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The question that the Patent Attorney for the Defense raised before the Court is whether the particular computer-implemented scheme for mitigating “settlement risk” by using a third-party intermediary are patent eligible pursuant to 35 U.S.C. § 101, or are instead drawn to a patent-ineligible abstract idea. The Court held that merely requiring generic computer implementation fails to transform the abstract idea into a patent-eligible invention. The District Court found the claims to be ineligible because the patent claims were directed to “employing a neutral intermediary to facilitate simultaneous exchange of obligations in order to minimize risk.” To understand what is patent eligible subject matter, one must first look at Section 101 of the Patent Act. The act 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. An established principle of patent law has long held that laws of nature, natural phenomena, and abstract ideas do not rise to the level of patent eligible subject matter. In fact, this is one of the oldest principles in United States law, dating back to over 150 years. The law was formed in this manner to prevent monopolization of patent rights that would impede on progress and innovation. For example, patenting of a mathematical equation would significantly impede the progress of math and science. But the question then becomes what is a law of nature, natural phenomena, and an abstract idea? The Supreme Court has established a two part test for determining whether an idea is an abstract idea or patent eligible subject matter. The Court determined [...]