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    No. 13-298

    WILSON-EPES PRINTING CO.,INC. (202)789-0096 WASHINGTON,D.C.20002

    IN THESupreme Court of the United States

    ALICE CORPORATION PTY.,LTD.,Petitioner,

    v.

    CLSBANK INTERNATIONAL AND CLSSERVICES LTD.,Respondents.

    On Writ of Certiorari

    to the United States Court of Appeals

    for the Federal Circuit

    BRIEF OF MICROSOFT CORPORATION,

    ADOBE SYSTEMS INC., AND HEWLETT-

    PACKARD COMPANY ASAMICI CURIAE

    IN SUPPORT OF AFFIRMANCE

    HORACIO E.GUTIRREZJULE L.SIGALLDAVIDW.JONESMICROSOFT CORPORATIONOne Microsoft WayRedmond, WA 98052(425)882-8080Counsel for MicrosoftCorporation

    JEFFREYA.LAMKENCounsel of Record

    MICHAEL G.PATTILLO,JR.MOLOLAMKEN LLPThe Watergate, Suite 660600 New Hampshire Ave., NWWashington, D.C. 20037(202) [email protected] M.WHEALAN4613 Merivale RoadChevy Chase, MD 20815

    (202) 994-2195Counsel for Amici Curiae

    [List of Counsel continued on Inside Cover]

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    ANTHONY BACACYNTHIA BRIGHTCURTIS ROSEROBERTWASSONHEWLETT-PACKARD COMPANYOFFICE OF THE GENERALCOUNSEL

    3000 Hanover StreetPalo Alto, CA 94304(650) 857-1501

    Counsel for Hewlett-PackardCompany

    DANA S.RAOADOBE SYSTEMS INC.345 Park AvenueSan Jose, CA 95110(408) 536-3298

    Counsel for AdobeSystems Inc.

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    (i)

    QUESTION PRESENTEDWhether the courts below correctly concluded that

    none of the asserted claims are patent eligible under 35U.S.C. 101.

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    (iii)

    TABLE OF CONTENTS

    Page

    Question Presented ........................................................ i

    Interest ofAmici Curiae............................................... 1

    Introduction and Summary of Argument ................... 3

    Argument......................................................................... 6

    I. Software-Implemented TechnologicalInnovations Are Patent Eligible Under 101 ...................................................................... 6

    A. Software Makes ComputingTechnology Work ...................................... 6B. Software-Enabled Inventions Are

    the Modern-Day Heirs toMechanical Inventions.............................. 7

    C. Software Advances PervadeTodays Technological Landscape .......... 10

    II. The Patents at Issue in This Case AreNot Directed to Computer-ImplementedInventions and Are Ineligible Under

    101 ...................................................................... 17A.Adding a Computer to the Steps

    of an Abstract Business MethodDoes Not Make a Claim PatentEligible........................................................ 19

    B. Petitioners Purported Invention IsNot Patent-Eligible Subject Matter,But Rather Bilskion a Computer....... 22

    1. Petitioners Patents Seek ToCover an Abstract Idea ...................... 22

    2. Recitation of a Computer DoesNot Make the Claims PatentEligible.................................................. 25

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    iv

    TABLE OF CONTENTSContinuedPage

    III. In Harder Cases, Patent EligibilityShould Turn on Whether the Claim as a

    Whole Recites a Specific, PracticalApplication of the Idea Rather ThanMerely Reciting Steps Inherent in theIdea Itself ............................................................ 27

    A. Patent Eligibility Can BeDetermined Only By Looking toEach Claim, Taken as a Whole................ 29

    B. This Courts Precedents Guide theDistinction Between Unpatentable

    Abstract Ideas and Patent-EligibleApplications................................................ 30

    Conclusion........................................................................ 35

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    vi

    TABLE OF AUTHORITIESContinuedPage(s)

    OTHER AUTHORITIES

    AAA Found. for Traffic Safety,FAQs:Anti-Lock Braking System (ABS), (Feb.15, 2005), https://www.aaafoundation.org/faqs-anti-lock-braking-system-abs............. 15

    Alan Cane, Car Manufacturing: VehicleMakers Appreciate the Virtues ofVirtual Design, Financial Times (May28, 2008), http://www.ft.com/cms/s/0/76265d22-2af8-11dd-a7fc-000077b07658.html#axzz2tL1PQkhN................................................. 12

    Auto Alliance, Technologies Working To-gether: Autos, Computers and Elec-tronics, http://www.autoalliance.org/index.cfm?objectid=1D64C240-7EE5-11E3-9303000C296BA163 ........................ 14, 15

    Ctr. for Auto. Research,Just How High-Tech is the Automotive Industry?(2014),

    http://www.autoalliance.org/auto-innovation/2014-car-report. ................................. 15

    David A. Patterson & John L. Hennessy,Computer Organization and Design(4th ed. 2009).......................................................... 6

    Eric Rogell, Car-Building Robots withLaser Eyes Can See Exactly Where toPlace Parts for Custom-Like Fit,Discovery News (Apr. 12, 2012),http://news.discovery.com/autos/drive/national-robotics-week-car-building-robots-

    with-laser-eyes-can-see-exactly-where-to-place-parts-for-custom-like-fit.htm ............... 13

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    vii

    TABLE OF AUTHORITIESContinuedPage(s)

    FocusMagic,Forensics Examples,http://www.focusmagic.com/forensics-examples.htm......................................................... 16

    Intl Fedn of Robotics,History ofIndustrial Robots(2012), http://www.ifr.org/uploads/media/History_of_Industrial_Robots_online_brochure_by_IFR_2012.pdf ...................................................................... 13

    James E. Bessen & Robert M. Hunt,AnEmpirical Look at Software Patents, 16J. Econ. & Mgmt. Strategy 157 (2007)............... 16

    James E. Tomayko, Computers TakeFlight: A History of NASAs PioneeringDigital Fly-By-Wire Project(2000),http://www.nasa.gov/centers/dryden/pdf/182985main_DFBW_rev1.pdf....................... 11, 12

    James W. Cortada, The Digital Hand: HowComputers Changed the Work of Ameri-can Manufacturing, Transportation,

    and Retail Industries(2003)......................... 11, 12Jamie Page Deaton,Ask the Editor: What

    Is Stability Control?, U.S. News &World Report (July 22, 2011),http://usnews.rankingsandreviews.com/cars-trucks/best-cars-blog/2011/07/Ask_the_Editor_Whats_Stability_Control................ 15

    Johannes Winterhagen,Road to a DigitalFuture, Pictures of the Future Magazine(Fall 2012), http://www.siemens.com/innovation/apps/pof_microsite/_pof-fall-2012/_html_en/automotive-software.html... 14, 15

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    viii

    TABLE OF AUTHORITIESContinuedPage(s)

    John Brandon,How Computers HaveRevolutionised Our Cars, TechRadar(July 4, 2013), http://www.techradar.com/us/news/car-tech/how-computers-have-revolutionised-car-design-1160141..................... 12

    John Markoff,Skilled Work, Without theWorker, The New York Times (Aug. 18,2012), http://www.nytimes.com/

    2012/08/19/business/new-wave-of-adept-robots-is-changing-globalindustry.html?pagewanted=all&_r=0........................................ 13

    Kunio Doi, Current Status and FuturePotential of Computer-Aided Diagnosisin Medical Imaging, 78 Brit. J. ofRadiology S3 (2005) .............................................. 16

    Mark A. Lemleyet al., Life AfterBilski,63 Stan. L. Rev. 1315 (2011) ............................... 35

    Michael Tovey et al., Sketching and DirectCAD Modelling in Automotive Design,

    21 Design Studies 569 (2000)............................... 12Moores Law and Intel Innovation,

    http://www.intel.com/content/www/us/en/history/museum-gordon-moore-law.html .................................................................. 6

    National Geographic Education, GPS,http://education.nationalgeographic.com/education/encyclopedia/gps/?ar_a=1................. 14

    Ocean Systems, ClearID Examples,http://www.oceansystems.com/forensic/

    forensic-Photoshop-Plugins/examples.php.......................................................................... 16

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    TABLE OF AUTHORITIESContinuedPage(s)

    Paul Ingrassia, This Car Changed America,The Wall Street Journal (Sept. 27, 2008),http://online.wsj.com/news/articles/SB122246777029780525 ................................................. 13

    Presidents Info. Tech Advisory Comm.,Natl Coordination Office for Computing,Info. & Comcns,Information Technolo-

    gy Research: Investing in Our Future

    (1999), http://research .microsoft.com/en-us/um/people/gray/papers/pitac_report_99_2_24.pdf .......................................................... 16

    Ron White,How Computers Work(9th ed. 2008).......................................................... 6

    The History of IBM Electric Typewriters,http://www-03.ibm.com/ibm/history/exhibits/modelb/modelb_history.html ............... 9

    Univ. of Ariz. Dept of Surgery,Robotic-Assisted Surgery, http://surgery.arizona.edu/unit/program/robotic-assisted-surgery.................................................... 16

    Will Knight,Smart Robots Can Now WorkRight Next to Auto Workers, MITTechnology Review (Sept. 17, 2013),http://www.technologyreview.com/news/518661/smart-robots-can-now-work-right-next-to-auto-workers/................................. 13

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    IN THESupreme Court of the United States

    NO.13-298

    ALICE CORPORATION PTY.,LTD.,

    Petitioner,v.

    CLSBANK INTERNATIONAL AND CLSSERVICES LTD.,

    Respondents.

    On Writ of Certiorari

    to the United States Court of Appeals

    for the Federal Circuit

    BRIEF OF MICROSOFT CORPORATION,

    ADOBE SYSTEMS INC., AND HEWLETT-

    PACKARD COMPANY ASAMICI CURIAE

    IN SUPPORT OF AFFIRMANCE

    INTEREST OFAMICI CURIAE1

    Microsoft Corporation is a leader in the technologyindustry and an active and longstanding player in thepatent system. Since its founding in 1975, it has devel-

    1 Pursuant to Supreme Court Rule 37.6, counsel for amici curiaestates that no counsel for a party authored this brief in whole or inpart, and no party or counsel for a party made a monetarycontribution intended to fund the preparation or submission of this

    brief. No person other than amicior their counsel made a monetarycontribution to this briefs preparation or submission. Counsel ofrecord for both petitioner and respondents have consented to thefiling of amicus briefs in letters that have been filed with the Clerk.

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    oped and marketed a wide range of software, services,and hardware products, including the flagship Windowsoperating system, the Office suite of productivity applica-tions, the Surface tablet computer, and the Xbox gamingsystem.

    Adobe Systems Inc. is devoted to changing the worldthrough digital experiences. With its over 30-year his-tory in the software and services fields, and flagshipproducts like Photoshop, Acrobat, Flash, and AdobeMarketing Cloud, Adobe provides the tools the worlduses to create groundbreaking digital content, deploy it

    across all screens, measure and optimize it over time, andachieve greater business success.

    Hewlett-Packard Company is the worlds largest in-formation technology company. It offers personal com-puters, enterprise storage and servers, networking de-vices, IT management software, IT services, andimaging- and printing-related products.

    The question presented in this case purports to con-cern the patent eligibility of computer-implemented in-ventions. The patents at issue, however, do not claim

    true computer-implemented inventions, but instead claimbusiness methods for mitigating risk in financial trans-actions. Amici have a profound interest in ensuring thatcourts understand the differences between the two. Asleading technology companies, amici currently spend $14billion annually on research and development and holdnearly 63,000 U.S. patents, most of which relate tocomputer-implemented inventions. Amici are also fre-quently sued for allegedly infringing business-methodpatents, some of which, like the claims in this case, mas-querade as computer-implemented inventions. Amicithus have unique and balanced insights on, and experi-ence with, the issues presented by this case.

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    INTRODUCTION ANDSUMMARY OF ARGUMENT

    Petitioner frames the question presented as [w]heth-er claims to computer-implemented inventions * * * aredirected to patent-eligible subject matter within themeaning of 35 U.S.C. 101 (rather than being categor-ically excluded as abstract ideas). Pet. Br. i. That ques-tion has an easy, but superficial, answer: yes. But theactual question is whether petitioners patent claims,which are directed to abstract business methods, qualifyas computer-implemented inventions eligible for patent

    protection. The answer to that question is no.Petitioners patents claim a method of performing

    escrowsan otherwise unpatentable business methodto which petitioner has essentially bolted on the directiveperform that method on a computer. But merely say-ing, perform an otherwise unpatentable idea on ageneral-purpose computer does not make the idea pat-entable. In Bilskiv. Kappos, 130 S. Ct. 3218 (2010), theCourt held that the abstract idea of hedging was notpatentable. Adding the directive to do the hedging on a

    computer would not have changed that result. The sameis true here.

    I. Precisely because this case does not involve a truecomputer-implemented invention (but rather a businessmethod posing as one), the Court has no reason toaddressor to risk the potential uncertainty and unfore-seen impacts that can be created by addressingthe pat-entability of computer-implemented inventions and soft-ware generally. The importance of software to the prog-ress of innovation and the economy cannot be overstated.Software provides the infrastructure for innovation intodays information age. Computers of all types rely fortheir operation on the same physical activityturning

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    millions of tiny transistors, embedded in silicon chips, onand off in the desired sequences. It is software thatdefines the operation of a computers transistors. Bycontrolling those transistors, software can enable a singlegeneral-purpose computer to function as a camera, atelephone, a video player, a gaming device, and more.

    Previously, most patentable inventions took the formof new, single-purpose mechanical devices, or improve-ments to existing physical mechanisms. Today, manytechnological inventionsboth pioneering discoveriesand incremental improvementsrely not on advances in

    mechanical design, but on advances in the software thatcontrols computer hardware. These digital advances arethe heirs to their mechanical forebearsthey are no lessinnovative, and they serve the same practical function inadvancing the state of technology. The fact that theytake the form of a process implemented through soft-wares reconfiguration of transistors, rather than modi-fying the physical structure of a machine, does not makethem any less patent eligible.

    Software-based innovation pervades every sector of

    the economy. In the aerospace and automobile indus-tries, innovations like fly-by-wire controls and anti-lockbrakes are not so much the product of mechanicalevolution as of software advances. Such computer-implemented innovations have been considered, andshould remain, just as patent eligible as their mechanicalpredecessors.

    II. Petitioners patents in this case cover a businessmethod of the sort this Court held to be an unpatentableabstract idea inBilski. While some of petitioners claimsdo refer to a computer or computer implementation, nonerelates to an advance in computing, software, or anyother technology. Nor do the claims represent an innova-

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    tion in how a computer may be employed to produce thedesired result. Instead, the claims recite an abstract ideafor conducting a business transaction and then add whatamounts to the directive, do it on a computer. Peti-tioners patents are no more directed to a computer-implemented innovation for electronic transactions thana generic claim for a molecule configured to cure can-cer describes a novel pharmaceutical for treating oncol-ogy patients.

    [T]o transform an unpatentable law of nature into apatent-eligible application of such a law, one must do

    more than simply state the law of nature while adding thewords apply it. Mayo Collaborative Servs. v. Prome-theus Labs., Inc., 132 S. Ct. 1289, 1294 (2011). Likewise,to transform an otherwise unpatentable business methodinto a patentable computer-implemented invention, onemust do more than say do it on a computer. SeePark-erv.Flook, 437 U.S. 584, 593 (1978). To resolve this case,the Courts decision need not, and should not, go further.

    III. This Courts 101 cases provide well-suitedthreshold tests for filtering out unpatentable business-

    method patents, including those disguised as computer-implemented inventions. But applying them to truecomputer-implemented inventions may prove harder infuture cases. Assessing the eligibility of software-relatedclaims often presents difficult issues and unique con-cerns. The Court should not purport to issue guidelinesfor such claims in the absence of a record that will helpthe Court evaluate those complexities.

    In the meantime, courts can continue to address thepatent eligibility of computer-implemented inventionswith reference to established 101 principles. Thoseprinciples require courts to consider the actual patentclaims themselves, taken as a whole. And they establish

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    that a claim invoking abstract concepts is patent eligibleonly if it also contains additional limitations that directthe claim to a specific, practical application of the ideaan invention that advances computer functionality orrepresents a new way to use a computer to achieve aresultrather than attempting to monopolize the ideaitself.

    ARGUMENT

    I. SOFTWARE-IMPLEMENTED TECHNOLOGICAL INNO-VATIONS ARE PATENT ELIGIBLE UNDER 101

    A. Software Makes Computing Technology WorkIt is natural to envision innovation in computing tech-

    nology in terms of hardware, as each generation ofsmartphones, tablets, and laptops is faster, more power-ful, and more feature-rich than predecessors. And ad-vances in computer hardwareexemplified by increasesin processing power pursuant to Moores law2abound.Ultimately, however, software underlies the varied func-tionality and practical utility that computers provide.Without software, computers can do nothing useful. As aresult, software is an indispensable aspect of innovation

    in every technological field and sector of the economy.Despite the countless types of computing devices, they

    all operate using the same simple physical activity: therouting and re-routing of electrical signals by means ofon-off switches, typically transistors on silicon chips. Seegenerally David A. Patterson & John L. Hennessy, Com-

    puter Organization and Design (4th ed. 2009); RonWhite,How Computers Work(9th ed. 2008). While diffi-

    2 Moores law is the prediction that [t]he number of transistors

    incorporated in a [semiconductor] chipand, roughly, the pro-cessing power of chipswill double every 24 months. MooresLaw and Intel Innovation, http://www.intel.com/content/www/us/en/history/museum-gordon-moore-law.html.

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    cult to visualize, the complex functions that computersperform come down to the rapid manipulation of millionsof transistors in particular configurations.

    Software defines the operations of those transistors.Software developers conceive of the functionality theywant a computer to perform, and then write instructioncode using a programming language that allows opera-tions to be defined through syntax and semantics thathumans can readily understand. But the functions devel-oped in programming language must then be reduced tomachine language, which provides instructions at the

    rudimentary level of turning the computers transistorson and off in the desired sequences. See Patterson &Hennessy, supra, at 11-13, 20-21, 76-80.

    Different software programs enable a general-purposecomputer to perform new and different tasks. Suchprogramming creates a new machine, because a generalpurpose computer in effect becomes a special purposecomputer once it is programmed to perform particularfunctions pursuant to instructions from program soft-ware. In re Alappat, 33 F.3d 1526, 1545 (Fed. Cir. 1994)

    (en banc). Simply put, it is software that transforms thesingle set of circuits in a general-purpose computer into aword processor, camera, telephone, video player, orgaming device. Where formerly inventors had to buildnew devices, software can endow a single computingdevice with new features, capabilities, and advances inperformance by reconfiguring the devices existing tran-sistors.

    B. Software-Enabled Inventions Are the Modern-Day Heirs to Mechanical Inventions

    Software innovations are the modern-day heirs tounquestionably patent-eligible mechanical inventionsthey are precisely the sort of new and useful advances in

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    technology that the patent system was designed toencourage and protect. Pfaff v. Wells Elecs., Inc., 525U.S. 55, 63 (1998). The fact that technological advancesmay take the form of software reconfiguring a com-puters transistors, rather than an improvement in themechanical structure of a machine, does not make themany less patent eligible.

    The technological evolution from mechanical type-writer to todays word-processing software illustratesthat point. Christopher Latham Sholes did not invent thetypewriter, but he developed the first commercially

    viable one. In 1868, he received a patent for his Im-provement in Type-Writing Machines. At that time,typewriters were purely mechanical devices. Sholes in-novations were likewise mechanical: They included abetter way of working the type-bars, of moving andregulating the movement of the carriage, and of hold-ing, applying, and moving the inking-ribbon. U.S. Pat-ent No. 79,265, at 1 (issued June 23, 1868).

    Other innovations followedthey, too, were patent-eligible new and useful improvement[s] in a type-

    writers mechanics. 35 U.S.C. 101. The capital-shiftfunction allowed users to toggle between upper- andlower-case characters on a single type bar. Several pat-ents were awarded in the late 19th century for implemen-tations of a capital-shift mechanism. E.g., U.S. PatentNos. 202,923 (issued Apr. 30, 1878), 551,842 (issued Dec.24, 1895), 564,699 (issued July 28, 1896). And theinvention of a mechanism for proportional spacing, whichadjusts the distance between letters in proportion totheir varying widths, produced more aesthetically pleas-ing typesetting. See U.S. Patent No. 2,111,410 (issuedApr. 15, 1935).

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    In the 1930s, incorporation of electric motors in-creased typewriters speed. Several patents for thattechnology were issued to Russell Thompson of Elec-tromatic Typewriters, Inc. See, e.g., U.S. Patent Nos.1,940,155 (issued Dec. 19, 1933), 2,063,530 (issued Dec. 8,1936). IBM acquired Electromatic, using its patents toproduce the first commercially successful electric type-writer. See The History of IBM Electric Typewriters,http://www.03.ibm.com/ibm/history/exhibits/modelb/modelb_history.html. IBM further advanced the art in the1960s with its Selectric typewriter, replacing the movable

    carriage and individual typestrikers with a golf-ball-shaped revolving printing head. See U.S. Patent No.2,895,584 (issued July 21, 1959).

    In the 1970s, typewriters began shifting to digitaltechnology, as companies developed single-purposeword-processing computers. Lexitron, for example, pat-ented an Electronic Text Display and Processing Sys-tem that included a display, a memory, a processor, anda keyboard. U.S. Patent No. 3,810,107, col.1, ll.50-57(issued May 7, 1974) ( 107 Patent). Functionality pre-

    viously achieved through gears and leverslike pro-portional font spacingwas re-developed using softwarethat provided instructions to computing hardware. Thosedigital improvements served the same function as, andwere no less technologically innovative than, their me-chanical forebears. Accordingly, the inventions were pat-entable. See, e.g., U.S. Patent No. 3,654,609 (issued Apr.4, 1972).

    Digital word processors also introduced entirely newfeatures. Early word-processing devices allowed opera-tors to edit text on a display before committing it topaper. See, e.g., 107 Patent, col.1-2. Later inventionsutilized software to identify misspellings and recommend

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    corrections. See U.S. Patent No. 4,859,091, col.1 (issuedAug. 22, 1989).

    Today, word-processing software runs on general-purpose computers. Manufacturers no longer need todesign customized devices for different uses. Instead,software applications tailored to different specialtieslike Microsoft Word for business documents, AdobeAcrobat for printed brochures, and Sublime Text forsoftware codetransform the same general-purposecomputer into a specialized word-processing device. See

    Alappat, 33 F.3d at 1545. In a mechanical typewriter, an

    etched piece of metal stamped a letter on paper. Now,software renders that letter so it will appear on a pixel-oriented LCD display or print on a printer. See U.S.Patent No. 5,740,456, col.1 (issued Apr. 14, 1998).

    Other software-implemented advances in word proc-essing have no analog in the mechanical typewriter.Todays word-processing software can spell-check docu-ments without human input; automatically correct text;call up a graphical interface integrating e-mail functional-ity within the word-processing application; and even

    create web pages. Our system has rightly encouragedand rewarded these software-implemented inventionsthrough patents. See U.S. Patent Nos. 5,787,451 (issuedJuly 28, 1998), 5,761,689 (issued June 2, 1998), 6,405,225(issued June 11, 2002), 7,340,675 (issued Mar. 4, 2008).

    C. Software Advances Pervade Todays Techno-logical Landscape

    As the story of the typewriter demonstrates, manytypes of technological advances that once were achievedby changing the devices physical structure are now

    implemented through advances in software. Softwaredrives more than general-purpose computers like PCsand tablets. Programmable microchipsand the soft-

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    ware that runs themare now standard components ineverything from mobile phones to washing machines.Software enables improvements and new capabilities incountless devices, without requiring changes to the ma-chinery the software operates.

    The reach of software-based technological advancesthus extends far beyond the software industry. Theaerospace industry has played a leading role. Oftenexpensive new uses of computing would be developed inthe aerospace sector, and then later transferred to otherindustries. James W. Cortada, The Digital Hand: How

    Computers Changed the Work of American Manufactur-ing, Transportation, and Retail Industries 154 (2003).For example, an American fighter of World War IIcould be built on the basis of roughly 8,000 blueprints.

    Id. at 155. By the 1960s, a military plane requiredbetween 50,000 and 100,000 drawings. Ibid. The Indus-try developed automated drafting tools to keep pace.

    Ibid. Later, the development of computer-assisted de-sign software programs (CAD) enabled engineers tosimulat[e] design, stress, [and] performance of mater-

    ials before ever building prototypes. Ibid.Software transformed not only aerospace design, but

    the vehicles themselves. One example is advanced ve-hicle control software. Cortada, supra, at 154. Aircraftonce were operated through mechanical controls. Whenthe pilot made a steering adjustment by moving the yoke,a series of cables and connectors would physically relaythe pilots movements to airplane control surfaces (theailerons, elevator, and rudder). James E. Tomayko,Computers Take Flight: A History of NASAs Pioneer-

    ing Digital Fly-By-Wire Project 11-12 (2000),http://www.nasa.gov/centers/dryden/pdf/182985main_DFBW_rev1.pdf. Later, hydraulic systems were used.

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    They amplified the force applied, but they still utilizedphysical links connecting the yoke to the control surfaces.Those have now given way to computer-controlled fly-by-wire systems. Dating to the computerized systemsused in the Apollo spacecraft, fly-by-wire technology firstappeared in an airplane in 1972 in NASAs F-8 Crusader.

    Id.at viii, 16-19.

    When the pilot moves the yoke in a fly-by-wire system,it feeds data into a computer that then adjusts the controlsurfaces. Tomayko, supra, at 11-12. The computer canexecute faster, finer, and more frequent adjustments

    than a human pilot ever could. Ibid. Fly-by-wire controlyields enormous benefits, including lower airframeweight, increased fuel efficiency, improved handling andresponsiveness, and greater safety. Id. at viii. Fly-by-wire is now used in everything from commercial airliners,to military fighter jets, to the Space Shuttle Orbiter. Id.at vii, 127-128.

    Software-driven innovations originating in the aero-space industry have rapidly spread to the automotive in-dustry. Cortada, supra, at 154. Everything from the

    initial design, to production, to the end-product carsthemselves has been improved by innovations in soft-ware.

    Until the 1960s, engineers designed cars by makinghand-drawn sketches. Today, engineers use CAD pro-grams. Michael Tovey et al.,Sketching and Direct CAD

    Modelling in Automotive Design, 21 Design Studies 569,570-571 (2000). Three-dimensional computer modelinghelps designers hit their targets for styling, energyefficiency, cost, and safety. John Brandon,How Compu-ters Have Revolutionised Our Cars, TechRadar (July 4,2013), http://www.techradar.com/us/news/car-tech/how-computers-have-revolutionised-car-design-1160141; Alan

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    Cane, Car Manufacturing: Vehicle Makers Appreciatethe Virtues of Virtual Design, Financial Times (May 28,2008), http://www.ft.com/cms/s/0/76265d22-2af8-11dd-a7fc-000077b07658.html#axzz2tL1PQkhN.

    Automobile assembly was originally purely manualand mechanical. When Henry Ford introduced theModel T in 1908, workers carried components to a sta-tionary chassis, manually attaching each piece. SeePaulIngrassia, This Car Changed America, The Wall StreetJournal (Sept. 27, 2008), http://online.wsj.com/news/ar-ticles/SB122246777029780525. Even with Fords intro-

    duction of the assembly line, production required anarmy of workers to physically bolt parts to the car frameas it moved past. That began to change in the 1960swhen GM first installed an industrial robot in its Trenton,New Jersey plant. Intl Fedn of Robotics, History of

    Industrial Robots (2012), http://www.ifr.org/uploads/media/History_of_Industrial_Robots_online_brochure_by_IFR_2012.pdf. The technology proliferated, andcomputer-controlled industrial robots now performwelding, painting, and quality-control. See John Mark-

    off, Skilled Work, Without the Worker, The New YorkTimes (Aug. 18, 2012), http://www.nytimes.com/2012/08/19/business/new-wave-of-adept-robots-is-changing-glo-bal-industry.html?pagewanted=all&_r=0.

    More recently, manufacturers have realized that withthe right software and safety controls, robots can workin close proximity to humans. Will Knight, Smart

    Robots Can Now Work Right Next to Auto Workers,MIT Technology Review (Sept. 17, 2013), http://www.technologyreview.com/news/518661/smart-robots-can-now-work-right-next-to-auto-workers/. Thus, the collab-orative robotor cobotnow works alongside hu-mans, maximizing efficiency and quality. SeeEric Rog-

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    ell, Car-Building Robots with Laser Eyes Can SeeExactly Where to Place Parts for Custom-Like Fit,Discovery News (Apr. 12, 2012), http://news.discov-ery.com/autos/drive/national-robotics-week-car-building-robots-with-laser-eyes-can-see-exactly-where-to-place-parts-for-custom-like-fit.htm . As a result, the same fac-tory that required 5,000 workers in the 1960s now re-quires a workforce of only 1,500.

    Today, cars themselves are essentially rolling com-puters. Johannes Winterhagen,Road to a Digital Fu-ture, Pictures of the Future Magazine 64 (Fall 2012),

    http://www.siemens.com/innovation/apps/pof_microsite/_pof-fall-2012/_html_en/automotive-software.html. Simi-lar to computers and smartphones, electronic parts likesensors and microprocessors comprise the backbone oftodays cars. Auto Alliance, Technologies Working To-

    gether: Autos, Computers and Electronics, http://www.autoalliance.org/index.cfm?objectid=1D64C240-7EE5-11E3-9303000C296BA163. Engines, transmissions,brakes, airbags, and even power windows are equippedwith intelligent electronics. Winterhagen, supra, at 64.

    Computer-controlled, software-implemented [d]river as-sist systems include lane departure and blind spot warn-ings, adaptive cruise control, automatic braking, tele-matics control systems and more. Auto Alliance, supra.

    Onboard GPS receivers employ software to determinethe cars location based on satellite signals. See NationalGeographic Education, GPS, http://education.nationalgeographic.com/education/encyclopedia/gps/?ar_a=1.Software also allows GPS devices to determine the bestroute, anticipate delays, and predict arrival time.

    Software has also enabled new safety features. Anti-lock braking systems (ABS), for example, sense therate of rotation of each wheel and use software to

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    determine when a computer should apply the brakes toprevent wheel lock and ensure the driver maintains con-trol of the car. AAA Foundation for Traffic Safety,

    FAQs: Anti-Lock Braking System (ABS), (Feb. 15,2005), https://www.aaafoundation.org/faqs-anti-lock-braking-system-abs. Stability-control systems similarlyuse software to monitor each wheel and make adjust-ments to maximize traction. Jamie Page Deaton,Askthe

    Editor: What Is Stability Control?, U.S. News & WorldReport (July 22, 2011), http://usnews.rankingsandreviews.com/cars-trucks/best-cars-blog/2011/07/Ask_the_Edi

    tor_Whats_Stability_Control. And computer-controlledcrash-avoidance systems can help drivers stay in theirlanes and even brake automatically in critical situa-tions. Winterhagen, supra, at 64. Those advances wereprimarily the result of software innovations, rather thanadvances in mechanical components. And the next levelof software-driven advancesself-driving cars in whichsoftware can read road signs and traffic signals andnavigate roadways, traffic and pedestrian hazardsisjust around the corner. Auto Alliance, supra.

    To fuel that innovation, the automotive industryspends $18 billion annually in the U.S. alone on researchand development. Ctr. for Auto. Research, Just How

    High-Tech is the Automotive Industry? 1 (2014),http://www.autoalliance.org/auto-innovation/2014-car-report. Much of that research and development is directedtoward software-enabled innovation. And auto makersrely on patents to protect those investments: [A]pprox-imately 5,000 new patents per year are awarded tocompanies in the automotive industry. Id.at 2.

    The aerospace and automotive industries are but twoexamples of industries where software, as much as newmechanical components, drives innovation. Virtually

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    every industryfrom medicine3

    to law enforcement4

    has been transformed. The vast majority of software-related patents today go not to traditional softwarecompanies, but to manufacturing companies that inte-grate software with their products. See James E. Bessen& Robert M. Hunt, An Empirical Look at Software

    Patents, 16 J. Econ. & Mgmt. Strategy 157, 171 (2007).

    * * * * *

    Software provides the infrastructure of innovation intodays information age. Presidents Info. Tech. Advi-sory Comm., Natl Coordination Office for Computing,Info. & Commcns, Information Technology Research:

    Investing in Our Future 23 (1999), available athttp://research.microsoft.com/en-us/um/people/gray/papers/pitac_report_99_2_24.pdf. Where, as in the examplesabove, software plays an integral role in achieving apractical, technological effect, that computer-implemented invention should be just as patent eligibleunder 101 as its mechanical forebears. The fact that asoftware-based technological invention achieves its resultthrough instructions that manipulate transistors on a

    silicon chip does not make the invention any moreabstract than if it were a new mechanical structure.

    Precisely because software innovations play such acritical role in this Nations economy and progress, theCourt should take care not to create uncertainty as to

    3 See, e.g., Kunio Doi, Current Status and Future Potential ofComputer-Aided Diagnosis in Medical Imaging, 78 Brit. J. ofRadiology S3, S3-S19 (2005); Univ. of Ariz. Dept of Surgery, Robotic-Assisted Surgery, http://surgery.arizona.edu/unit/program/robotic-assisted-surgery.4

    See, e.g., FocusMagic,Forensics Examples, http://www.focusmagic.com/forensics-examples.htm; Ocean Systems, ClearID Examples,http://www.oceansystems.com/forensic/forensic-Photoshop-Plugins/examples.php.

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    the patentability of true computer-implemented inven-tions, like software * * * and inventions based on linearprogramming, data compression, and the manipulation ofdigital signals. Bilski v. Kappos, 130 S. Ct. 3218, 3227(2010). Fortunately, this case does not require the Courtto make pronouncements that could create such a de-stabilizing effect. As explained below, this case does notpresent the patentability of a genuine computer-implemented innovation. Instead, it presents the morepedestrian question whether an otherwise-unpatentableabstract business method can be rendered patentable

    simply by reciting a directive that it should be performedon a computer. Because the answer to that question isno, the Court should go no further than to so hold,avoiding categorical rules that might have wide-rangingand unforeseen impacts on types of patents not current-ly before the Court. Id.at 3229.

    II. THE PATENTS AT ISSUE IN THIS CASE ARE NOTDIRECTED TO COMPUTER-IMPLEMENTED INVEN-

    TIONS AND ARE INELIGIBLE UNDER 101

    This case does not concern a computer-implemented

    invention. Rather, the patents at issue here are directedto an unpatentable business method combined with anequally abstract directive to perform that method using acomputer. Petitioner thus misframes the matter beforethe Court when it seeks a broad referendum on whetherclaims to computer-implemented inventions * * * aredirected to patent-eligible subject matter within themeaning of 35 U.S.C. 101 (rather than being categor-ically excluded under the abstract-ideas exception). Pet.Br. i. That begs the antecedent question whetherpetitioners business-method-based claims truly arecomputer-implemented inventions. They are not.

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    An abstract idea is not patentable subject matterunder 101, but an application of an abstract ideamay well be deserving of patent protection. Diamondv.Diehr, 450 U.S. 175, 187 (1981); see Mackay Radio &Tel. Co. v. Radio Corp. of Am., 306 U.S. 86, 94 (1939)(While a scientific truth, or the mathematical expressionof it, is not a patentable invention, a novel and usefulstructure created with the aid of knowledge of scientifictruth may be.). There is a broad spectrum of patentsthat invoke use of a computer, some of which will beunpatentable abstract ideas, while others are patent-

    able applications. At one end, as discussed above, arecomputer-implemented inventions that involve legitimateinnovations in computer science, computerized systems,or other technological or industrial fields. Such softwareinnovations are no different than other types of tech-nological inventions that have long been patent eligibleunder 101. There should be no doubt that they, too, arepatent eligible. See pp. 7-15, supra.

    At the other end of the spectrum are many so-calledbusiness method patent claims. Such claims primarily

    involve processes in non-technological fields, like busi-ness or finance. Because such claims are concerned withintangible concepts about organizing human behaviorand transactions, they often will implicate the abstractideas exception to 101. Bilski, 130 S. Ct. at 3229-3230.The fact that a business-method claim may also instructthat the concept be implemented using a computer is notitself sufficient to transform an unpatentable [abstractidea] into a patent-eligible application of such [an ab-stract idea]. Mayo Collaborative Servs. v. Prometheus

    Labs., Inc., 132 S. Ct. 1289, 1294 (2011).

    Petitioners patents fall into the latter category. Theclaims all focus on a method for reducing settlement risk

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    in financial transactions. Some claims may mention com-puters, but there is no connection between the methoddescribed and technological innovation; the references tocomputers are incidental or pretextual. The putativeinvention is the method, and that cannot be changed bysaying, and do it on a computer. Far from being direct-ed to patentable computer-implemented inventions, thepatents concern unpatentable abstract ideas for organ-izing human obligations. See Bilski, 130 S. Ct. at 3225.It is thus not true that, if all these claims * * * are notpatent eligible, this case is the death of * * * all * * *

    software patents. Pet. App. 85a-86a (Moore, J., dissent-ing in part). Confirming the invalidity of petitionersbusiness-method patents would not, under an ap-propriate standard, imperil the patent eligibility ofcomputer-implemented inventions that represent truetechnological advances.

    A. Adding a Computer to the Steps of anAbstract Business Method Does Not Make a

    Claim Patent Eligible

    This case involves so-called business method pat-

    ents. Business-method patents are directed primarily tomethods of organizing human activity. U.S. Br. 8,

    Bilski v. Kappos, No. 08-964 (U.S. Sept. 2009) (U.S.Bilski Br.). The purported innovation typically con-cerns the practice or management of business or financialconcepts. While the patent may make token referencesto using a computer when reciting the steps of thebusiness method, the patent, on its face, is not techno-logical in nature. The mention of a computer is notintegral to performing the method, and the claims do notdisclose any contribution to computer technology.5

    5 In Bilski, the United States urged that claims directed totechnological and industrial processes should be patent eligible,

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    Patent claims directed to business methods are differ-ent in kind from claims directed to technological orindustrial computer-implemented innovations. Indeed,[f]or centuries, it was considered well established that aseries of steps for conducting business was not, in itself,patentable. Bilski, 130 S. Ct. at 3232 (Stevens, J., con-curring in the judgment). While the Court has declinedto hold that 101 categorically excludes such business-method patents, id.at 3228 (majority opinion), it has cau-tioned that they often raise special problems in terms ofvagueness and suspect validity, id. at 3229 (plurality

    opinion); see also eBay Inc.v.MercExchange, L.L.C., 547U.S. 388, 397 (2006) (Kennedy, J., concurring). Chiefamong those is the concern that such patents may not bepatent eligible because they seek to monopolize abstractideas about economic endeavors. SeeBilski, 130 S. Ct.at 3229-3230.

    Where a business-method-based patent would other-wise cover only an abstract idea, the mere fact that italso recites a computer is not enough to make it a patent-eligible, computer-implemented invention. [T]o trans-

    form an unpatentable [abstract idea] into a patent-eligible applicationof such [an abstract idea], one mustdo more than simply state the [abstract idea] whileadding the words apply it. Mayo, 132 S. Ct. at 1294.Likewise, a claim that recites an abstract business-method idea does not become a patent-eligible applica-tion merely by adding the words do it on a computer

    but claims directed to methods of organizing human activity that

    are untethered to technology are not. U.S.Bilski Br., supra, at 8.While the Court did not adopt that as a test for patent eligibility, it isuseful for distinguishing computer-implemented inventions frombusiness methods.

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    (or by adding some similarly token computer-basedlimitation).

    Rather, patent eligibility must turn on whether theuse of a computer is integral to the claimed inventionitself, or whether the recited use of a computer is merelyinsignificant post-solution activity tacked on to thesteps of the business method. Diehr, 450 U.S. at 191-192.In Mayo, this Court addressed the patent eligibility ofclaims that purport to apply natural laws describing therelationships between the concentration in the blood ofcertain thiopurine metabolites and the likelihood that the

    drug dosage will be ineffective or induce harmful sideeffects. 132 S. Ct. at 1294. That correlation itself was anunpatentable law of nature. Id.at 1296. The Court heldthat the other aspects of the claims, such as the processfor administering the test, did not add enough to theirstatements of the correlations to allow the processes theydescribe to qualify as patent-eligible processes that applynatural laws, as opposed to merely seeking to claim thenatural law itself. Id.at 1297.

    Business-method claims likewise will often recite an

    unpatentable abstract idea. See Bilski, 130 S. Ct. at3229. Generally reciting the use of a computer to imple-ment an otherwise unpatentable method does not addenough to make it a patent-eligible computer implemen-tation of the idea. Mayo, 132 S. Ct. at 1297. Bolting on arequirement that a computer be used in connection witha business method at most limit[s] the use of the [idea]to a particular technological environment. Diehr, 450U.S. at 191. But that, too, fails to make the abstractmethod patent eligible. Id.at 192.

    True computer-implemented inventionsthose thatare inherently connected to computer technology, enablenew functionality, or otherwise produce a technical effect

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    contributing to the utility of the computershould notrun afoul of that prohibition. See pp. 7-15, supra. Butallowing the token recitation of a computer to establishthe patent eligibility of an otherwise unpatentable, non-technological business method would exalt[ ] form oversubstance. Parkerv.Flook, 437 U.S. 584, 590 (1978). Itis precisely the type of approach this Court has warnedwould make the determination of patentable subjectmatter depend simply on the draftsmans art and wouldill serve the principles underlying the prohibition againstpatents for [abstract] ideas * * * . Id. at 593; see also

    Diehr, 450 U.S. at 192. As explained below, this is such acase: Petitioners invocation of a computer in its patentsis a fig leaf meant to disguise an unpatentable businessmethod as a patent-eligible computer-implemented in-vention.

    B. Petitioners Purported Invention Is Not Patent-Eligible Subject Matter, But Rather Bilskion

    a Computer

    1. Petitioners Patents Seek To Cover an Ab-stract Idea

    In Bilski, the patent claimed a method for how buy-ers and sellers of commodities in the energy market can* * * hedge[ ] against the risk of price changes. 130 S.Ct. at 3223. Claim 1 recited a process involving (1) initi-ating a series of transactions in which consumers pur-chase a commodity from a commodity provider at afixed rate based upon historical averages that corres-pond[] to a risk position of said consumers; (2) iden-tifying market participants for said commodity having acounter-risk position to said consumers; and (3) initiat-ing a series of transactions between the commodityprovider and the market participants at a second fixedrate such that the series of market participant transac-

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    tions balances the risk position of the first series ofconsumer transactions. Id.at 3223-3224. Claim 4 put[ ]the concept articulated in Claim 1 into a mathematicalformula, and other claims described the application ofClaims 1 and 4 to energy markets. Ibid.

    Those claims, the Court explained, sought to coverthe conceptof hedging risk. 130 S. Ct. at 3229 (empha-sis added). The Court held that the claims fall[] outsideof 101, and are not patentable processes becausethey are attempts to patent abstract ideas. Id.at 3229-3230.6 Upholding petitioners claims would effectively

    grant a monopoly over the general concept of riskhedging, and thus pre-empt use of this approach in allfields. Id. at 3231. The fact that certain claims ad-dressed the application of that concept to energy mar-kets did not change the outcome. Id.at 3229. [L]imit-ing an abstract idea to one field of use * * * d[oes] notmake the concept patentable. Id.at 3231.

    This case involves a similar attempt to patent anabstract ideathe concept of an escrow. See Pet. App.28a (Lourie, J., concurring); id. at 82a (Rader, C.J.,

    concurring in part and dissenting in part). For example,claim 33 of petitioners 479 Patent recites [a] method ofexchanging obligations as between parties, each partyholding a credit record and a debit record with anexchange institution, the credit records and debit recordsfor exchange of predetermined obligations. Pet. App.26a. It breaks the method into four steps: (1) a third-party supervisory institution creates shadow recordsfor each stakeholder that reflect the parties balances in

    6

    Four Justices would have held that the claims were not patenteligible because methods of doing business are not, in themselves,covered by the statute. Bilski, 130 S. Ct. at 3257 (Stevens, J.,concurring in the judgment).

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    real financial accounts at exchange institutions; (2) thesupervisory institution obtains a start-of-day-balancefrom the parties exchange institutions for use in theirshadow records; (3) transactions are referred to thesupervisory institution, which adjust[s] each respectivepartys shadow records and permit[s] only those trans-actions for which updated records indicate there aresufficient funds; and (4) at the end-of-day, the super-visory institution instructs the respective exchange insti-tutions to irrevocabl[y] exchange credits or debits inthe parties financial accounts. Id.at 26a-27a.

    For purposes of 101 patent eligibility, that methodclaim is indistinguishable from the claim inBilski. Pet.App. 84a (Rader, C.J., concurring in part and dissentingin part); id. at 31a (Lourie, J., concurring) (claimsclosely resemble those in Bilski). Like the claim in

    Bilski, it covers a fundamental economic practice forprotecting against risk, Bilski, 130 S. Ct. at 3231theuse of an intermediary to mitigate settlement risk.Pet. App. 26a (Lourie, J., concurring). While the claimbreaks the process down into steps (again like Bilski ),

    those steps simply explain the basic concept of anescrow. Bilski, 130 S. Ct. at 3231. The claim invokesextravagant sounding terms (like shadow records),Pet. App. 30a (Lourie, J., concurring), but upon analysis,each step is itself inherent within the concept of anescrow, id. at 83a (Rader, C.J., concurring in part anddissenting in part). The Federal Circuit thus had nodifficulty concluding, by a 7-3 vote, that the method claimhere, like the claim in Bilski, seeks to cover anunpatentable abstract ideathe idea of an escrowitselfas opposed to a particular application of that idea.

    See Pet. App. 3a n.1 (Lourie, J., concurring).

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    2.

    Recitation of a Computer Does Not Make theClaims Patent Eligible

    The patents at issue here also purport to covercomputer-based implementations of an escrow. Peti-tioners supposedly computer-based claims, however,stand in stark contrast with the software-based innova-tions described above (at pp. 7-15). The claims at issuehere do nothing to advance the state of technology. Theydo not describe a new computer, enable general-purposecomputers to perform new functions related to escrows,or allow computers to execute the steps of an escrow

    transaction faster, more efficiently, or more reliably thanbefore. Petitioners own description of its computersystems, computerized methods, and computer productsclaims makes clear that they are not directed to techno-logical innovation, but to steps to eliminate * * * settle-ment risk. Pet. Br. 4; see also id. at 7, 8-9, 10. Insubstance, the claims have nothing to do with computersbeyond saying that one could use a computer to performan escrow. The abstract business-method claims in

    Bilski would not have become patent eligible had the

    inventor simply added perform the steps of hedging on acomputer. This case should be no different.

    Petitioners method claims make that particularlyclear. They simply recite the steps inherent in executingan escrow transactionthey do not even mention acomputer. See pp. 23-24, supra. While the partiesstipulated that the steps should be interpreted torequire a computer, Pet. App. 6a (Lourie, J., concur-ring), the claim does not describe a series of computeroperations. It is thus impossible to construe the opera-tion of a computer as being integral to executing thesteps of the method, much less to read the claim asencompassing an advance in software or any computer-

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    related field. As a result, the parties stipulation that acomputer should be used at most stipulates to someinsignificant post-solution activity. Diehr, 450 U.S. at191-192. The stipulation may limit the use of the [idea]to a particular technological environment, but thatcannot make the method patent eligible. Id.at 191.

    Petitioners computer readable medium and sys-tem claims fare no better. Both purport to describetangible thingsrespectively, a computer programproduct comprising a computer readable storage medi-um, Pet. App. 32a, and a data processing system

    comprised of a data storage unit coupled to acomputer, id.at 35a. But neither set of claims describesa technological innovation in the recited hardware or thesoftware that makes it run. Indeed, the claims havenothing to do with advances in or new applications ofcomputing technology to execute escrow transactions.Instead, the claims simply recite the same steps of thebusiness method recited in the method claim, whilesprinkling in references to generic computer hardware.See id. at 32a, 35a. Merely mentioning a computer in

    connection with the method steps does not add enoughto the description of the abstract business method to limitclaims to a specific, practical application that is narrowerthan the idea itself. Mayo, 132 S. Ct. at 1297. Simplyadding program code for causing a computer to executean escrow transaction, Pet. App. 32a, or genericallyconfigur[ing] a computer to execute an escrow, id.at35a, add[s] nothing of significance to the basic idea ofan escrow,Mayo, 132 S. Ct. at 1302.

    Through the draftsmans art,Flook, 437 U.S. at 593,petitioners computer-readable-medium and systemclaims purport to describe tangible, technological de-vices. But one should not exalt[ ] form over substance.

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    Id. at 590. The computer references are incidental orpretextualthey amount to nothing more than saying,one could perform the steps of an escrow using a com-puter. That is not enough to transform an un-patentable [abstract idea] into a patent-eligible applica-tionof [that idea]. Mayo, 132 S. Ct. at 1294. To resolvethis case, the Court need go no further.

    III. IN HARDER CASES, PATENT ELIGIBILITY SHOULDTURN ON WHETHER THE CLAIM AS A WHOLE

    RECITES A SPECIFIC, PRACTICAL APPLICATION OF

    THE IDEA RATHER THAN MERELY RECITING STEPS

    INHERENT IN THE IDEA ITSELF

    Far from describing a technological innovation in com-puting technology, the patents at issue disclose anabstract idea and add to it only a bald directive to imple-ment it on a computer. Because 101 serves as acoarse gauge of the suitability of broad subject mattercategories for patent protection, Ultramercial, Inc. v.

    Hulu, LLC, 722 F.3d 1335, 1339 (Fed. Cir. 2013), 101sthreshold test, Bilski, 130 S. Ct. at 3225, is well-suitedto the evaluation of such unpatentable business methods.

    Given their non-technical nature, the substance andpreemptive scope of such patents often will be readilyapparent to a non-expert district court judge on the faceof the claim language. See id.at 3231. Efforts to use thedraftsmans art,Flook, 437 U.S. at 593, to dress up anabstract business-method claim as something it is not willgenerally be transparent.

    When it comes to true computer-implemented inven-tions, however, a blunt or simplistic application of theabstract ideas exception poses grave risks. Software isheavily dependent upon the use of algorithms. And it isclear that a process is not unpatentable simply becauseit contains a * * * mathematical algorithm. Flook, 437

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    U.S. at 590. Where a software patent describes a prac-tical application of an algorithm as part of a process thatproduces a technological effect or useful result on acomputere.g., encryption, data compression, higher-speed processingthat should be patent eligible underthis Courts precedent. See Diehr, 450 U.S. at 187-188.By contrast, where a patent claims use of an algorithmmerely to produce a number, but does not utilize thatcalculation in service of a specific technological applica-tion, that may not be patent eligible under existingprecedent, even where used on a computer. Flook, 437

    U.S. at 585. Regrettably, it may be very difficult for a layjudge, with little technical understanding of how com-puters actually operate, to discern the difference betweenthe two. In such cases, expert testimony may be neces-sary to illuminate the technological principles at issue,and claim construction required to determine the preciseboundaries (and actual preemptive scope) of the patent.Even then, it still may be difficult to determine whetherthe patent covers an abstract idea or not.

    Precisely because that difficulty is not present here,

    the Court should avoid adopting categorical rules andbroad pronouncements regarding 101 patent eligibilitythat might have wide-ranging and unforeseenimpactsindeed, the potential to destabilize multipleindustries. Bilski, 130 S. Ct. at 3229. To the extent lowercourts require guidance for determining the patenteligibility of software claimsas opposed to business-method claims masquerading as softwarethe Courtshould await a case with a fully developed factual andlegal record reflecting the issues. Adamsv.Robertson,520 U.S. 83, 92 (1997) (per curiam).

    In the meantime, courts can continue to address thepatent eligibility of computer-implemented inventions

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    using principles articulated in this Courts prior 101 de-cisions. Those principles require courts to focus on thepatent claims themselves, taken as a whole. And theymake clear that a claim invoking an abstract concept willbe patent eligible only if it also contains sufficient limita-tions to restrict the invention to a specific, practical appli-cation of the idea, rather than covering the idea itself.Those principles may prove difficult to apply in some cir-cumstances, but by retaining a claim-specific approach,they help ensure that 101 remains flexible enough toencompass new and unforeseen inventions. J.E.M. Ag

    Supply, Inc. v.Pioneer Hi-Bred Intl, Inc., 534 U.S. 124,135 (2001).

    A. Patent Eligibility Can Be Determined Only byLooking to Each Claim, Taken as a Whole

    The Court has made clear that, in determining wheth-er a patent seeks to cover an unpatentable abstract ideaor a patent-eligible application of the idea, courts mustlook to what is actually claimed. The primary concernanimating the abstract-idea exception is the dangerthat patents that tie up an abstract ideas use will

    inhibit future innovation premised upon that idea, andthus foreclose[] more future innovation than the under-lying discovery could reasonably justify. Mayo, 132 S.Ct. at 1301. And one can determine how much of an ideathe patent ties up only by looking to the claims them-selves, because it is the claims that define[] the scope ofa patent grant. Markman v. Westview Instruments,

    Inc., 517 U.S. 370, 373 (1996) (quotation marks omitted).If a claim recites additional limitations drawn to asufficiently specific, practical means of applying theunderlying abstract idea, it will ensure that the patentdoes not foreclose others from developing or practicingdifferent implementations of the idea.

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    All of the claims elements thus must be consideredas a whole. Diehr, 450 U.S. at 188. InMayo, the Courtdescribed the process as looking to the inventive con-cept in the claim. 132 S. Ct. at 1294. That does notsuggest that courts should isolate what they perceive tobe the heart or gist of the claim and ask whether thatis an abstract idea. Rather, it means the court shouldconsider the entirecombination of elements recited inthe claim in order to ensure that the patent in practiceamounts to significantly more than the [abstract idea]itself. Ibid. Indeed, the Court has held that [i]t is

    inappropriate to dissect the claims by isolating the coreconcept from the limitations that purport to implementthat concept. Diehr, 450 U.S. at 188; see also Bilski, 130S. Ct. at 3230. Where a court focuses its analysis on theunderlying concept divorced from the context of theclaim, it improperly skews the analysis, because allinventions at some level embody, use, reflect, rest uponor apply laws of nature, natural phenomena, or abstractideas. Mayo, 132 S. Ct. at 1293. It likewise runs therisk of trivializing the other limitations and improperly

    dismissing them as insignificant post-solution activity.Diehr, 450 U.S. at 191-192.

    B. This Courts Precedents Guide the DistinctionBetween Unpatentable Abstract Ideas and

    Patent-Eligible Applications

    This Court has explained that, in distinguishingbetween an unpatentable abstract idea and a patent-eligible application of that idea, courts must ask whetherthe limitations in the patent claims, taken as a whole,add enough in the way of specific, practical applicationto differentiate the scope of the claimed invention fromthe underlying abstract idea itself. Mayo, 132 S. Ct. at

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    1297. This Courts precedents provide several helpfulguideposts in drawing that distinction.

    OReilly v.Morse, 56 U.S. (15 How.) 62 (1853), whichconcerned a patent by Samuel Morse, is particularlyinstructive because it involved some claims that werepatent eligible and others that were not. Claim 8 ofMorses patent purported to cover the use of the motivepower of the electric or galvanic current, which I callelectro-magnetism, however developed for marking orprinting intelligible characters, signs, or letters, at anydistances. Id. at 112-13. That claim, the Court found,

    recited the idea of using electric current for printingcharacters at a distance, but it did not describe anyspecific process or machinery [by which] the result isaccomplishedput differently, the claim recited theidea, but no practical applicationof the idea. Id.at 113.As a result, the claim sought a monopoly in [the ideas]use, however developed, thus claim[ing] an exclusiveright to use * * * manner[s] and process[es] which[Morse] has not described and indeed had not invented.

    Ibid. Allowing a patent over the idea itself, the Court

    noted, would shut[] the door to every new discoveryand development of the science, no matter what form ittook. Ibid. Accordingly, the claim [was] too broad andnot patentable subject matter. Ibid.

    By contrast, the Court did allow other claims thatrecited specific, practical applications of the principleMorse had articulated. For example, Claim 3 describedin detail a device for using galvanic current to print atdistances, which was comprised of the combination ofmachinery herein described, consisting of the generationof electricity, the circuit of conductors, the contrivancefor closing and breaking the circuit, the electro-magnet,the pen or contrivance for marking, and the machinery

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    for sustaining and moving the paper. Morse, 56 U.S. (15How.) at 85. And Claim 5 dealt not with machinery, butwith the use of Morse codei.e., the system of signs,consisting of dots and spaces, and of dots, spaces, andhorizontal lines, for numerals, letters, words, orsentences, as described in the patentfor telegraphicpurposes. Id. at 86. For those specific, practicalapplications of Morses discovery, Morse was entitled toa patent. Id.at 117.

    The Courts decisions inParkerv.Flook, 437 U.S. 584(1978), and Diamond v.Diehr, 450 U.S. 175 (1981), are,

    together, similarly helpful guideposts, because they aretwo cases in which the Court reached opposite conclu-sions about the patent eligibility of processes that em-bodied the equivalent of natural laws. Mayo, 132 S. Ct.at 1298. Flookconcerned a method claim for updatingthe value of an alarm limit on a process variablee.g., temperature, pressure, flow ratesinvolved in aprocess comprising the catalytic chemical conversion ofhydrocarbons. 437 U.S. at 596. Specifically, the recitedsteps involved (1) [d]etermining the present value of

    the relevant process variable; (2) [d]etermining a newalarm base using a specified mathematical formula;(3) [d]etermining an updated alarm limit; and (4) [a]d-justing said alarm limit to said updated alarm limitvalue. Id.at 597. The Court held that the claim was notpatent eligible because it sought to cover an abstractideathe mathematical formula utilized in the claimrather than a sufficiently particularized application ofthat idea. While the claim nominally purported to coveruse of the equation in connection with a catalyticconverter, it did not recite a sufficiently specific method

    for howto do so. The claim did not, for example, explainhow to select the appropriate margin of safety, theweighting factor, or any of the variables. Nor d[id] it

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    purport to contain any disclosure relating to the chemicalprocesses at work, the monitoring of process variables, orthe means of setting off an alarm or adjusting an alarmsystem. Id. at 586. To the contrary, all that itprovide[d] is a formula for computing an updated alarmlimit, ibid., which is itself simply a number, id.at 585.Thus, the Court held, the other steps in the process didnot limit the claim to a particular application of theunpatentable mathematical formula. Mayo, 132 S. Ct. at1299 (discussingFlook).

    The claim at issue in Diehr was for a method of

    operating a rubber-molding press for precision moldedcompounds with the aid of a digital computer. 450 U.S.at 179 n.5. Like Flook, the claim involved use of amathematical formula, the Arrhenius equation. Ibid.The claim recited the following steps: (1) providing saidcomputer with a data base for said press including atleast, natural logarithm conversion data (ln), the activa-tion energy constant (C) unique to each batch of saidcompound being molded, and a constant (x) dependentupon the geometry of the particular mold in the press;

    (2) initiating an interval timer in said computer upon theclosure of the press for monitoring the elapsed time ofsaid closure; (3) constantly determining the tempera-ture (Z); (4) repetitively calculating in the computer, atfrequent intervals during each cure, the Arrhenius equa-tion for reaction time during the cure, which is lnv=CZ+x where v is the total required cure time;(5) repetitively comparing in the computer at said fre-quent intervals during the cure each said calculation ofthe total required cure time calculated with the Arrhen-ius equation and said elapsed time; and (6) opening the

    press automatically when a said comparison indicatesequivalence. Ibid.

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    Contrasting the claim at issue with that in Flook, theCourt found that it did not seek to patent a mathe-matical formula or pre-empt the use of [the Arrhenius]equation. Diehr, 450 U.S. at 187. Rather, it soughtpatent protection for a process of curing syntheticrubber, ibid., and the claims describe in detail a step-by-step method for accomplishing such a process, id.at184. The Court held that Arrhenius equation is notpatentable in isolation, but when a process for curingrubber is devised which incorporates in it a more efficientsolution of the equation, that process is at the very least

    not barred at the threshold by 101. Id. at 188.Industrial processes such as this are the types whichhave historically been eligible to receive the protection ofour patent laws. Id.at 184.

    The different outcomes inFlook andDiehrthus boileddown to whether the claims recited a practical applicationof the abstract concept with sufficient specificity. If theclaim in Flookhad not merely recited the mathematicalequation for adjusting an alarm limitwhich yielded onlya number, 437 U.S. at 585but instead also recited

    specific steps for a practical application of the equation inconnection with catalytic conversion, the Court may wellhave found the claim patent eligible. Conversely, if theclaim in Diehr had generically recited the concept ofusing the Arrhenius equation to determine how long tolet rubber cure in a mold, without detailing the specificsteps of how to effectuate that through a particularprocess, that claim may have been found ineligible.

    Morse, Flook, and Diehr thus provide courts withguidance in deciding the patent eligibility of computer-implemented processes. By focusing on whether theclaims recite a sufficiently specific application of anyabstract ideas on which they depend, courts can ensure

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    that the patentees right to exclude is commensuratewith the inventions practical, real-world contribution,rather than asserting coverage over general ideas un-moored to a specific application. Mark A. Lemley et al.,

    Life After Bilski, 63 Stan. L. Rev. 1315, 1317 (2011).There may be harder cases that involve how to applythose principles. But this case is not one of them.

    CONCLUSION

    The judgment of the Federal Circuit should beaffirmed.

    Respectfully submitted.

    HORACIO E.GUTIRREZJULE L.SIGALLDAVIDW.JONESMICROSOFT CORPORATIONOne Microsoft WayRedmond, WA 98052(425)882-8080

    Counsel for MicrosoftCorporation

    ANTHONY BACACYNTHIA BRIGHTCURTIS ROSEROBERTWASSONHEWLETT-PACKARD

    COMPANYOFFICE OF THE GENERAL

    COUNSEL3000 Hanover StreetPalo Alto, CA 94304(650) 857-1501

    Counsel for Hewlett-Packard Company

    JEFFREYA.LAMKENCounsel of Record

    MICHAEL G.PATTILLO,JR.MOLOLAMKEN LLPThe Watergate, Suite 660600 New Hampshire Ave., NW

    Washington, D.C. 20037(202) 556-2000

    [email protected]

    JOHN M.WHEALAN4613 Merivale RoadChevy Chase, MD 20815(202) 994-2195

    Counsel for Amici Curiae

    DANA S.RAOADOBE SYSTEMS INC.345 Park AvenueSan Jose, CA 95110(408) 536-3298

    Counsel for Adobe

    Systems Inc.FEBRUARY 2014