad and
other gene patent holders have gained the right to exclude
the rest of the scientific community from examining the
naturally occurring genes of every person in the United
States”); Michael Specter, Can We Patent Life?, The New
Yorker, April 2, 2013 (“Any scientist who wants to con-
duct research on such a gene—even on a small sequence
of its DNA—has to pay license fees.”).
    3  See Lourie Op. at 15–16 (“Guarding against the
wholesale preemption of fundamental principles should be
our primary aim in applying the common law exceptions
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION          9
    The patent statute requires that the patented infor-
mation is made known (“patent” is derived from the latin
“patere,” which means “to lie open”), and that the patent-
ee provide details of how to make and use the patented
subject matter. In return, the patentee receives a term of
exclusivity that has traditionally been applied only
against commercial practice. On this simple bargain the
industrial age blossomed, built on improvements and
advances in patented subject matter.
    Judicial precedent is sparse on the issue of experi-
mental use, for until recently the principle was not in
question. Technical publications often describe research
in patent-heavy fields, apparently without fear of law-
suits. At a recent conference reported in the Trademark,
& Copyright Journal, a spokesman stated that “research
has been spurred rather than inhibited as a result of the
[Myriad] patents, citing 18,000 researchers who have
published over 10,000 articles . . . .” 85 PTCJ 759 (2013).
   In summary, experimental use of patented infor-
mation can take various forms, including:
     a. experiments to improve or build upon patented sub-
ject matter– Such studies are encouraged by the patent
system; it has never been the law that such experimenta-
tion is infringement.
    b. experiments to compare patented subject matter
with alternatives to determine relative performance and
properties– Improvements would be inhibited if new
developments could not be compared with the old. Such a
position has never been the law.
   c. experimental study of patented subject matter to
understand its mechanism– Such scientific study is an

to § 101.”); Rader Op. at 18 n.3 (permissible experimenta-
tion is limited to “academic research” “without commer-
cial ends”).
10            CLS BANK INTERNATIONAL   v. ALICE CORPORATION
important attribute of patent systems. Scientific under-
standing may or may not lead to new commercial embod-
iments, which are not excused from infringement if
covered by valid claims; but study of patented subject
matter is not infringement.
    d. experimental study of patented subject matter to
find new applications or modifications– Such new direc-
tions are a benefit of the patent system; the experimenta-
tion is not infringement.
    The courts, the press, and the public, have been led
down a path that is contrary to patent principles. Let us
remove the doubts we have sown. With clarification of
the right to experiment with the information disclosed in
patents, it will no longer be necessary to resort to the
gambit of treating such information as an “abstraction” in
order to liberate the subject matter for experimentation,
whether for scientific or commercial purposes. I respect-
fully dissent from the contrary majority position.
                             III
      “ABSTRACTION” IN COMPUTER-BASED PATENTS
    I turn briefly to the concept of “abstraction” in connec-
tion with section 101 eligibility of computer-implemented
subject matter. In the case before us, the diverse theories
of the role of section 101, presented by the parties and the
many amici curiae, show not only the complexity but also
the importance of the issue. However, it is not necessary
to rewrite the law of patent eligibility.
    All scientific and technologic advance starts with fun-
damental principles, described by my colleagues as “ab-
stract ideas,” although the Court has recognized that “all
inventions at some level embody, use, reflect, rest upon,
or apply laws of nature, natural phenomena, or abstract
ideas.” Mayo, 132 S. Ct. at 1293. Scientific principles are
“a creation of the human mind, with its freely invented
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION           11
ideas and concepts,” 4 while the adaptation of such princi-
ples to public benefit is the milieu of patents. The Court
explained in Mackay Radio & Telephone Co. v. Radio
Corp. of America, 306 U.S. 86, 94 (1939) that “While a
scientific truth, or the mathematical expression of it, is
not a patentable invention, a novel and useful structure
created with the aid of knowledge of scientific truth may
be.”
    My colleagues today attempt to devise universal crite-
ria of eligibility under section 101. Some colleagues rely
on “abstraction;” while others invoke “preemption;”
others look for “meaningful” limitations. I quite agree
that it is not easy to define “abstraction” or “preemption”
or “meaningful limitation,” yet my colleagues propose that
these terms bar the gateway to the patent system. Such
definition is as elusive for Alice Corporation’s escrow
banking system as for the most complex of phenomena:
   The intrinsic uncertainty of the meaning of words
   was of course recognized very early and has
   brought about the need for definitions, or—as the
   word “definition” says—for the setting of bounda-
   ries that determine where the word is to be used
   and where not to. But definitions can be given on-
   ly with the help of other concepts, and so one will
   finally have to rely on some concepts that are tak-
   en as they are, unanalyzed and undefined.
Werner Heisenberg, Physics and Philosophy 168 (1958).
    I propose that the court return to the statute, and
hold that when the subject matter is within the statutory
classes in section 101, eligibility is established. This
conforms with legislative intent.       See Diamond v.
Chakrabarty, 447 U.S. 303, 308 (1980) (“In choosing such


   4    Albert Einstein & Leopold Infeld, The Evolution of
Physics 310 (1938).
12            CLS BANK INTERNATIONAL   v. ALICE CORPORATION
expansive terms as ‘manufacture’ and ‘composition of
matter,’ modified by the comprehensive ‘any,’ Congress
plainly contemplated that the patent laws would be given
wide scope.”). The Court in Diamond v. Diehr, 450 U.S.
175, 182 (1981), reiterated that the system of patents
embraces “anything under the sun that is made by man”;
it cannot be that computer-implemented developments
may or may not be eligible under section 101 depending
on how broadly they are sought to be claimed. Breadth of
claiming, and undue breadth, are determined under
sections 102, 103, and 112, not section 101.
    The Court in J.E.M. v. Pioneer recognized that section
101 is a general and “dynamic provision designed to
encompass new and unforeseen inventions.” 534 U.S. at
135. In its study of “A Patent System for the 21st Centu-
ry” (2004) the National Research Council focused on the
emerging technologies in a “Knowledge-Based Economy,”
and observed that the patent system is “a unitary system
with few a priori exclusions.” Id. at 57. It is beyond cavil
that the patent system is intended to be receptive to the
advances of science and technology.
    This court referred to section 101 as a “coarse filter,”
see Research Corporation Technologies, Inc. v. Microsoft
Corp., 627 F.3d 859, 869 (Fed. Cir. 2010). On traversing
the coarse filter, the subject matter is subjected to the
statutory rigors of novelty, unobviousness, enablement,
specificity, etc. This approach places inventions in the
statutory framework of patentability, not merely eligibil-
ity to be considered for participation in the patent incen-
tive system.
    No substitute has been devised for the incentive of
profit opportunity through market exclusivity. 5 The court


     5  Illustration is seen in the Orphan Drug Act, 21
U.S.C. §360aa–360ee (1997), which provides patent-like
exclusivity and is reported to have provided treatment for
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION          13
should return to these basic principles, and abandon its
failed section 101 ventures into abstraction, preemption,
and meaningfulness.
    I repeat my concern for the court’s preservation of le-
gal uncertainty through our inconclusive treatment of the
law of section 101. The escrow banking mechanism of the
patents in suit is claimed in the Alice Corporation patents
as a method or a system or a media device. The form of
the claim does not determine section 101 patent eligibil-
ity. Nor does the scope of the claim. In claim drafting, it
is customary to start with broad claims and then draft
claims of progressively narrower scope; this does not
determine “abstraction” under section 101. As in O’Reilly
v. Morse, 56 U.S. 62 (1853), Samuel Morse’s broadest
claim was rejected for undue breadth because it was
directed to “the use of the motive power of the electric or
galvanic current . . . for making or printing intelligible
characters, letters or signs, at any distances,” id. at 86;
the Court did not discuss “eligibility,” but simply held
that this claim was not limited to the “specific machinery”
described in the specification, and was unduly broad.


many previously untreated diseases. Food & Drug Ad-
min., Developing Products for Rare Diseases & Conditions,
http://www.fda.gov/ForIndustry/DevelopingProductsforRa
reDiseasesConditions/default.htm (“The [Orphan Drug]
program has successfully enabled the development and
marketing of more than 400 drugs and biologic products
for rare diseases since 1983. In contrast, fewer than 10
such products supported by industry came to market
between 1973 and 1983.”). And the experience of the
Bayh-Dole Act is that patent exclusivity has moved much
university research into public benefit. See Wendy H.
Schacht, Cong. Research Serv., RL 32076, The Bayh-Dole
Act: Selected Issues in Patent Policy and the Commerciali-
zation of Technology 7 (2005).
14           CLS BANK INTERNATIONAL   v. ALICE CORPORATION
    I share the majority view that all of the claims stand
or fall together. I would hold that the system, the meth-
od, and the media claims are eligible under section 101,
and would remand to the district court for determination
of patentability under the substantive provisions of the
statute.
  United States Court of Appeals
      for the Federal Circuit
                 ______________________

            CLS BANK INTERNATIONAL,
                  Plaintiff-Appellee,

                           AND


                CLS SERVICES LTD.,
            Counterclaim Defendant-Appellee,

                            v.

         ALICE CORPORATION PTY. LTD.,
               Defendant-Appellant.
              ______________________

                       2011-1301
                 ______________________

    Appeal from the United States District Court for the
District of Columbia in No. 07-CV-974, Judge Rosemary
M. Collyer.
                 ______________________

LINN and O’MALLEY, Circuit Judges, dissenting from the
Court’s judgment.

    The method, media, and system claims we review to-
day must rise and fall together; either they are all patent
eligible or they are not. This is so, not because, as Judge
Lourie’s opinion concludes, they are all tainted by refer-
ence to the same abstract concept, but because the record
we are presented makes clear that they are grounded by
2             CLS BANK INTERNATIONAL   v. ALICE CORPORATION

the same meaningful limitations that render them patent
eligible. Thus, we believe the analysis of the method
claims conducted by Chief Judge Rader and Judge Moore
in Part VI of our collective opinion1 and Parts III.A and
III.B of Judge Lourie’s opinion suffer from the same flaw:
they are divorced from the record to which we are bound.
We write to address that flaw.

                              I

    We begin with a careful assessment of the record and
procedural posture presented in this case. This appeal
arises from a grant of summary judgment in favor of
Plaintiff-Appellee CLS Bank International (“CLS”),
dismissing the action with prejudice on grounds that none
of the asserted claims of U.S. Patent Nos. 5,970,479 (“the
’479 patent”), 6,912,510 (“the ’510 patent”), 7,149,720
(“the ’720 patent”), and 7,725,375 (“the ’375 patent”) recite
patentable subject matter.       The summary judgment
process occurred prior to construction of the asserted
claims and their attendant limitations. Indeed, the court
considered and granted CLS’s summary judgment motion
before ever conducting a hearing pursuant to Markman v.
Westview Instruments, Inc., 517 U.S. 370 (1996), and even
before briefing on claim construction. As such, no deter-
mination has ever been made regarding how one of skill
in the art would understand the claims as of the date of
issuance. And, no careful assessment of the intrinsic
record or prosecution history has ever occurred; much of
this was never even made a part of the trial record.


    1   We cite to Parts I–V and VII of our collective opin-
ion as the “Rader/Linn/Moore/O’Malley Op.;” we refer to
Part VI of that opinion, which is authored by Chief Judge
Rader and Judge Moore only, as the “Rader/Moore Op.”
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION           3

    As the trial court recognized, the only way to avoid
these predicate steps before granting summary judgment
was for the court to construe the claims as defendant-
appellant Alice Corporation (“Alice”) would have it do.
The trial court was, thus, required to read into the claims
whatever limitations Alice asserted a skilled artisan
would assume they possessed. Similarly recognizing the
procedural posture in which it asked the trial court to
rule, “CLS agreed to assume a construction of claims
favorable to Alice.” CLS Bank Int’l v. Alice Corp., 768 F.
Supp. 2d 221, 236 n.6 (D.D.C. 2011). The trial court did
so; it concluded that, “because the relevant terms of
claims 33 and 34 of the ’479 Patent have yet to be con-
strued, because CLS has agreed to a broad construction 2
of terms favorable to Alice, and because the specification
reveals a computer-based invention, the Court can rea-
sonably assume for present purposes that the terms
‘shadow’ credit and/or debit record and ‘transaction’ in the
’479 Patent recite electronic implementation and a com-
puter or an analogous electronic device.” Id. at 236 (foot-
note added).

    We must look then to the construction posited by Alice
at the summary judgment stage to understand the claims
before us. It is undisputed that Alice claimed that “the
entirety of Alice’s method [as recited in the ’479 and ’510
patents]—including the ‘adjusting’ step that effectuates


   2     The trial court misspoke here; CLS conceded to a
narrower construction—not a broader one. That is, alt-
hough, on their face, the claims arguably cover all appli-
cations of the claimed method, not just electronic
applications, i.e., they are broad, CLS agreed to limit
those claims to electronic implementations of all aspects
of the claimed methods.
4            CLS BANK INTERNATIONAL   v. ALICE CORPORATION

the claimed exchange of obligations—must be performed
electronically using a computer and memory.” Memoran-
dum in Support of Alice Corp. Pty. Ltd.’s Renewed Cross-
Motion for Summary Judgment as to Patent Eligibility &
in Opposition to CLS’s Motion for Summary Judgment at
41, CLS Bank Int’l v. Alice Corp., 768 F. Supp. 2d 221
(D.D.C. 2011) (No. 1:07-cv-974), ECF No. 95 [hereinafter
“Alice’s Summ. J. Br.”]. Specifically, Alice argued that a
skilled artisan would appreciate that the method claims
necessarily require electronic implementation of each of
their steps and that this electronic implementation would
occur through a computer. In support of this position,
Alice offered an expert declaration by Mr. Paul Ginsberg.
See Alice Corp. Pty. Ltd.’s Renewed Cross-Motion for
Partial Summary Judgment as to Subject Matter Eligibil-
ity, Declaration of Stanley E. Fisher, Exhibit 1, Declara-
tion of Paul Ginsberg, CLS Bank Int’l v. Alice Corp., 768
F. Supp. 2d 221 (D.D.C. 2011) (No. 1:07-cv-974), ECF No.
95-3 [hereinafter “Ginsberg Decl.”]. In that declaration,
Mr. Ginsberg explained how a person of skill in the art
would interpret the method claims upon “reviewing the
claims in view of the patent specification (including the
description of the subject matter in ¶¶ 25-26 above) and
the prosecution history.” Id. ¶ 29. Based on this record,
both CLS and the trial court accepted the fact that the
method claims of the ’510 and ’479 patents recite “an
electronic method for performing the settlement, and the
‘maintaining,’ ‘receiving,’ ‘adjusting,’ and ‘generating’
steps are central to that process.” Alice’s Summ. J. Br. at
42.

    CLS has stood by these stipulations and assumptions
on appeal. Indeed, it emphatically has done so. In all of
its briefing and in its arguments on appeal, CLS has
acknowledged that the shadow credit and debit records
and the transactions and adjustments between them must
be implemented electronically. Appellee’s Principal En
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION             5

Banc Br. 3, 34; Appellee’s Reply En Banc Br. 20; Oral Arg.
at 11:29, CLS Bank Int’l v. Alice Corp., No. 2011-1301,
available at http://www.cafc.uscourts.gov/oral-argument-
recordings/2011-1301/2013-02-08/all [hereinafter “Oral
Arg.”]. At oral argument in this en banc proceeding,
counsel for CLS confirmed its view that every limitation
and electronic process that appears in the system claims
must be read into the method claims. Oral Arg. at 11:29-
11:55. 3 Thus, counsel for CLS agreed that, given the state
of the record we face on appeal, the claims cannot be
parsed—they either all are drawn to patentable subject
matter, as Alice claims, or none are drawn to patentable
subject matter, as CLS claims. Appellee’s Principal En


   3 The following exchange took place during oral ar-
gument:

   Judge O’Malley: [Y]ou conceded that . . . the term
   shadow credit and debit record and transaction all
   recite electronic implementation . . . on a comput-
   er or some other electronic device.

   And then she [the district judge] later pointed out
   that even at the Markman stage you said that
   “let’s assume that . . . we have to have all of these
   activities—

   Mr Perry: Correct Your Honor

   Judge O’Malley: —implemented through a system
   on a computer.”

   Mr. Perry: That’s correct Your Honor.

Oral Arg. 11:29-11:55.
6             CLS BANK INTERNATIONAL    v. ALICE CORPORATION

Banc Br. 11, 51 (“Here, the Section 101 analysis is equiva-
lent for all of Alice’s claims.”).

                              II

    Our colleagues ignore the record of the lower court
proceedings and the stipulations by which CLS agrees it
must be bound. Chief Judge Rader and Judge Moore
construe the method claims as far broader than the
system claims and assume they are sufficiently different
from those system claims to merit different treatment
under the Supreme Court’s case law governing exceptions
to 35 U.S.C. § 101. See Rader/Moore Op. at 41 (construing
“each step” of the method claims as “individually
recit[ing] merely a general step inherent within the
concept of an escrow, using a third party intermediary in
this fashion”). Judge Lourie also construes the method
claims broadly, but, unlike the Chief Judge and Judge
Moore, imports the breadth he reads into the method
claims into the system and media claims as well. See
Lourie Op. at 26-28, 30-38. None of those judges explains
how the record supports the claim constructions in which
they engage, however.

    Notably, when analyzing the method claims, the Chief
Judge and Judge Moore cite to no portion of the written
descriptions of the ’510 or ’479 patents, or to CLS’s stipu-
lations regarding claim construction, all the while claim-
ing to rely on “the record.” See Rader/Moore Op. at 39-40
(“The record in this case shows . . . .”); id. at 40 (“Further,
the record again shows . . . .”). And, they summarily
reject the trial court’s assumption that the method claims
require the same computer implementation as the system
claims. Id. at 41 (“[T]he district court assumed the single
fact that the method claims are implemented by comput-
er. Putting to the side whether this construction was
correct, even assuming the method claims require use of a
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION          7

computer in some unspecified way, this implicit reference
to computer implementation is not, by itself, enough.”
(citations omitted) (internal quotation marks and ellipsis
omitted)). As explained above, however, the actual record
establishes that the method claims require more than the
use of a computer in some unspecified way. CLS has
conceded as much and the trial court found as much.

    Alice’s expert testified that “[s]pecific terms in the
claims 33 and 34 [of the ’479 patent],” “includ[ing], for
example, ‘shadow credit record,’ ‘shadow debit record,’ and
‘transaction,’” “would be understood by the person of
ordinary skill in the art to require that the methods
recited in those claims are electronically implemented by
a computer coupled to a data storage unit.” Ginsberg
Decl. ¶ 32. That is, “the particular methods claimed in
these patents only work, as intended, when carried out
using a computer.” Id. ¶ 41. Once the trial court chose to
proceed on the assumption that computer implementation
is required for the method claims, it is the written de-
scription—the same written description that informs the
system claims—which tells us just what the nature of
that computer implementation is.

    For this reason, we believe that Chief Judge Rader
and Judge Moore’s analysis in Part VI of the collective
opinion is internally inconsistent with the analysis the
four of us employ in Part V of that opinion. Specifically,
when analyzing the system claims, we note that “[t]he
specification also includes numerous flowcharts that
provide algorithm support for the functions recited in the
claims.” Rader/Linn/Moore/O’Malley Op. at 32. We also
note that “the ’375 Patent discloses at least thirty-two
figures which provide detailed algorithms for the software
with which this hardware is to be programmed.” Id. at
31. Relying on the details disclosed in Fig. 16 of the ’375
patent, we assert that “[l]abeling this system claim an
8             CLS BANK INTERNATIONAL   v. ALICE CORPORATION

‘abstract concept’ wrenches all meaning from those words,
and turns a narrow exception into one which may swallow
the expansive rule (and with it much of the investment
and innovation in software).” Id. at 34. We do not see
how Chief Judge Rader and Judge Moore, when analyzing
the method claims, can ignore the fact that the specific
functionality described in the figures applies just as much
to them as to the system claims. Chief Judge Rader and
Judge Moore, in Part V of the collective opinion,
acknowledge that the flow charts in the ’375 patent depict
the algorithms which the software runs—i.e., the subject
matter of the method claims. And the same Figure 16 is
present in the ’479 and ’510 patents. In this regard,
barring an actual construction of the claims, we must
assume the method claims are just as specific as the
system claims, and merit the same treatment we afford
those latter claims.

      Judge Lourie not only divorces his analysis from the
record, he turns it on its head. Although Judge Lourie
mentions the agreement between the parties and trial
court regarding claim construction, see Lourie Op. at 25,
he ignores the substance of the stipulations and assump-
tions upon which the proceedings below were predicated—
i.e., that the method claims are narrowed by incorporation
of all electronic aspects of the system claims, see id. at 26
(“First, the requirement for computer implementation
could scarcely be introduced with less specificity; the
claim lacks any express language to define the computer’s
participation.”). He then takes it upon himself to construe
the claims, giving the method claims their broadest
possible interpretation in the process. See id. at 26 (con-
struing the method claims such that “[t]here is no specific
or limiting recitation of essential or improved computer
technology, and no reason to view the computer limitation
as anything but insignificant postsolution activity relative
to the abstract idea” (citations omitted) (internal quota-
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION            9

tion marks omitted)); id. at 27 (construing “shadow rec-
ord” as “reciting no more than the necessary tracking
activities of a supervisory institution”). Indeed, Judge
Lourie begins, not with the record, or even a proper
exercise in claim construction, but with identification of
what he finds to be the fundamental concept “wrapped up
in the claim.” Id. at 18. From there, he searches the
words in the claims for “substantive limitations that
narrow, confine, or otherwise tie down the claim.” Id. at
18-19. By starting with a paraphrased abstraction of the
claims and excluding the record evidence regarding the
meaning of the claims, Judge Lourie preordains the
method claims ineligible. Judge Lourie then reads into
the system claims the same abstraction he felt damned
the method claims.

    Thus, Judge Lourie explicitly finds that “[t]he com-
puter-based limitations recited in the system claims here
cannot support any meaningful distinction from the
computer-based limitations that failed to supply an
‘inventive concept’ to the related method claims.” Id. at
34. The “abstraction” he ferrets from his own reading of
the method claims, thus, works much like a computer
virus to infect his analysis of all of the claims, regardless
of their limitations. Indeed, he actually strips the claims
of their detail and limitations—in direct contravention of
the Supreme Court’s admonitions in Diamond v. Diehr,
450 U.S. 175, 188 (1981)—calling it mere “extravagant
language.” Lourie Op. at 27.

    We do not believe a patent eligibility inquiry can be
disembodied from the actual claims at issue, with their
attendant limitations. The analytical process in which
Judge Lourie engages is at odds with the most basic
concepts that govern our patent system. See Giles S.
Rich, Extent of Protection and Interpretation of Claims—
American Perspectives, 21 Int’l Rev. of Indus. Prop. &
10            CLS BANK INTERNATIONAL   v. ALICE CORPORATION

Copyright L. 497, 499 (1990) (“[T]he name of the game is
the claim.”); see also Phillips v. AWH Corp., 415 F.3d
1303, 1312 (Fed. Cir. 2005) (en banc) (“It is a bedrock
principle of patent law that the claims of a patent define
the invention to which the patentee is entitled the right to
exclude.” (internal quotation marks omitted)). His meth-
odology just cannot be right.

    While it may be possible to construe the method
claims in such a way that they would read like those in
Bilski v. Kappos, 130 S. Ct. 3218 (2010), and, thus, be
patent ineligible, we see no intellectually sound way to
distinguish the method claims as construed by the district
court from the system claims.

                            III

    We assume our colleagues feel free to ignore the
record—or, more appropriately, the lack thereof—in this
case because claim construction is a question of law which
this court reviews de novo. See Cybor Corp. v. FAS
Techs., Inc., 138 F.3d 1448, 1456 (Fed. Cir. 1998) (en
banc). Whether review is de novo or not, however, it still
must be a “review”—it must be premised on a record
below in which all relevant claim construction issues were
vetted and in which the parties had an opportunity to
proffer intrinsic and extrinsic evidence which would
inform the claim construction process. None of that
occurred in this case. Instead, Alice’s evidence and argu-
ments were proffered and accepted by all as established
fact. We are not persons of skill in the art and cannot
open the record for proceedings that did not occur below.
We are a reviewing court whose review must be predicat-
ed upon the record presented.

    For these reasons, we agree with CLS, and with vir-
tually every amicus to consider these claims, that all
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION           11

asserted claims must rise or fall together, because they all
contain the same computer-based limitations.

                             IV

    We turn to our view of the claims at issue here. This
section of our opinion need not detain long. Along with
Chief Judge Rader and Judge Moore, we have already
explained why the system claims in this case are patent
eligible and are not swallowed up by the exception from
patent eligibility for claims that do no more than recite
abstract ideas. See Rader/Linn/Moore/O’Malley Op. Part
V. As we note, the claimed data processing system “in-
cludes at least four separate structural components” that
perform very specific functions, id. at 31, see also Moore
Op. at 13 (“[Claim 1 of the ’375 patent] is a pure system
claim, directed to a specific machine configured to perform
certain functions.”), and to describe the system as an
abstraction ignores what is claimed, see Rad-
er/Linn/Moore/O’Malley Op. at 34 (“Labeling this system
claim an ‘abstract concept’ wrenches all meaning from
those words, and turns a narrow exception into one which
may swallow the expansive rule (and with it much of the
investment and innovation in software).”), see also Moore
Op. at 13 (“[I]t is impossible to conclude that this claim is
merely an abstract idea.”). 4

    For the reasons we describe herein, moreover, we
would employ the same rationale we employed for the
system claims to find the method and media claims patent
eligible as well. The trial court construed these claims to


    4    We agree with Judge Moore’s similar analysis of
the system claims in her separate opinion, which we join
in full.
12            CLS BANK INTERNATIONAL   v. ALICE CORPORATION

require all the computer-implemented limitations of the
system claims. Indeed, in doing so, the trial court conced-
ed that there was meaningful support in the written
description of the ’479 and ’510 patents for that construc-
tion. We have no record upon which to disagree with that
construction of these claims, one which both parties
continue to urge upon us. And, it is a careful assessment
of the claims—with all their limitations—which must
guide our inquiry.

    As we said in the panel opinion in this case, moreover,
assuming the presence of all the computer-based limita-
tions in the written description, none of these claims are
unduly pre-emptive. While the abstract idea at their
heart may be the use of an intermediary to facilitate
financial transactions, the claims here are directed to very
specific ways of doing that—using “shadow credit rec-
ord[s]” and “shadow debit record[s]” that are adjusted
only if the “transactions . . . do not result in the value of
the shadow debit record being less than the value of the
shadow credit record at any time,” making the permitted
transactions “in chronological order,” and exchanging
“credits” and “debits” “in accordance with the adjustments
of the said permitted transactions.” ’479 patent col. 65 ll.
23-50. While it is possible these claims may have been
obvious over the prior art—which, of course, would in-
clude the abstract idea itself—they do not preempt all
commercial uses or applications of that idea.

                             V

    We finally note that certain Amici express concern re-
garding the proliferation and aggressive enforcement of
low quality software patents. See Br. of Amici Curiae
Google Inc., Dell Inc., Facebook, Inc., Homeaway, Inc.,
Intuit Inc., Rackspace Hosting, Inc., Red Hat, Inc., and
Zynga Inc. in Supp. of Pet’rs at 23-25 [hereinafter “Google
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION           13

Br.”]; Amici Curiae Internet Retailers’ Corrected Br. in
Supp. of Neither Party at 14-22 [hereinafter “Internet
Retailers Br.”]. They seem to believe that patents on
early generation technology inhibit technological advanc-
es. See Google Br. 23-25; Internet Retailers Br. 14-22.
Based on these concerns, these Amici ask us to find all the
claims at issue in the patents before us ineligible under
the abstract ideas exception to § 101.

     We do not discount Amici’s concerns, we just disagree
with what they ask us to do to quell them. Congress can,
and perhaps should, develop special rules for software
patents. It could, for instance, limit their life by limiting
the term of such patents. See Peter S. Menell, A Method
for Reforming the Patent System, 13 Mich. Telecomm. &
Tech. L. Rev. 487, 501 (2007) (arguing patent reform
should include “identifying and evaluating categorical
reform options (such as excluding business method pa-
tents or altering the duration of software patents).”). Or,
Congress could limit the scope of software patents by
requiring functional claiming. Cf. Mark A. Lemley,
Software Patents and the Return of Functional Claiming,
2013, at 42, available at http://papers.ssrn.com/sol3/
papers.cfm?abstract_id=2117302, Stanford Pub. L. Work-
ing Paper No. 2117302, (arguing that the problems with
software patents can be remedied through strict enforce-
ment of the 35 U.S.C. § 112(f) limitations on functional
claiming, not by “retroactively invalidat[ing] tens of
thousands of software patents”). Or, it could do both, or
devise some other rule. But broadening what is a narrow
exception to the statutory definition of patent eligibility
should not be the vehicle to address these concerns.
While Congress may, this court may not change the law to
address one technological field or the concerns of a single
industry. See United States v. Rutherford, 442 U.S. 544,
555 (1979) (“Under our constitutional framework, federal
courts do not sit as councils of revision, empowered to
14            CLS BANK INTERNATIONAL   v. ALICE CORPORATION

rewrite legislation in accord with their own conceptions of
prudent public policy.”); see also Anderson v. Wilson, 289
U.S. 20, 27 (1933) (“We do not pause to consider whether
a statute differently conceived and framed would yield
results more consonant with fairness and reason. We
take the statute as we find it.”).

    Thus, whatever the merits of such concerns, the an-
swer is not to rewrite the law by broadening the abstract
ideas exception to § 101, especially if the only way to do so
is to ignore the limitations in the claims actually before
us.

                             VI

    Appropriately treating the abstract ideas exception to
patent eligibility under 35 U.S.C. § 101 as a narrow judge-
made exception to a broad statutory grant, and being true
to the record and claim constructions we are presented,
we would find all claims at issue in this case patent
eligible and would vacate the judgment of the lower court
and remand for further proceedings. We dissent from this
court’s judgment which has the effect of doing otherwise.
  United States Court of Appeals
      for the Federal Circuit
                 ______________________

            CLS BANK INTERNATIONAL,
                  Plaintiff-Appellee,

                           AND

                CLS SERVICES LTD.,
            Counterclaim Defendant-Appellee,

                            v.

         ALICE CORPORATION PTY. LTD.,
               Defendant-Appellant.
              ______________________

                       2011-1301
                 ______________________

    Appeal from the United States District Court for the
District of Columbia in No. 07-CV-974, Judge Rosemary
M. Collyer.
                 ______________________

       Additional Reflections of Chief Judge Rader

RADER, Chief Judge.

    In the twenty-fifth year of my judicial service, I am
wont to reflect on my early judicial experience in search of
the confidence in the correctness of my judicial views that
I then enjoyed. In this instance, my reflection carries me
back to one of the first cases I helped decide as a new
Circuit Judge on this court.
2             CLS BANK INTERNATIONAL   v. ALICE CORPORATION
    The case, Arrythmia Research Tech. v. Corazonix
Corp., 958 F.2d 1053 (Fed. Cir. 1992), involved a patent
on a software invention that allowed for swift computer
analysis of electrocardiogram images to detect heart
attack risks. Of course, I encountered the case flushed
with confidence and a commitment to the law as written
by our legislative branch, the branch to which I had
dedicated my entire early career. In the face of this
marvelous way to protect human life more efficiently and
reliably, I found myself certain that this invention would
“promote the Progress of the useful Arts.” Moreover, the
investment in research to develop that new method cried
out for protection. Without protection, I reasoned, inves-
tors would quickly opt to put their resources into new
cosmetics or weight control improvements—safer proposi-
tions. In sum, I thought this case was easy.

    Therefore, I could only describe my emotion as sur-
prise that my senior colleagues on the panel, Judges
Newman and Lourie, struggled mightily. The author for
the court performed impressive feats of intellectual acro-
batics trying to gain some handhold to show that the
mathematic equations in the method had some physical
connection and no preemptive effect, whatever those
concepts mean (and I still do not know if they have any
meaning, let alone what that meaning might be). The
court succeeded in converting “applying,” “determining,”
and “comparing” into “physical process steps that trans-
form one physical, electrical signal into another.” Id. at
1059.

    With some trepidation, I ventured to express my view
that the statute settled the question without the need for
laborious analysis. At the close of my opinion, I expressed
a little frustration: “When all else fails . . . consult the
statute.” For me, Parker v. Flook, 437 U.S. 584 (1978),
Gottschalk v. Benson, 409 U.S. 63 (1972), In re Abele, 684
F.2d 902 (CCPA 1982), In re Walter, 618 F.2d 758 (CCPA
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION           3
1980), and In re Freeman, 573 F.2d 1237 (CCPA 1978),
vindicated the proposition that “all else had failed.” And
for me, the magisterial statute with its sweeping inclusion
of “any” process and even “improvements thereon” with-
out any of the written exceptions for “software per se” or
other legislative exceptions featured in failed European
and Asian statutes settled the question. Indeed, as the
law expressed and the Supreme Court recognized, an
invention could extend to “anything under the sun that is
made by man.” Diamond v. Diehr, 450 U.S. 175, 182
(1981) (quoting 182 S. Rep. No. 1979, 82d Cong., 2d Sess.,
5 (1952) and H.R. Rep. No. 1923, 82d Cong., 2d Sess., 6
(1952)).

     As I noted at the outset, a quarter century has passed.
After In re Alappat, 33 F.3d 1526 (Fed Cir. 1994) (en
banc), and a few other opinions, the law of patent eligibil-
ity enjoyed a halcyon decade of reliance on the statute.
Inventions rose and fell, but based on the merits of their
contributions to the progress of the useful arts, not on the
basis of undefined and unproven judicial abstractions like
“abstractness” or “preemption.” Prior art governed the
patentability of claims. The separate concept of patent
eligibility of subject matter (not a claim-driven concept at
all) was not subject to judicial preference for a broad or
narrow view of formless substance.

     Although Diehr and Diamond v. Chakrabarty, 447
U.S. 303 (1980), betokened decades of enforcing the
patent law as written, these giants too have bowed to new
judicial influences. Twenty years ago, Judges Newman,
Lourie, and I still unanimously agreed on the outcome of
Arrythmia. The intervening commotion leaves us with
little, if any, agreement amongst us even though the
statute has not changed a syllable.
4             CLS BANK INTERNATIONAL   v. ALICE CORPORATION
   Thus, I find myself writing again as I did in 1992.
And I find myself resorting to exactly the same phrase:

          When all else fails, consult the statute!

And for evidence that all else has failed, I need only recite
Bilski v. Kappos, 130 S. Ct. 3218 (2010), Mayo Collabora-
tive Servs. Inc. v. Prometheus Labs., Inc., 132 S. Ct. 1289
(2012), Ass’n for Molecular Pathology v. U.S. Patent &
Trademark Off., 689 F.3d 1303 (Fed. Cir. 2012), cert
granted in part, 133 S. Ct. 694 (2012), MySpace, Inc. v.
GraphOn Corp., 672 F.3d 1250 (Fed. Cir. 2012), Dealer-
track, Inc. v. Huber, 674 F.3d 1315 (Fed. Cir. 2012), and
Classen Immunotherapies, Inc. v. Biogen IDEC, 659 F.3d
1057 (Fed. Cir. 2011), and this list can and will go on and
grow.

     And the remedy is the same: consult the statute! The
statute offers a patent to both inventions and discoveries,
including simply an improvement on a known process or
product. The statute further directs that even the mere
new use of an old machine is eligible for patenting, with,
of course, a high obstacle of meeting the conditions of
patentability set forth in Sections 102 and 103 of the
Patent Act ahead. See S. Rep. No. 82-1979 at 17 (explain-
ing that the new use of a known machine or composition
of matter is eligible for patenting “provided the conditions
of patentability are satisfied.”) In that regard, the Su-
preme Court long ago held that Section 101 is not a
“condition of patentability.” Diehr, 450 U.S. at 189-90
(citing In re Bergy, 596 F.2d 952, 963 (CCPA 1979) (Sec-
tion 101 “was never intended to be a ‘standard of patenta-
bility,’ the standards, or conditions as the statute calls
them, are in 102 and 103”)). Finally, the statute does not
list Section 101 among invalidity defenses to infringe-
ment. See 35 U.S.C. § 282 (while invalidity for failing to
meet a “condition of patentability” is among the author-
 CLS BANK INTERNATIONAL   v. ALICE CORPORATION            5
ized defenses, Section 101 is not a “condition of patenta-
bility”).

    And what about “exceptions” like natural laws and
natural phenomena? Of course, these are universal
constants created, if at all, only by God, Vishnu, or Allah.
But, for perspective, even gravity is not a natural law in
Einsteinian theory, but a symptom of a curved universe.
Einstein posited the speed of light as the only true natu-
ral constant. Thus, in context, equating the personalized
medicinal effect of a human-created pharmaceutical in
patients of different metabolic rates and genetic makeups
with the speed of light (or even gravity) is only possible in
a netherworld of undefined judicial insights. Moreover, to
inject the patentability test of “inventiveness” into the
separate statutory concept of subject matter eligibility
makes this doctrine again “the plaything of the judges
who, as they became initiated into its mysteries, delighted
to devise and expound their own ideas of what it meant;
some very lovely prose resulting.” Giles S. Rich, Princi-
ples of Patentability, 28 Geo. Wash. L. Rev. 393, 404
(1960).

    I enjoy good writing and a good mystery, but I doubt
that innovation is promoted when subjective and empty
words like “contribution” or “inventiveness” are offered up
by the courts to determine investment, resource alloca-
tion, and business decisions. Again, it is almost . . . well,
“obvious” . . . to note that when all else fails, it makes
sense to consult the simplicity, clarity, and directness of
the statute.

    As I start my next quarter century of judicial experi-
ence, I am sure that one day I will reflect on this moment
as well. I can only hope it is a brighter reflection than I
encounter today.
