Nautilus, Inc. v. Biosig Instruments, Inc.

NOTICE: This opinion is subject to
formal revision before publication in the preliminary print of the
United States Reports. Readers are requested to notify the Reporter
of Decisions, Supreme Court of the United States, Washington,
D. C. 20543, of any typographical or other formal errors, in
order that corrections may be made before the preliminary print
goes to press.

															SUPREME COURT OF THE UNITED STATES

															_________________

															No. 13–369

															_________________

															NAUTILUS, INC., PETITIONER v. BIOSIG
INSTRUMENTS, INC.

															on writ of certiorari to the united states
court of appeals for the federal circuit

															[June 2, 2014]

															     Justice Ginsburg
delivered the opinion of the Court.

															     The Patent Act requires
that a patent specification “conclude with one or more claims
particularly pointing out and distinctly claiming the subject
matter which the applicant regards as [the] invention.” 35
U. S. C. §112, ¶2 (2006 ed.) (emphasis added). This case,
involving a heart-rate monitor used with exercise equipment,
concerns the proper reading of the statute’s clarity and precision
demand. According to the Federal Circuit, a patent claim passes the
§112, ¶2 threshold so long as the claim is “amenable to
construction,” and the claim, as construed, is not “insolubly
ambiguous.” 715 F. 3d 891, 898–899 (2013). We conclude that
the Federal Circuit’s formulation, which tolerates some ambiguous
claims but not others, does not satisfy the statute’s definiteness
requirement. In place of the “insolubly ambiguous” standard, we
hold that a patent is invalid for indefiniteness if its claims,
read in light of the specification delineating the patent, and the
prosecution history, fail to inform, with reasonable certainty,
those skilled in the art about the scope of the invention.
Expressing no opinion on the validity of the patent-in-suit,

															we remand, instructing the Federal Circuit to
decide the case employing the standard we have prescribed.

															I

															     Authorized by the
Constitution “[t]o promote the Progress of Science and useful Arts,
by securing for limited Times to . . . Inventors the
exclusive Right to their . . . Discoveries,” Art. I,
§8, cl. 8, Congress has enacted patent laws rewarding
inventors with a limited monopoly. “Th[at] monopoly is a property
right,” and “like any property right, its boundaries should be
clear.” Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535
U. S. 722, 730 (2002) . See also Markman v. Westview
Instruments, Inc., 517 U. S. 370, 373 (1996) (“It has long
been understood that a patent must describe the exact scope of an
invention and its manufacture . . . .”). Thus, when
Congress enacted the first Patent Act in 1790, it directed that
patent grantees file a written specification “containing a
description . . . of the thing or things . . .
invented or discovered,” which “shall be so particular” as to
“distinguish the invention or discovery from other things before
known and used.” Act of Apr. 10, 1790, §2, 1Stat. 110.

															     The patent laws have
retained this requirement of definiteness even as the focus of
patent construction has shifted. Under early patent practice in the
United States, we have recounted, it was the written specification
that “represented the key to the patent.” Markman, 517 U. S.,
at 379. Eventually, however, patent applicants began to set out the
invention’s scope in a separate section known as the “claim.” See
generally 1 R. Moy, Walker on Patents §4.2, pp. 4–17 to 4–20
(4th ed. 2012). The Patent Act of 1870 expressly conditioned the
receipt of a patent on the inventor’s inclusion of one or more such
claims, described with particularity and distinctness. See Act of
July 8, 1870, §26, 16Stat. 201 (to obtain a patent, the inventor
must “particularly point out and distinctly claim the part,
improvement, or combination which [the inventor] claims as his
invention or discovery”).

															     The 1870 Act’s
definiteness requirement survives today, largely unaltered. Section
112 of the Patent Act of 1952, applicable to this case, requires
the patent applicant to conclude the specification with “one or
more claims particularly pointing out and distinctly claiming the
subject matter which the applicant regards as his invention.” 35
U. S. C. §112, ¶2 (2006 ed.). A lack of definiteness
renders invalid “the patent or any claim in suit.” §282,
¶2(3).[ 1 ]

															II

															A

															     The patent in
dispute, U. S. Patent No. 5,337,753 (’753 patent), issued to
Dr. Gregory Lekhtman in 1994 and assigned to respondent Biosig
Instruments, Inc., concerns a heart-rate monitor for use during
exercise. Previous heart-rate monitors, the patent asserts, were
often inaccurate in measuring the electrical signals accompanying
each heartbeat (electrocardiograph or ECG signals). The inaccuracy
was caused by electrical signals of a different sort, known as
electromyogram or EMG signals, generated by an exerciser’s skeletal
muscles when, for example, she moves her arm, or grips an exercise
monitor with her hand. These EMG signals can “mask” ECG signals and
thereby impede their detection. App. 52, 147.

															     Dr. Lekhtman’s
invention claims to improve on prior art by eliminating that
impediment. The invention focuses on a key difference between EMG
and ECG waveforms: while ECG signals detected from a user’s left
hand have a polarity opposite to that of the signals detected from
her right hand,[ 2 ] EMG signals
from each hand have the same polar-ity. The patented device works
by measuring equalized EMG signals detected at each hand and then
using circuitry to subtract the identical EMG signals from each
other, thus filtering out the EMG interference.

															     As relevant here, the
’753 patent describes a heart-rate monitor contained in a hollow
cylindrical bar that a user grips with both hands, such that each
hand comes into contact with two electrodes, one “live” and one
“common.” The device is illustrated in figure 1 of the patent, id.,
at 41, reproduced in the Appendix to this opinion.

															     Claim 1 of the ’753
patent, which contains the limitations critical to this dispute,
refers to a “heart rate monitor for use by a user in association
with exercise apparatus and/or exercise procedures.” Id., at 61.
The claim “comprise[s],” among other elements, an “elongate member”
(cylindrical bar) with a display device; “electronic circuitry
including a difference amplifier”; and, on each half of the
cylindrical bar, a live electrode and a common electrode “mounted
. . . in spaced relationship with each other.”
Ibid.[ 3 ] The claim sets forth
additional elements, including that the cylindrical bar is to be
held in such a way that each of the user’s hands “contact[s]” both
electrodes on each side of the bar. Id., at 62. Further, the EMG
signals detected by the two electrode pairs are to be “of
substan-tially equal magnitude and phase” so that the difference
amplifier will “produce a substantially zero [EMG] signal” upon
subtracting the signals from one another. Ibid.

															B

															     The dispute between
the parties arose in the 1990’s, when Biosig allegedly disclosed
the patented technology to StairMaster Sports Medical Products,
Inc. According to Biosig, StairMaster, without ever obtaining a
license, sold exercise machines that included Biosig’s patented
technology, and petitioner Nautilus, Inc., continued to do so after
acquiring the StairMaster brand. In 2004, based on these
allegations, Biosig brought a patent infringement suit against
Nautilus in the U. S. District Court for the Southern District
of New York.

															     With Biosig’s lawsuit
launched, Nautilus asked the U. S. Patent and Trademark Office
(PTO) to reexamine the ’753 patent. The reexamination proceedings
centered on whether the patent was anticipated or rendered obvious
by prior art—principally, a patent issued in 1984 to an inventor
named Fujisaki, which similarly disclosed a heart-rate monitor
using two pairs of electrodes and a difference amplifier.
Endeavoring to distinguish the ’753 patent from prior art, Biosig
submitted a declaration from Dr. Lekhtman. The declaration
attested, among other things, that the ’753 patent sufficiently
informed a person skilled in the art how to configure the detecting
electrodes so as “to produce equal EMG [signals] from the left and
right hands.” Id., at 160. Although the electrodes’ design
variables—including spacing, shape, size, and material—cannot be
standardized across all exercise machines, Dr. Lekhtman explained,
a skilled artisan could undertake a “trial and error” process of
equalization. This would entail experimentation with different
electrode configurations in order to optimize EMG signal
cancellation. Id., at 155–156, 158.[ 4 ] In 2010, the PTO issued a determination confirming the
patentability of the ’753 patent’s claims.

															     Biosig thereafter
reinstituted its infringement suit, which the parties had
voluntarily dismissed without prejudice while PTO reexamination was
underway. In 2011, the District Court conducted a hearing to
determine the proper construction of the patent’s claims, see
Markman v. Westview Instruments, Inc., 517 U. S. 370 (1996)
(claim construction is a matter of law reserved for court
decision), including the claim term “in spaced relationship with
each other.” According to Biosig, that “spaced relationship”
referred to the distance between the live electrode and the common
electrode in each electrode pair. Nautilus, seizing on Biosig’s
submissions to the PTO during the reexamination, maintained that
the “spaced relationship” must be a distance “greater than the
width of each electrode.” App. 245. The District Court ultimately
construed the term to mean “there is a defined relationship between
the live electrode and the common electrode on one side of the
cylindrical bar and the same or a different defined relationship
between the live electrode and the common electrode on the other
side of the cylindrical bar,” without any reference to the
electrodes’ width. App. to Pet. for Cert. 43a–44a.

															     Nautilus moved for
summary judgment, arguing that the term “spaced relationship,” as
construed, was indefinite under §112, ¶2. The District Court
granted the motion. Those words, the District Court concluded, “did
not tell [the court] or anyone what precisely the space should be,”
or even supply “any parameters” for determining the appropriate
spacing. Id., at 72a.

															     The Federal Circuit
reversed and remanded. A claim is indefinite, the majority opinion
stated, “only when it is ‘not amenable to construction’ or
‘insolubly ambiguous.’ ” 715 F. 3d 891, 898 (2013)
(quoting Datamize, LLC v. Plumtree Software, Inc., 417 F. 3d
1342, 1347 (CA Fed. 2005)). Under that standard, the majority
determined, the ’753 patent survived indefiniteness review.
Considering first the “intrinsic evidence”—i.e., the claim
language, the specification, and the prosecution history—the
majority discerned “certain inherent parameters of the claimed
apparatus, which to a skilled artisan may be sufficient to
understand the metes and bounds of ‘spaced relationship.’ ”
715 F. 3d, at 899. These sources of meaning, the majority
explained, make plain that the distance separating the live and
common electrodes on each half of the bar “cannot be greater than
the width of a user’s hands”; that is so “because claim 1 requires
the live and common electrodes to independently detect electrical
signals at two distinct points of a hand.” Ibid. Furthermore, the
major-ity noted, the intrinsic evidence teaches that this distance
cannot be “infinitesimally small, effectively merging the live and
common electrodes into a single electrode with one detection
point.” Ibid. The claim’s functional provisions, the majority went
on to observe, shed additional light on the meaning of “spaced
relationship.” Surveying the record before the PTO on
reexamination, the majority concluded that a skilled artisan would
know that she could attain the indicated functions of equalizing
and removing EMG signals by adjusting design variables, including
spacing.

															     In a concurring
opinion, Judge Schall reached the majority’s result employing “a
more limited analysis.” Id., at 905. Judge Schall accepted the
majority’s recitation of the definiteness standard, under which
claims amenable to construction are nonetheless indefinite when
“the construction remains insolubly ambiguous.” Ibid. (internal
quotation marks omitted). The District Court’s construction of
“spaced relationship,” Judge Schall maintained, was sufficiently
clear: the term means “there is a fixed spatial relationship
between the live electrode and the common electrode” on each side
of the cylindrical bar. Ibid. Judge Schall agreed with the majority
that the intrinsic evidence discloses inherent limits of that
spacing. But, unlike the majority, Judge Schall did not “presum[e]
a functional linkage between the ‘spaced relationship’ limitation
and the removal of EMG signals.” Id., at 906. Other limitations of
the claim, in his view, and not the “ ‘spaced relationship’
limitation itself,” “included a functional requirement to remove
EMG signals.” Ibid.

															     We granted certiorari,
571 U. S. ___ (2014), and now vacate and remand.

															III

															A

															     Although the parties
here disagree on the dispositive question—does the ’753 patent
withstand definiteness scrutiny—they are in accord on several
aspects of the §112, ¶2 inquiry. First, definiteness is to be
evaluated from the perspective of someone skilled in the relevant
art. See, e.g., General Elec. Co. v. Wabash Appliance Corp., 304
U. S. 364, 371 (1938) . See also §112, ¶1 (patent’s
specification “shall contain a written description of the
invention, and of the manner and process of making and using it, in
such full, clear, concise, and exact terms as to enable any person
skilled in the art to which it pertains, or with which it is most
nearly connected, to make and use the same” (emphasis added)).
Second, in assessing definiteness, claims are to be read in light
of the patent’s specification and prosecution history. See, e.g.,
United States v. Adams, 383 U. S. 39 –49 (1966)
(specification); Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki
Co., 535 U. S. 722, 741 (2002) (prosecution history). Third,
“[d]efiniteness is measured from the viewpoint of a person skilled
in [the] art at the time the patent was filed.” Brief for
Respondent 55 (emphasis added). See generally E. Manzo, Patent
Claim Construction in the Federal Circuit §0.2, p. 9 (2014)
(“Patent claims . . . should be construed from an
objective perspective of a [skilled artisan], based on what the
applicant actually claimed, disclosed, and stated during the
application process.”).

															     The parties differ,
however, in their articulations of just how much imprecision §112,
¶2 tolerates. In Nautilus’ view, a patent is invalid when a claim
is “ambiguous, such that readers could reasonably interpret the
claim’s scope differently.” Brief for Petitioner 37. Biosig and the
Solicitor General would require only that the patent provide
reasonable notice of the scope of the claimed invention. See Brief
for Respondent 18; Brief for United States as Amicus Curiae
9–10.

															     Section 112, we have
said, entails a “delicate balance.” Festo, 535 U. S., at 731.
On the one hand, the definiteness requirement must take into
account the inherent limitations of language. See ibid. Some
modicum of uncertainty, the Court has recognized, is the “price of
ensuring the appropriate incentives for innovation.” Id., at 732.
One must bear in mind, moreover, that patents are “not addressed to
lawyers, or even to the public generally,” but rather to those
skilled in the relevant art. Carnegie Steel Co. v. Cambria Iron
Co., 185 U. S. 403, 437 (1902) (also stating that “any
description which is sufficient to apprise [steel manufacturers] in
the language of the art of the definite feature of the invention,
and to serve as a warning to others of what the patent claims as a
monopoly, is sufficiently definite to sustain the
patent”).[ 5 ]

															     At the same time, a
patent must be precise enough to afford clear notice of what is
claimed, thereby “ ‘appris[ing] the public of what is still
open to them.’ ” Markman, 517 U. S., at 373 (quoting
McClain v. Ortmayer, 141 U. S. 419, 424 (1891) ).[ 6 ] Otherwise there would be “[a] zone
of uncertainty which enterprise and experimentation may enter only
at the risk of infringement claims.” United Carbon Co. v. Binney
& Smith Co., 317 U. S. 228, 236 (1942) . And absent a
meaningful definiteness check, we are told, patent applicants face
powerful incentives to inject ambigu-ity into their claims. See
Brief for Petitioner 30–32 (citing patent treatises and drafting
guides). See also Federal Trade Commission, The Evolving IP
Marketplace: Aligning Patent Notice and Remedies With Competition
85 (2011) (quoting testimony that patent system fosters “an
incentive to be as vague and ambiguous as you can with your claims”
and “defer clarity at all costs”).[ 7 ] Eliminating that temptation is in order, and “the
patent drafter is in the best position to resolve the ambiguity in
. . . patent claims.” Halliburton Energy Servs., Inc. v.
M–I LLC, 514 F. 3d 1244, 1255 (CA Fed. 2008). See also Hormone
Research Foundation, Inc. v. Genentech, Inc., 904 F. 2d 1558,
1563 (CA Fed. 1990) (“It is a well-established axiom in patent law
that a patentee is free to be his or her own lexicographer
. . . .”).

															     To determine the proper
office of the definiteness command, therefore, we must reconcile
concerns that tug in opposite directions. Cognizant of the
competing concerns, we read §112, ¶2 to require that a patent’s
claims, viewed in light of the specification and prosecution
history, inform those skilled in the art about the scope of the
invention with reasonable certainty. The definiteness requirement,
so understood, mandates clarity, while recognizing that absolute
precision is unattainable. The standard we adopt accords with
opinions of this Court stating that “the certainty which the law
requires in patents is not greater than is reasonable, having
regard to their subject-matter.” Minerals Separation, Ltd. v. Hyde,
242 U. S. 261, 270 (1916) . See also United Carbon, 317
U. S., at 236 (“claims must be reasonably clear-cut”);
Markman, 517 U. S., at 389 (claim construction calls for “the
necessarily sophisticated analysis of the whole document,” and may
turn on evaluations of expert testimony).

															B

															     In resolving
Nautilus’ definiteness challenge, the Fed-eral Circuit asked
whether the ’753 patent’s claims were “amenable to construction” or
“insolubly ambiguous.” Those formulations can breed lower court
confusion,[ 8 ] for they lack the
precision §112, ¶2 demands. It cannot be sufficient that a court
can ascribe some meaning to a patent’s claims; the definiteness
inquiry trains on the understanding of a skilled artisan at the
time of the patent application, not that of a court viewing matters
post hoc. To tolerate imprecision just short of that rendering
a claim “insolubly ambiguous” would diminish the definiteness
requirement’s public-notice function and foster the
innovation-discouraging “zone of uncertainty,” United Carbon, 317
U. S., at 236, against which this Court has warned.

															     Appreciating that
“terms like ‘insolubly ambiguous’ may not be felicitous,” Brief for
Respondent 34, Biosig argues the phrase is a shorthand label for a
more probing inquiry that the Federal Circuit applies in practice.
The Federal Circuit’s fuller explications of the term “insolubly
ambiguous,” we recognize, may come closer to tracking the statutory
prescription. See, e.g., 715 F. 3d, at 898 (case below) (“[I]f
reasonable efforts at claim construction result in a definition
that does not provide sufficient particularity and clarity to
inform skilled artisans of the bounds of the claim, the claim is
insolubly ambiguous and invalid for indefiniteness.” (internal
quotation marks omitted)). But although this Court does not
“micromanag[e] the Federal Circuit’s particular word choice” in
applying patent-law doctrines, we must ensure that the Federal
Circuit’s test is at least “probative of the essential inquiry.”
Warner-Jenkinson Co. v. Hilton Davis Chemical Co., 520 U. S.
17, 40 (1997) . Falling short in that regard, the expressions
“insolubly ambiguous” and “amenable to construction” permeate the
Federal Circuit’s recent decisions concerning §112, ¶2’s
requirement.[ 9 ] We agree with
Nautilus and its amici that such terminology can leave courts and
the patent bar at sea without a reliable compass.[ 10 ]

															IV

															     Both here and in the
courts below, the parties have advanced conflicting arguments as to
the definiteness of the claims in the ’753 patent. Nautilus
maintains that the claim term “spaced relationship” is open to
multiple interpretations reflecting markedly different
understandings of the patent’s scope, as exemplified by the
disagreement among the members of the Federal Circuit
panel.[ 11 ] Biosig responds
that “spaced relationship,” read in light of the specification and
as illustrated in the accompanying drawings, delineates the
permissible spacing with sufficient precision.

															     “[M]indful that we are
a court of review, not of first view,” Cutter v. Wilkinson, 544
U. S. 709 , n. 7 (2005), we decline to apply the standard
we have announced to the controversy between Nautilus and Biosig.
As we have explained, the Federal Circuit invoked a standard more
amorphous than the statutory definiteness requirement allows. We
therefore follow our ordinary practice of remanding so that the
Court of Appeals can reconsider, under the proper standard, whether
the relevant claims in the ’753 patent are sufficiently definite.
See, e.g., Johnson v. California, 543 U. S. 499, 515 (2005) ;
Gasperini v. Center for Humanities, Inc., 518 U. S. 415, 438
(1996) .

															*  *  *

															     For the reasons stated,
we vacate the judgment of the United States Court of Appeals for
the Federal Circuit and remand the case for further proceedings
consistent with this opinion.

															It is so ordered.

															APPENDIX

															Patent No. 5,337,753, Figure 1 Notes 1 In the Leahy-Smith
America Invents Act, Pub. L. 112–29, , enacted in 2011, Congress
amended several parts of the Patent Act. Those amendments modified
§§112 and 282 in minor respects not pertinent here. In any event,
the amended versions of those provisions are inapplicable to patent
applications filed before September 16, 2012, and proceedings
commenced before September 16, 2011. See §§4(e), 15(c), 20(), ,
notes following 35 U. S. C. §§2, 111, 119. Here, the
application for the patent-in-suit was filed in 1992, and the
relevant court proceedings were initiated in 2010. Accordingly,
this opinion’s citations to the Patent Act refer to the 2006
edition of the United States Code. 2 This difference in
polarity occurs because the heart is not aligned vertically in
relation to the center of the body; the organ tilts leftward from
apex to bottom. App. 213. 3 As depicted in figure 1
of the patent, at 41, reproduced in the Appendix to this opinion,
the live electrodes are identified by numbers 9 and 13, and the
common electrodes, by 11 and 15. 4 Dr. Lekhtman’s
declaration also referred to an expert report prepared by Dr.
Henrietta Galiana, Chair of the Department of Biomedical
Engineering at McGill University, for use in the infringement
litigation. That report described how Dr. Galiana’s laboratory
technician, equipped with a wooden dowel, wire, metal foil, glue,
electrical tape, and the drawings from the ’753 patent, was able in
two hours to build a monitor that “worked just as described in the
. . . patent.” , at 226. 5 See also v. , –66 (1923)
(upholding as definite a patent for an improvement to a
paper-making machine, which provided that a wire be placed at a
“high” or “substantial elevation,” where “readers . . .
skilled in the art of paper making and versed in the use of the
. . . machine” would have “no difficulty . . .
in determining . . . the substantial [elevation] needed”
for the machine to operate as specified). 6 See also v. , (“The
statutory requirement of particularity and distinctness in claims
is met only when they clearly distinguish what is claimed from what
went before in the art and clearly circumscribe what is foreclosed
from future enterprise.”); v. , (“The limits of a patent must be
known for the protection of the patentee, the encouragement of the
inventive genius of others and the assurance that the subject of
the patent will be dedicated ultimately to the
public.”). 7 Online at http:
 / / www.
 ftc.gov / sites / default / files / documents /reports / evolving - ip - marketplace - aligning - patent - notice - and - remedies -competition - report - federal - trade / 110307patentreport.pdf
(as visited May 30, 2014, and available in Clerk of Court’s case
file). 8 See, v. , ___
F. Supp. 2d ___, ___, 2014 WL 869092, *4 (MD Fla., Mar. 5,
2014) (finding that “the account,” as used in claim, “lacks
definiteness,” because it might mean several different things and
“no informed and confident choice is available among the contending
definitions,” but that “the extent of the indefiniteness
. . . falls far short of the ‘insoluble ambiguity’
required to invalidate the claim”). 9 , v. , 600 F. 3d
1357, 1366 (CA Fed. 2010) (“the definiteness of claim terms depends
on whether those terms can be given any reasonable meaning”); v. ,
417 F. 3d 1342, 1347 (CA Fed. 2005) (“Only claims ‘not
amenable to construction’ or ‘insolubly ambiguous’ are
indefinite.”); v. , 265 F. 3d 1371, 1375 (CA Fed. 2001) (“If a
claim is insolubly ambiguous, and no narrowing construction can
properly be adopted, we have held the claim indefinite.”). See also
Dept. of Commerce, Manual of Patent Examining Procedure
§2173.02(I), p. 294 (9th ed. 2014) (PTO manual describing Federal
Circuit’s test as upholding a claim’s validity “if some meaning can
be gleaned from the language”). 10 The
Federal Circuit suggests that a permissive definiteness standard
“ ‘accord[s] respect to the statutory presumption of patent
validity.’ ” 715 F. 3d 891, 902 (2013) (quoting , 265
F. 3d, at 1375). See also §282, ¶1 (“[a] patent shall be
presumed valid,” and “[t]he burden of establishing invalidity of a
patent or any claim thereof shall rest on the party asserting such
invalidity”); v. , 564 U. S. ___, ___ (2011) (slip op., at 1)
(invalidity defenses must be proved by “clear and convincing
evidence”).As the parties appear to agree, however, this
presumption of validity does not alter the degree of clarity that
§112, ¶2 demands from patent applicants; to the contrary, it
incorporates that definiteness requirement by reference. See §282,
¶2(3) (defenses to infringement actions include “[i]nvalidity of
the patent or any claim in suit for failure to comply with
. . . any requirement of [§112]”). 11 Notably, however, all three panel
members found Nautilus’ arguments unavailing.


NOTICE: This opinion is subject to
formal revision before publication in the preliminary print of the
United States Reports. Readers are requested to notify the
Reporter of Decisions, Supreme Court of the United States,
Washington, D. C. 20543, of any typographical or other formal
errors, in order that corrections may be made before the
preliminary print goes to press.

															SUPREME COURT OF THE UNITED STATES

															_________________

															No. 13–298

															_________________

															ALICE CORPORATION PTY. LTD, PETITIONER v. CLS
BANK INTERNATIONAL et al.

															on writ of certiorari to the united states
court of appeals for the federal circuit

															[June 19, 2014]

															     Justice Thomas
delivered the opinion of the Court.

															     The patents at issue in
this case disclose a computer-implemented scheme for mitigating
“settlement risk” (i.e., the risk that only one party
to a financial transaction will pay what it owes) by using a
third-party intermediary. The question presented is whether these
claims are patent eligible under 35 U. S. C. §101,
or are instead drawn to a patent-ineligible abstract idea. We hold
that the claims at issue are drawn to the abstract idea of
intermediated settlement, and that merely requiring generic
computer implementation fails to transform that abstract idea into
a patent-eligible invention. We therefore affirm the judgment of
the United States Court of Appeals for the Federal Circuit.

															I

															A

															     Petitioner Alice
Corporation is the assignee of several patents that disclose
schemes to manage certain forms of financial risk. [ 1 ] According to the specification largely
shared by the patents, the invention “enabl[es] the
management of risk relating to specified, yet unknown, future
events.” App. 248. The specification further explains that
the “invention relates to methods and apparatus, including
electrical computers and data processing systems applied to
financial matters and risk management.” Id., at 243.

															     The claims at issue
relate to a computerized scheme for mitigating “settlement
risk”—i.e., the risk that only one party to an
agreed-upon financial exchange will satisfy its obligation. In
particular, the claims are designed to facilitate the exchange of
financial obligations between two parties by using a computer
system as a third-party intermediary. Id., at 383–384. [ 2 ] The intermediary creates
“shadow” credit and debit records (i.e., account
ledgers) that mirror the balances in the parties’ real-world
accounts at “exchange institutions” (e.g., banks). The
intermediary updates the shadow records in real time as
transactions are entered, allowing “only those transactions
for which the parties’ updated shadow records indicate
sufficient resources to satisfy their mutual obligations.”
717 F. 3d 1269, 1285 (CA Fed. 2013) (Lourie, J., concurring).
At the end of the day, the intermediary instructs the relevant
financial institutions to carry out the “permitted”
transactions in accordance with the updated shadow records, ibid.,
thus mitigating the risk that only one party will perform the
agreed-upon exchange.

															     In sum, the patents in
suit claim (1) the foregoing method for exchanging obligations (the
method claims), (2) a computer system configured to carry out the
method for exchanging obligations (the system claims), and (3) a
computer-readable medium containing program code for performing the
method of exchanging obligations (the media claims). All of the
claims are implemented using a computer; the system and media
claims expressly recite a computer, and the parties have stipulated
that the method claims require a computer as well.

															B

															     Respondents CLS Bank
International and CLS Services Ltd. (together, CLS Bank) operate a
global network that facilitates currency transactions. In 2007, CLS
Bank filed suit against petitioner, seeking a declaratory judgment
that the claims at issue are invalid, unenforceable, or not
infringed. Petitioner counterclaimed, alleging infringement.
Following this Court’s decision in Bilski v. Kappos, 561
U. S. 593 (2010) , the parties filed cross-motions for summary
judgment on whether the asserted claims are eligible for patent
protection under 35 U. S. C. §101. The District
Court held that all of the claims are patent ineligible because
they are directed to the abstract idea of “employing a
neutral intermediary to facilitate simultaneous exchange of
obligations in order to minimize risk.” 768 F. Supp. 2d
221, 252 (DC 2011).

															     A divided panel of the
United States Court of Appeals for the Federal Circuit reversed,
holding that it was not “manifestly evident” that
petitioner’s claims are directed to an abstract idea. 685
F. 3d 1341, 1352, 1356 (2012). The Federal Circuit granted
rehearing en banc, vacated the panel opinion, and affirmed the
judgment of the District Court in a one-paragraph per curiam
opinion. 717 F. 3d, at 1273. Seven of the ten participating
judges agreed that petitioner’s method and media claims are
patent ineligible. See id., at 1274 (Lourie, J., concurring); id.,
at 1312–1313 (Rader, C. J., concurring in part and
dissenting in part). With respect to petitioner’s system
claims, the en banc Federal Circuit affirmed the District
Court’s judgment by an equally divided vote. Id., at
1273.

															     Writing for a
five-member plurality, Judge Lourie concluded that all of the
claims at issue are patent ineligible. In the plurality’s
view, under this Court’s decision in Mayo Collaborative
Services v. Prometheus Laboratories, Inc., 566 U. S. ___
(2012), a court must first “identif[y] the abstract idea
represented in the claim,” and then determine “whether
the balance of the claim adds ‘significantly
more.’ ” 717 F. 3d, at 1286. The plurality
concluded that petitioner’s claims “draw on the
abstract idea of reducing settlement risk by effecting trades
through a third-party intermediary,” and that the use of a
computer to maintain, adjust, and reconcile shadow accounts added
nothing of substance to that abstract idea. Ibid.

															     Chief Judge Rader
concurred in part and dissented in part. In a part of the opinion
joined only by Judge Moore, Chief Judge Rader agreed with the
plurality that petitioner’s method and media claims are drawn
to an abstract idea. Id., at 1312–1313. In a part of the
opinion joined by Judges Linn, Moore, and O’Malley, Chief
Judge Rader would have held that the system claims are patent
eligible because they involve computer “hardware” that
is “specifically programmed to solve a complex
problem.” Id., at 1307. Judge Moore wrote a separate opinion
dissenting in part, arguing that the system claims are patent
eligible. Id., at 1313–1314. Judge Newman filed an opinion
concurring in part and dissenting in part, arguing that all of
petitioner’s claims are patent eligible. Id., at 1327. Judges
Linn and O’Malley filed a separate dissenting opinion
reaching that same conclusion. Ibid.

															     We granted certiorari,
571 U. S. ___ (2013), and now affirm.

															II

															     Section 101 of the
Patent Act defines the subject matter eligible for patent
protection. It 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.” 35
U. S. C. §101.

															“We have long held that this provision
contains an important implicit exception: Laws of nature, natural
phenomena, and abstract ideas are not patentable.”
Association for Molecular Pathology v. Myriad Genetics, Inc., 569
U. S. ___, ___ (2013) (slip op., at 11) (internal quotation
marks and brackets omitted). We have interpreted §101 and its
predecessors in light of this exception for more than 150 years.
Bilski, supra, at 601–602; see also O’Reilly v. Morse,
15 How. 62, 112–120 (1854); Le Roy v. Tatham, 14 How. 156,
174–175 (1853).

															     We have described the
concern that drives this exclusionary principle as one of
pre-emption. See, e.g., Bilski, supra, at 611–612 (upholding
the patent “would pre-empt use of this approach in all
fields, and would effectively grant a monopoly over an abstract
idea”). Laws of nature, natural phenomena, and abstract ideas
are “ ‘ “the basic tools of scientific
and technological work.” ’ ” Myriad,
supra, at ___ (slip op., at 11). “[M]onopolization of those
tools through the grant of a patent might tend to impede innovation
more than it would tend to promote it,” thereby thwarting the
primary object of the patent laws. Mayo, supra, at ___ (slip op.,
at 2); see U. S. Const., Art. I, §8, cl. 8 (Congress
“shall have Power . . . To promote the Progress of
Science and useful Arts”). We have “repeatedly
emphasized this . . . concern that patent law not inhibit
further discovery by improperly tying up the future use of”
these building blocks of human ingenuity. Mayo, supra, at ___ (slip
op., at 16) (citing Morse, supra, at 113).

															     At the same time, we
tread carefully in construing this exclusionary principle lest it
swallow all of patent law. Mayo, 566 U. S., at ___ (slip op.,
at 2). At some level, “all inventions . . . embody,
use, reflect, rest upon, or apply laws of nature, natural
phenomena, or abstract ideas.” Id., at ___ (slip op., at 2).
Thus, an invention is not rendered ineligible for patent simply
because it involves an abstract concept. See Diamond v. Diehr, 450
U. S. 175, 187 (1981) . “[A]pplication[s]” of such
concepts “ ‘to a new and useful
end,’ ” we have said, remain eligible for patent
protection. Gottschalk v. Benson, 409 U. S. 63, 67 (1972)
.

															     Accordingly, in
applying the §101 exception, we must distinguish between
patents that claim the “ ‘buildin[g]
block[s]’ ” of human ingenuity and those that
integrate the building blocks into something more, Mayo, 566
U. S., at ___ (slip op., at 20), thereby
“transform[ing]” them into a patent-eligible invention,
id., at ___ (slip op., at 3). The former “would risk
disproportionately tying up the use of the underlying” ideas,
id., at ___ (slip op., at 4), and are therefore ineligible for
patent protection. The latter pose no comparable risk of
pre-emption, and therefore remain eligible for the monopoly granted
under our patent laws.

															III

															     In Mayo Collaborative
Services v. Prometheus Laboratories, Inc., 566 U. S. ___
(2012), we set forth a framework for distinguishing patents that
claim laws of nature, natural phenomena, and abstract ideas from
those that claim patent-eligible applications of those concepts.
First, we determine whether the claims at issue are directed to one
of those patent-ineligible concepts. Id., at ___ (slip op., at 8).
If so, we then ask, “[w]hat else is there in the claims
before us?” Id., at ___ (slip op., at 9). To answer that
question, we consider the elements of each claim both individually
and “as an ordered combination” to determine whether
the additional elements “transform the nature of the
claim” into a patent-eligible application. Id., at ___ (slip
op., at 10, 9). We have described step two of this analysis as a
search for an “ ‘inventive
concept’ ”—i.e., an element or combination
of elements that is “sufficient to ensure that the patent in
practice amounts to significantly more than a patent upon the
[ineligible concept] itself.” Id., at ___ (slip op., at 3). [ 3 ]

															A

															     We must first
determine whether the claims at issue are directed to a
patent-ineligible concept. We conclude that they are: These claims
are drawn to the abstract idea of intermediated settlement.

															     The “abstract
ideas” category embodies “the longstanding rule that
‘[a]n idea of itself is not patentable.’ ”
Benson, supra, at 67 (quoting Rubber-Tip Pencil Co. v. Howard, 20
Wall. 498, 507 (1874)); see also Le Roy, supra, at 175 (“A
principle, in the abstract, is a fundamental truth; an original
cause; a motive; these cannot be patented, as no one can claim in
either of them an exclusive right”). In Benson, for example,
this Court rejected as ineligible patent claims involving an
algorithm for converting binary-coded decimal numerals into pure
binary form, holding that the claimed patent was “in
practical effect . . . a pat- ent on the algorithm
itself.” 409 U. S., at 71–72. And in Parker v.
Flook, 437 U. S. 584 –595 (1978), we held that a
mathematical formula for computing “alarm limits” in a
catalytic conversion process was also a patent-ineligible abstract
idea.

															     We most recently
addressed the category of abstract ideas in Bilski v. Kappos, 561
U. S. 593 (2010) . The claims at issue in Bilski described a
method for hedging against the financial risk of price
fluctuations. Claim 1 recited a series of steps for hedging risk,
including: (1) initiating a series of financial transactions
between providers and consumers of a commodity; (2) identifying
market participants that have a counterrisk for the same commodity;
and (3) initiating a series of transactions between those market
participants and the commodity provider to balance the risk
position of the first series of consumer transactions. Id., at 599.
Claim 4 “pu[t] the concept articulated in claim 1 into a
simple mathematical formula.” Ibid. The remaining claims were
drawn to examples of hedging in commodities and energy markets.

															     “[A]ll members of
the Court agree[d]” that the patent at issue in Bilski
claimed an “abstract idea.” Id., at 609; see also id.,
at 619 (Stevens, J., concurring in judgment). Specifically, the
claims described “the basic concept of hedging, or protecting
against risk.” Id., at 611. The Court explained that
“ ‘[h]edging is a fundamental economic practice
long prevalent in our system of commerce and taught in any
introductory finance class.’ ” Ibid. “The
concept of hedging” as recited by the claims in suit was
therefore a patent-ineligible “abstract idea, just like the
algorithms at issue in Benson and Flook.” Ibid.

															     It follows from our
prior cases, and Bilski in particular, that the claims at issue
here are directed to an abstract idea. Petitioner’s claims
involve a method of exchanging financial obligations between two
parties using a third-party intermediary to mitigate settlement
risk. The intermediary creates and updates “shadow”
records to reflect the value of each party’s actual accounts
held at “exchange institutions,” thereby permitting
only those transactions for which the parties have sufficient
resources. At the end of each day, the intermediary issues
irrevocable instructions to the exchange institutions to carry out
the permitted transactions.

															     On their face, the
claims before us are drawn to the concept of intermediated
settlement, i.e., the use of a third party to mitigate settlement
risk. Like the risk hedging in Bilski, the concept of intermediated
settlement is “ ‘a fundamental economic practice
long prevalent in our system of commerce.’ ”
Ibid.; see, e.g., Emery, Speculation on the Stock and Produce
Exchanges of the United States, in 7 Studies in History, Economics
and Public Law 283, 346–356 (1896) (discussing the use of a
“clearing-house” as an intermediary to reduce
settlement risk). The use of a third-party intermediary (or
“clearing house”) is also a building block of the
modern economy. See, e.g., Yadav, The Problematic Case of
Clearinghouses in Complex Markets, 101 Geo. L. J. 387,
406–412 (2013); J. Hull, Risk Management and Financial
Institutions 103–104 (3d ed. 2012). Thus, intermediated
settlement, like hedging, is an “abstract idea” beyond
the scope of §101.

															     Petitioner acknowledges
that its claims describe intermediated settlement, see Brief for
Petitioner 4, but rejects the conclusion that its claims recite an
“abstract idea.” Drawing on the presence of
mathematical formulas in some of our abstract-ideas precedents,
petitioner contends that the abstract-ideas category is confined to
“preexisting, fundamental truth[s]” that
“ ‘exis[t ] in principle apart from any human
action.’ ” Id., at 23, 26 (quoting Mayo, 566
U. S., at ___ (slip op., at 8)).

															     Bilski belies
petitioner’s assertion. The concept of risk hedging we
identified as an abstract idea in that case cannot be described as
a “preexisting, fundamental truth.” The patent in
Bilski simply involved a “series of steps instructing how to
hedge risk.” 561 U. S., at 599. Al-though hedging is a
longstanding commercial practice, id., at 599, it is a method of
organizing human activity, not a “truth” about the
natural world “ ‘that has always
existed,’ ” Brief for Petitioner 22 (quoting
Flook, supra, at 593, n. 15). One of the claims in Bilski
reduced hedging to a mathematical formula, but the Court did not
assign any special significance to that fact, much less the sort of
talismanic significance petitioner claims. Instead, the Court
grounded its conclusion that all of the claims at issue were
abstract ideas in the understanding that risk hedging was a
“ ‘fundamental economic
practice.’ ” 561 U. S., at 611.

															     In any event, we need
not labor to delimit the precise contours of the “abstract
ideas” category in this case. It is enough to recognize that
there is no meaningful distinction between the concept of risk
hedging in Bilski and the concept of intermediated settlement at
issue here. Both are squarely within the realm of “abstract
ideas” as we have used that term.

															B

															     Because the claims at
issue are directed to the abstract idea of intermediated
settlement, we turn to the second step in Mayo’s framework.
We conclude that the method claims, which merely require generic
computer implementation, fail to transform that abstract idea into
a patent-eligible invention.

															1

															     At Mayo step two, we
must examine the elements of the claim to determine whether it
contains an “ ‘inventive
concept’ ” sufficient to “transform”
the claimed abstract idea into a patent-eligible application. 566
U. S., at ___, ___ (slip op., at 3, 11). A claim that recites
an abstract idea must include “additional features” to
ensure “that the [claim] is more than a drafting effort
designed to monopolize the [abstract idea].” Id., at ___
(slip op., at 8–9). Mayo made clear that transformation into
a patent-eligible application requires “more than simply
stat[ing] the [abstract idea] while adding the words ‘apply
it.’ ” Id., at ___ (slip op., at 3).

															     Mayo itself is
instructive. The patents at issue in Mayo claimed a method for
measuring metabolites in the bloodstream in order to calibrate the
appropriate dosage of thiopurine drugs in the treatment of
autoimmune dis- eases. Id., at ___ (slip op., at 4–6). The
respondent in that case contended that the claimed method was a
patent-eligible application of natural laws that describe the
relationship between the concentration of certain metabolites and
the likelihood that the drug dosage will be harmful or ineffective.
But methods for determining metabolite levels were already
“well known in the art,” and the process at issue
amounted to “nothing significantly more than an instruction
to doctors to apply the applicable laws when treating their
patients.” Id., at ___ (slip op., at 10). “Simply
appending conventional steps, specified at a high level of
generality,” was not “enough” to supply an
“ ‘inventive concept.’ ” Id., at
___, ___, ___ (slip op., at 14, 8, 3).

															     The introduction of a
computer into the claims does not alter the analysis at Mayo step
two. In Benson, for example, we considered a patent that claimed an
algorithm implemented on “a general-purpose digital
computer.” 409 U. S., at 64. Because the algorithm was
an abstract idea, see supra, at 8, the claim had to supply a
“ ‘new and use-ful’ ” application
of the idea in order to be patent eligible. 409 U. S., at 67.
But the computer implementation did not supply the necessary
inventive concept; the process could be “carried out in
existing computers long in use.” Ibid. We accordingly
“held that simply implementing a mathematical principle on a
physical machine, namely a computer, [i]s not a patentable
application of that principle.” Mayo, supra, at ___ (slip
op., at 16) (citing Benson, supra, at 64).

															     Flook is to the same
effect. There, we examined a computerized method for using a
mathematical formula to adjust alarm limits for certain operating
conditions (e.g., temperature and pressure) that could signal
inefficiency or danger in a catalytic conversion process. 437
U. S., at 585–586. Once again, the formula itself was an
abstract idea, see supra, at 8, and the computer implementation was
purely conventional. 437 U. S., at 594 (noting that the
“use of computers for ‘automatic
monitoring-alarming’ ” was “well
known”). In holding that the process was patent ineligible,
we rejected the argument that “implement[ing] a principle in
some specific fashion” will “automatically fal[l]
within the patentable subject matter of §101.” Id., at
593. Thus, “Flook stands for the proposition that the
prohibition against patenting abstract ideas cannot be circumvented
by attempting to limit the use of [the idea] to a particular
technological environment.” Bilski, 561 U. S., at
610–611 (internal quotation marks omitted).

															     In Diehr, 450
U. S. 175 , by contrast, we held that a computer-implemented
process for curing rubber was patent eligible, but not because it
involved a computer. The claim employed a “well-known”
mathematical equation, but it used that equation in a process
designed to solve a technological problem in “conventional
industry practice.” Id., at 177, 178. The invention in Diehr
used a “thermocouple” to record constant temperature
measure-ments inside the rubber mold—something “the
industry ha[d] not been able to obtain.” Id., at 178, and
n. 3. The temperature measurements were then fed into a
computer, which repeatedly recalculated the remaining cure time by
using the mathematical equation. Id., at 178–179. These
additional steps, we recently explained, “transformed the
process into an inventive application of the formula.” Mayo,
supra, at ___ (slip op., at 12). In other words, the claims in
Diehr were patent eligible because they improved an existing
technological process, not because they were implemented on a
computer.

															     These cases demonstrate
that the mere recitation of a generic computer cannot transform a
patent-ineligible abstract idea into a patent-eligible invention.
Stating an abstract idea “while adding the words ‘apply
it’ ” is not enough for patent eligibility. Mayo,
supra, at ___ (slip op., at 3). Nor is limiting the use of an
abstract idea “ ‘to a particular technological
environment.’ ” Bilski, supra, at 610–611.
Stating an abstract idea while adding the words “apply it
with a computer” simply combines those two steps, with the
same deficient result. Thus, if a patent’s recitation of a
computer amounts to a mere instruction to “implemen[t]”
an abstract idea “on . . . a computer,” Mayo,
supra, at ___ (slip op., at 16), that addition cannot impart patent
eligibility. This conclusion accords with the pre-emption concern
that undergirds our §101 jurisprudence. Given the ubiquity of
computers, see 717 F. 3d, at 1286 (Lourie, J., concurring),
wholly generic computer implementation is not generally the sort of
“additional featur[e]” that provides any
“practical assurance that the process is more than a drafting
effort designed to monopolize the [abstract idea] itself.”
Mayo, 566 U. S., at ___ (slip op., at 8–9).

															     The fact that a
computer “necessarily exist[s] in the physical, rather than
purely conceptual, realm,” Brief for Petitioner 39, is beside
the point. There is no dispute that a computer is a tangible system
(in §101 terms, a “machine”), or that many
computer-implemented claims are formally addressed to
patent-eligible subject matter. But if that were the end of the
§101 inquiry, an applicant could claim any principle of the
physical or social sciences by reciting a computer system
configured to implement the relevant concept. Such a result would
make the determination of patent eligibility “depend simply
on the draftsman’s art,” Flook, supra, at 593, thereby
eviscerating the rule that “ ‘[l]aws of nature,
natural phenomena, and abstract ideas are not
patentable,’ ” Myriad, 569 U. S., at ___
(slip op., at 11).

															2

															     The representative
method claim in this case recites the following steps: (1)
“creating” shadow records for each counterparty to a
transaction; (2) “obtaining” start-of-day balances
based on the parties’ real-world accounts at exchange
institutions; (3) “adjusting” the shadow records as
transactions are entered, allowing only those transactions for
which the parties have sufficient resources; and (4) issuing
irrevocable end-of-day instructions to the exchange institutions to
carry out the permitted transactions. See n. 2, supra.
Petitioner principally contends that the claims are patent eligible
because these steps “require a substantial and meaningful
role for the computer.” Brief for Petitioner 48. As
stipulated, the claimed method requires the use of a computer to
create electronic records, track multiple transactions, and issue
simultaneous instructions; in other words, “[t]he computer is
itself the intermediary.” Ibid. (emphasis deleted).

															     In light of the
foregoing, see supra, at 11–14, the relevant question is
whether the claims here do more than simply instruct the
practitioner to implement the abstract idea of intermediated
settlement on a generic computer. They do not.

															     Taking the claim
elements separately, the function performed by the computer at each
step of the process is “[p]urely conventional.” Mayo,
supra, at ___ (slip op., at 10) (internal quotation marks omitted).
Using a computer to create and maintain “shadow”
accounts amounts to electronic recordkeeping—one of the most
basic functions of a computer. See, e.g., Benson, 409 U. S.,
at 65 (noting that a computer “operates . . . upon
both new and previously stored data”). The same is true with
respect to the use of a computer to obtain data, adjust account
balances, and issue automated instructions; all of these computer
functions are “well-understood, routine, conventional
activit[ies]” previously known to the industry. Mayo, 566
U. S., at ___ (slip op., at 4). In short, each step does no
more than require a generic computer to perform generic computer
functions.

															     Considered “as an
ordered combination,” the computer components of
petitioner’s method “ad[d] nothing . . . that
is not already present when the steps are considered
separately.” Id., at ___ (slip op., at 10). Viewed as a
whole, petitioner’s method claims simply recite the concept
of intermediated settlement as performed by a generic computer. See
717 F. 3d, at 1286 (Lourie, J., concurring) (noting that the
representative method claim “lacks any express language to
define the computer’s participation”). The method
claims do not, for example, purport to improve the functioning of
the computer itself. See ibid. (“There is no specific or
limiting recitation of . . . improved computer technology
. . .”); Brief for United States as Amicus Curiae
28–30. Nor do they effect an improvement in any other
technology or technical field. See, e.g., Diehr, 450 U. S., at
177–178. Instead, the claims at issue amount to
“nothing significantly more” than an instruction to
apply the abstract idea of intermediated settlement using some
unspecified, generic computer. Mayo, 566 U. S., at ___ (slip
op., at 10). Under our precedents, that is not “enough”
to transform an abstract idea into a patent-eligible invention.
Id., at ___ (slip op., at 8).

															C

															     Petitioner’s
claims to a computer system and a computer-readable medium fail for
substantially the same rea- sons. Petitioner conceded below that
its media claims rise or fall with its method claims. En Banc
Response Brief for Defendant-Appellant in No. 11–1301 (CA
Fed.) p. 50, n. 3. As to its system claims, petitioner
emphasizes that those claims recite “specific hardware”
configured to perform “specific computerized
functions.” Brief for Petitioner 53. But what petitioner
characterizes as specific hardware—a “data processing
system” with a “communications controller” and
“data storage unit,” for example, see App. 954, 958,
1257—is purely functional and generic. Nearly every computer
will include a “communications controller” and
“data storage unit” capable of performing the basic
calculation, storage, and transmission functions required by the
method claims. See 717 F. 3d, at 1290 (Lourie, J.,
concurring). As a result, none of the hardware recited by the
system claims “offers a meaningful limitation beyond
generally linking ‘the use of the [method] to a particular
technological environment,’ that is, implementation via
computers.” Id., at 1291 (quoting Bilski, 561 U. S., at
610–611).

															     Put another way, the
system claims are no different from the method claims in substance.
The method claims recite the abstract idea implemented on a generic
computer; the system claims recite a handful of generic computer
components configured to implement the same idea. This Court has
long “warn[ed] . . . against” interpreting
§101 “in ways that make patent eligibility ‘depend
simply on the draftsman’s art.’ ” Mayo,
supra, at ___ (slip op., at 3) (quoting Flook, 437 U. S., at
593); see id., at 590 (“The concept of patentable subject
matter under §101 is not ‘like a nose of wax which may
be turned and twisted in any direction
. . .’ ”). Holding that the system
claims are patent eligible would have exactly that result.

															     Because
petitioner’s system and media claims add nothing of substance
to the underlying abstract idea, we hold that they too are patent
ineligible under §101.

															*  *  *

															     For the foregoing
reasons, the judgment of the Court of Appeals for the Federal
Circuit is affirmed.

															It is so ordered. Notes 1 The patents at issue are
United States Patent Nos. 5,970,479 (the ’479 patent),
6,912,510, 7,149,720, and 7,725,375. 2 The parties agree that
claim 33 of the ’479 patent is representative of the method
claims. Claim 33 recites: “A method of exchanging obligations
as between parties, each party holding a credit record and a debit
record with an exchange institution, the credit records and debit
records for exchange of predetermined obligations, the method
comprising the steps of: “(a) creating a shadow credit record
and a shadow debit record for each stakeholder party to be held
independently by a supervisory institution from the exchange
institutions; “(b) obtaining from each exchange institution a
start-of-day balance for each shadow credit record and shadow debit
record; “(c) for every transaction resulting in an exchange
obligation, the supervisory institution adjusting each respective
party’s shadow credit record or shadow debit record, allowing
only these transactions that do not result in the value of the
shadow debit record being less than the value of the shadow credit
record at any time, each said adjustment taking place in
chronological order, and “(d) at the end-of-day, the
supervisory institution instructing on[e] of the exchange
institutions to exchange credits or debits 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 institutions.” App. 383–384. 3 Because the approach we
made explicit in Mayo considers all claim elements, both
individually and in combination, it is consistent with the general
rule that patent claims “must be considered as a
whole.” Diamond v. Diehr, ; see Parker v. Flook, (“Our
approach . . . is . . . not at all inconsistent
with the view that a patent claim must be considered as a
whole”). SUPREME COURT OF THE UNITED STATES

															_________________

															No. 13–298

															_________________

															ALICE CORPORATION PTY. LTD, PETITIONER v. CLS
BANK INTERNATIONAL et al.

															on writ of certiorari to the united states
court of appeals for the federal circuit

															[June 19, 2014]

															     Justice Sotomayor,
with whom Justice Ginsburg and Justice Breyer join, concurring.

															     I adhere to the view
that any “claim that merely describes a method of doing
business does not qualify as a ‘process’ under
§101.” Bilski v. Kappos, 561 U. S. 593, 614 (2010)
(Stevens, J., concurring in judgment); see also In re Bilski,
545 F. 3d 943, 972 (CA Fed. 2008) (Dyk, J., concurring)
(“There is no suggestion in any of th[e] early [English]
consideration of process patents that processes for organizing
human activity were or ever had been patent- able”). As in
Bilski, however, I further believe that the method claims at issue
are drawn to an abstract idea. Cf. 561 U. S., at 619 (opinion
of Stevens, J.). I therefore join the opinion of the Court.


NOTICE: This opinion is subject to
formal revision before publication in the preliminary print of the
United States Reports. Readers are requested to notify the Reporter
of Decisions, Supreme Court of the United States, Washington,
D. C. 20543, of any typographical or other formal errors, in
order that corrections may be made before the preliminary print
goes to press.

															SUPREME COURT OF THE UNITED STATES

															_________________

															No. 15–777

															_________________

															SAMSUNG ELECTRONICS CO., LTD., et al.,
PETITIONERS v. APPLE INC.

															on writ of certiorari to the united states
court of appeals for the federal circuit

															[December 6, 2016]

															Justice Sotomayor delivered the opinion of the
Court.

															Section 289 of the Patent Act provides a damages
rem-edy specific to design patent infringement. A person who
manufactures or sells “any article of manufacture to which [a
patented] design or colorable imitation has been applied shall be
liable to the owner to the extent of his totalprofit.” 35
U. S. C. §289. In the case of a design for a
single-component product, such as a dinner plate, the product is
the “article of manufacture” to which the design has been applied.
In the case of a design for a multicomponent product, such as a
kitchen oven, identifying the “article of manufacture” to which the
design has been applied is a more difficult task.

															This case involves the infringement of designs
for smartphones. The United States Court of Appeals for the Federal
Circuit identified the entire smartphone as the only permissible
“article of manufacture” for the purpose of calculating §289
damages because consumers could not separately purchase components
of the smartphones. The question before us is whether that reading
is consistent with §289. We hold that it is not.

															I

															A

															The federal patent laws have long permitted
those who invent designs for manufactured articles to patent their
designs. See Patent Act of 1842, §3, 5Stat. 543–544. Patent
protection is available for a “new, original and ornamental design
for an article of manufacture.” 35 U. S. C. §171(a). A
patentable design “gives a peculiar or distinctive appearance to
the manufacture, or article to which it may be applied, or to which
it gives form.” Gorham Co. v. White , 14 Wall. 511,
525 (1872). This Court has explained that a design patent is
infringed “if, in the eye of an ordinary observer, giving such
attention as a purchaser usually gives, two designs are
substantially the same.” Id., at 528.

															In 1885, this Court limited the damages
available for design patent infringement. The statute in effect at
the time allowed a holder of a design patent to recover “the actual
damages sustained” from infringement. Rev. Stat. §4919. In Dobson v. Hartford Carpet Co. , 114 U. S. 439
(1885) , the lower courts had awarded the holders of design patents
on carpets damages in the amount of “the entire profit to the
[patent holders], per yard, in the manufacture and sale of carpets
of the patented designs, and not merely the value which the designs
contributed to the carpets.” Id., at 443. This Court
reversed the damages award and construed the statute to require
proof that the profits were “due to” the design rather than other
aspects of the carpets. Id., at 444; see also Dobson v. Dornan , 118 U. S. 10, 17 (1886) (“The plaintiff must
show what profits or damages are attributable to the use of the
infringing design”).

															In 1887, in response to the Dobson cases,
Congress enacted a specific damages remedy for design patent
infringement. See S. Rep. No. 206, 49th Cong., 1st Sess., 1–2
(1886); H. R. Rep. No. 1966, 49th Cong., 1st Sess., 1–2 (1886). The
new provision made it unlawful to manufacture or sell an article of
manufacture to which a patented design or a colorable imitation
thereof had been applied. An act to amend the law relating to
patents, trademarks, and copyright, §1, 24Stat. 387. It went on to
make a design patent infringer “liable in the amount of” $250 or
“the total profit made by him from the manufacture or sale
. . . of the article or articles to which the design, or
color-able imitation thereof, has been applied.” Ibid. The Patent Act of 1952 codified this provision
in §289. 66Stat. 813. That codified language now reads, in relevant
part:

															“Whoever during the term of a patent for a
design, without license of the owner, (1) applies the patented
design, or any colorable imitation thereof, to any article of
manufacture for the purpose of sale, or (2) sells or exposes for
sale any article of manufacture to which such design or colorable
imitation has been applied shall be liable to the owner to the
extent of his total profit, but not less than $250
. . . .” 35 U. S. C. §289.

															B

															Apple Inc. released its first-generation
iPhone in 2007. The iPhone is a smartphone, a “cell phone with a
broad range of other functions based on advanced computing
capability, large storage capacity, and Internet connectiv-ity.” Riley v. California , 573 U. S. ___, ___ (2014)
(slip op., at 2). Apple secured many design patents in connection
with the release. Among those patents were the D618,677 patent,
covering a black rectangular front face with rounded corners, the
D593,087 patent, covering a rectangular front face with rounded
corners and a raised rim, and the D604,305 patent, covering a grid
of 16 colorful icons on a black screen. App. 530–578.

															Samsung Electronics Co., Samsung Electronics
America, Inc., and Samsung Telecommunications America, LLC
(Samsung), also manufacture smartphones. After Apple released its
iPhone, Samsung released a series of smartphones that resembled the
iPhone. Id., at 357–358.

															Apple sued Samsung in 2011, alleging, as
relevant here, that various Samsung smartphones infringed Apple’s
D593,087, D618,677, and D604,305 design patents. A jury found that
several Samsung smartphones did infringe those patents. See id., at 273–276. All told, Apple was awarded $399 million in
damages for Samsung’s design patent infringement, the entire profit
Samsung made from its sales of the infringing smartphones. See id. , at 277–280, 348–350.

															The Federal Circuit affirmed the design patent
infringement damages award.[ 1 ]
In doing so, it rejected Samsung’s argument “that the profits
awarded should have been limited to the infringing ‘article of
manufacture’ ”—for example, the screen or case of the
smartphone—“not the entire infringing product”—the smartphone. 786
F. 3d 983, 1002 (2015). It reasoned that “limit[ing] the
dam-ages” award was not required because the “innards of Samsung’s
smartphones were not sold separately from their shells as distinct
articles of manufacture to ordinary purchasers.” Ibid. We granted certiorari, 577 U. S. ___
(2016), and now reverse and remand.

															II

															Section 289 allows a patent holder to recover
the total profit an infringer makes from the infringement. It does
so by first prohibiting the unlicensed “appli[cation]” of a
“patented design, or any colorable imitation thereof, to any
article of manufacture for the purpose of sale” or the unlicensed
sale or exposure to sale of “any article of manufacture to which [a
patented] design or colorable imitation has been applied.” 35
U. S. C. §289. It then makes a person who violates that
prohibition “liable to the owner to the extent of his total profit,
but not less than $250.” Ibid. “Total,” of course, means
all. See American Heritage Dictionary 1836 (5th ed. 2011) (“[t]he
whole amount of something; the entirety”). The “total profit” for
which §289 makes an infringer liable is thus all of the profit made
from the prohibited conduct, that is, from the manufacture or sale
of the “article of manufacture to which [the patented] design or
colorable imitation has been applied.”

															Arriving at a damages award under §289 thus
involves two steps. First, identify the “article of manufacture” to
which the infringed design has been applied. Second, calculate the
infringer’s total profit made on that article of manufacture.

															This case requires us to address a threshold
matter: the scope of the term “article of manufacture.” The only
question we resolve today is whether, in the case of a
multicomponent product, the relevant “article of manufacture” must
always be the end product sold to the consumer or whether it can
also be a component of that product. Under the former
interpretation, a patent holder will always be entitled to the
infringer’s total profit from the end product. Under the latter
interpretation, a patent holder will sometimes be entitled to the
infringer’s total profit from a component of the end
product.[ 2 ]

															A

															The text resolves this case. The term “article
of manufacture,” as used in §289, encompasses both a product sold
to a consumer and a component of that product.

															“Article of manufacture” has a broad meaning. An
“article” is just “a particular thing.” J. Stormonth, A Dictionary
of the English Language 53 (1885) (Stormonth); see also American
Heritage Dictionary, at 101 (“[a]n individual thing or element of a
class; a particular object or item”). And “manufacture” means “the
conversion of raw materials by the hand, or by machinery, into
articles suitable for the use of man” and “the articles so made.”
Stormonth 589; see also American Heritage Dictionary, at 1070
(“[t]he act, craft, or process of manufacturing products,
especially on a large scale” or “[a] product that is
manufactured”). An article of manufacture, then, is sim-ply a thing
made by hand or machine.

															So understood, the term “article of manufacture”
is broad enough to encompass both a product sold to a consumer as
well as a component of that product. A component of a product, no
less than the product itself, is a thing made by hand or machine.
That a component may be integrated into a larger product, in other
words, does not put it outside the category of articles of
manufacture.

															This reading of article of manufacture in §289
is consistent with 35 U. S. C. §171(a), which makes “new,
original and ornamental design[s] for an article of manufacture”
eligible for design patent protection.[ 3 ] The Patent Office and the courts have understood §171
to permit a design patent for a design extending to only a
component of a multicomponent product. See, e.g., Ex
parte Adams , 84 Off. Gaz. Pat. Office 311 (1898) (“The several
articles of manufacture of peculiar shape which when combined
produce a machine or structure having movable parts may each
separately be patented as a design . . . ”); Application of Zahn , 617 F. 2d 261, 268 (CCPA 1980)
(“Section 171 authorizes patents on ornamental designs for articles
of manufacture. While the design must be embodied in some
articles, the statute is not limited to designs for complete
articles, or ‘discrete’ articles, and certainly not to articles
separately sold . . . ”).

															This reading is also consistent with 35
U. S. C. §101, which makes “any new and useful
. . . manufacture . . . or any new and useful
improvement thereof” eligible for utility patent protection. Cf. 8
D. Chisum, Patents §23.03[2], pp. 23–12 to 23–13 (2014) (noting
that “article of manufacture” in §171 includes “what would be
considered a ‘manufacture’ within the meaning of Section 101”).
“[T]his Court has read the term ‘manufacture’ in §101
. . . to mean ‘the production of articles for use from
raw or prepared materials by giving to these materials new forms,
qualities, properties, or combinations, whether by hand-labor or by
machinery.’ ” Diamond v. Chakrabarty , 447
U. S. 303, 308 (1980) (quoting American Fruit Growers,
Inc. v. Brogdex Co. , 283 U. S. 1, 11 (1931) ). The
broad term includes “the parts of a machine considered sepa-rately
from the machine itself.” 1 W. Robinson, The Law of Patents for
Useful Inventions §183, p. 270 (1890).

															B

															The Federal Circuit’s narrower reading of
“article of manufacture” cannot be squared with the text of §289.
The Federal Circuit found that components of the infringing
smartphones could not be the relevant article of manufacture
because consumers could not purchase those components separately
from the smartphones. See 786 F. 3d, at 1002 (declining to
limit a §289 award to a component of the smartphone because “[t]he
innards of Samsung’s smartphones were not sold separately from
their shells as distinct articles of manufacture to ordinary
purchasers”); see also Nordock, Inc. v. Systems Inc. ,
803 F. 3d 1344, 1355 (CA Fed. 2015) (declining to limit a §289
award to a design for a “ ‘lip and hinge plate’ ” because
it was “welded together” with a leveler and “there was no evidence”
it was sold “separate[ly] from the leveler as a complete unit”).
But, for the reasons given above, the term “article of manufacture”
is broad enough to embrace both a product sold to a consumer and a
component of that product, whether sold separately or not. Thus,
reading “article of manufacture” in §289 to cover only an end
product sold to a consumer gives too narrow a meaning to the
phrase.

															The parties ask us to go further and resolve
whether, for each of the design patents at issue here, the relevant
article of manufacture is the smartphone, or a particular
smartphone component. Doing so would require us to set out a test
for identifying the relevant article of manufacture at the first
step of the §289 damages inquiry and to parse the record to apply
that test in this case. The United States as amicus curiae suggested a test, see Brief for United States as Amicus
Curiae 27–29, but Samsung and Apple did not brief the issue. We
decline to lay out a test for the first step of the §289 damages
inquiry in the absence of adequate briefing by the parties. Doing
so is not necessary to resolve the question presented in this case,
and the Federal Circuit may address any remaining issues on
remand.

															III

															The judgment of the United States Court of
Appeals for the Federal Circuit is therefore reversed, and the case
is remanded for further proceedings consistent with this
opinion.

															It is so ordered. Notes 1 Samsung raised a host of
challenges on appeal related to other claims in the litigation
between Apple and Samsung. The Federal Circuit affirmed in
part—with respect to the design patent infringement finding, the
validity of two utility patent claims, and the design and utility
patent infringement damages awards—and reversed and remanded in
part—with respect to trade dress dilution. Only the design patent
infringement award is at issue here. 2 In its petition for
certiorari and in its briefing, Samsung challenged the decision
below on a second ground. It argued that 35 U. S. C. §289
contains a causation requirement, which limits a §289 damages award
to the total profit the infringer made because of the
infringement. Samsung abandoned this theory at argument, and so we
do not address it. See Tr. of Oral Arg. 6. 3 As originally enacted,
the provision protected “any new and original design for a
manufacture.” §3, 5Stat. 544. The provision listed examples,
including a design “worked into or worked on, or printed or painted
or cast or otherwise fixed on, any article of manufacture” and a
“shape or configuration of any article of manufacture.” Ibid. A streamlined version enacted in 1902 protected “any
new, original, and ornamental design for an article of
manufacture.” Ch. 783, 32Stat. 193. The Patent Act of 1952 retained
that language. See §171, 66Stat. 813.