The Supreme Court Should Take Up the USAA Case to Bring Clarity to the Esoteric ‘Abstract Ideas’ Doctrine of Alice

In 2014, the Supreme Court held that an invention is patent-ineligible if directed to “abstract ideas,” but that there was no need to define the term. Alice Corp. Pty. Ltd. v CLS Bank Int’l, 573 U.S. 208, 221. Now, with the experience of more than a decade of confusing and unpredictable decision-making by lower courts trying to apply Alice, it is time for the Supreme Court to step in and provide a definition and workable test for the abstract-ideas exclusion.

As written in 1952, Section 101 provides broad eligibility for protection for “any new and useful process, machine, manufacture, or composition of matter.” The  abstract-ideas exclusion came into being because the Supreme Court was not satisfied with the statute, and felt compelled to create an extra-statutory layer of hurdles patent owners must survive. The time is long overdue for the Supreme Court to provide a definition for the critical term they laid over the statutory scheme.

Fortunately, there is a vehicle for doing just that: The Court should grant the petition for certiorari filed by United States Automobile Association (USAA) in USAA v. PNC Bank on January 14, 2026. That will allow the Supreme Court to address the most basic of questions: What is an abstract idea? After all, it just makes sense for the Court to define the critical term rather than leave it to the imagination of decisionmakers who are tasked with deciding whether something is, or is not, an abstract idea.

The Current State of Affairs

Subject matter eligibility has been the most confounding and unpredictable issue in patent law since the Alice decision issued, especially for computer-implemented inventions. A decade later, we live in an era where emerging technology is transforming how we live, how we interact with others, and even how we process information. Yes, artificial intelligence (AI) in all its forms, machine learning, computer vision, cryptocurrency and blockchain technology, FinTech, cryptographic techniques, autonomous systems, cybersecurity, robotics, cloud systems, medical imaging, predictive health analytics, are all caught up in unnecessarily uncertainty because the Supreme Court refuses to define what is an unpatentable abstract idea.

The problem is not only that the Supreme Court has not defined the term “abstract idea”, but also that the Federal Circuit has taken what was intended to be a narrow exception to patent eligibility and incorrectly expanded it so that it threatens nearly every invention that has a tie to software, computers, or networks. That encompasses nearly any invention of consequence in this era.

Here we are, more than a decade after the Alice decision, and the U.S. is indisputably a global outlier when it comes to patent protection for computer-implemented inventions, which is astonishing to say because once upon a time the U.S. was one of the few countries that offered meaningful protection for computer-implemented inventions. Today, an abstract-ideas challenge is raised in virtually every eligibility litigation post-Alice. Courts apply the abstract-ideas exception without having a workable test, in each case resulting in a metaphysical exercise asking whether something is an abstract idea without knowing what that is in the first place. Large numbers of patents are invalidated in ex post fashion as abstract ideas, and there is no reliable ex ante predictability.

The U.S. patent system is falling behind other patent systems, such as Europe and China, that are not hobbled by a patent eligibility hurdles like our abstract-ideas doctrine. Europe has the eminently reasonably “technical effect” framework where there is no Alice-style hypersubjective exclusion, or mass hysteria against computer related innovations. Instead, computer-implemented inventions are eligible if there is a technical means to address a technical problem.

There is no functional, doctrinal, or practical equivalent to the Alice abstract-ideas exception in Europe, China, Japan, Korea, the UK, Canada, or Australia. It’s a home-grown American ideology, except in this case it does not make us the envy of the world. It just unnecessarily handicaps U.S. innovation.

The good news is that the Supreme Court can fix the problem by taking up the USAA v. PNC Bank case and providing a meaningful definition and test for abstract ideas.

The USAA Case

The USAA case provides a perfect vehicle because it squarely addresses the issue of what is meant by an abstract idea. It does not, like other cases presented to the Court in recent years, focus on the adjacent question of whether a claim is “directed to” an abstract idea.

USAA is an organization created in 1922 and is owned by its members made up of active duty servicemembers, veterans, and their families. Unlike conventional banks serving customers with brick and mortar branches, USAA more often provides its financial services remotely to service members who may be out at sea on a ship or who may be in Iran or Afghanistan in a war zone.

The problem USAA confronted was that service members had no way to deposit paper checks in these kinds of circumstances. Conventional check processing used specialized back-end check scanners that were capable of reliably capturing images of checks because the environment and the position of a paper check in relation to imaging sensors was very controlled. The idea of using smart phones with cameras to remotely image and deposit checks had been kicked around, but it had never worked because users could not operate their mobile devices to reliably capture images of sufficient quality for for backend processing and deposit.

Having recognized the problem, USAA spent millions of dollars to research and develop the Deposit@Mobile® system. Deposit@Mobile® uses a software app downloaded to a user’s mobile device that interfaces with the camera software and the user to ensure that a high-quality image of the check is captured. The software app performs authentication, error detection, guidance for image capture, and the like. Within a month of its launch in 2009, it was the number one FinTech app on Apple’s App Store. Industry publications praised USAA for its innovation. For example, AdAge magazine published a report naming USAA as “represent[ing] the bleeding edge of mobile banking technology.”

USAA received a number of patents covering the Deposit@Mobile® system and process. It licensed the patents to a number of banks (e.g., Discover, Esquire Bank, First Citizens).

In 2020, USAA filed two suits against PNC Bank for infringing its remote check deposit patents, resulting in significant jury verdicts. During those suits, a special master and district court judge evaluated the subject matter question and found that the patents were not directed to abstract ideas under step one of the Alice framework and, accordingly, found the inventions to be patent-eligible.

On appeal, the Federal Circuit struck the patents down as being ineligible because “the claims are directed to the abstract idea of depositing a check using a mobile device.” See USAA v. PNC Bank, App. No. 23-1639; USAA v. PNC Bank, App. No. 23-1778.

Seriously? Did the Federal Circuit reach this conclusion because they think they understand the invention, which means it can’t be anything special? Whatever the case may be, a system and process for “depositing a check using a mobile device” using a downloaded software app is not an “abstract idea”. The USAA invention provides a technological solution to a technological problem, just the type of innovation the patent system is supposed to protect and encourage.

Before reaching the Federal Circuit   both the magistrate judge and a district court judge found the claims eligible because the claims “specifically recite a ‘general purpose computer’ and then provide features that enable the recited general purpose computer to perform the same functions as the specialized check processing machines of the prior art.” And that’s precisely what the claims did. Through the use of a specialized downloaded software app, a standard mobile device could operate to perform high-quality check imaging—previously only attainable by dedicated backend check scanners—to enable remote check deposit processing.

After reciting the district court’s finding, the Federal Circuit stated: “We disagree and conclude that the claims are directed to the abstract idea of depositing a check using a mobile device.” The panel effectively made the statement by fiat and without any deference to the district court. There was no analysis or explanation as to why “depositing a check using a mobile device” using a downloaded software app is an abstract idea, just a conclusion that they were sure that it is an abstract idea.

We are in a very bad place under the current undefined regime. When inventions that are difficult to create are not eligible for patenting why do we even have a patent system at all?

The Stakeholders Have Been Pleading For Guidance

To be fair, the Federal Circuit has practically begged the Supreme Court for guidance on the atextual abstract-ideas exception. In Amdocs (Fed. Cir. 2016), the Federal Circuit lamented the lack of any “generally-accepted and understood definition of, or test for, what an ‘abstract idea” encompasses.” In Smart Systems Innovations (Fed. Cir. 2017), Judge Linn stated that “the abstract ideas category exception is almost impossible to apply consistently and coherently.” In Interval Licensing (Fed. Cir. 2018), Judge Plager stated that “the phrase ‘abstract ideas’ is a definitional morass,” because “there is no single, succinct, usable definition anywhere available.

Chief Judge Moore accurately depicted the state of affairs in American Axle (Fed Cir. 2020): “Our confusion has driven commentators, amici, and every judge to request Supreme Court clarification.” Judge Moore stated that “we have struggled to consistently apply the judicial exceptions [leading to] a panel-dependent body of law and destroying the ability of American businesses to invest with predictability.”

Let’s be clear—“abstract ideas” should not be subject to the “I know it when I see it” test Justice Stewart famously referenced for identifying obscenity. Judges, inventors, patent attorneys, investors, and academics find themselves unable to predict with any certainty whether an invention claims an abstract idea. That is a huge problem, and one of the Court’s own making.

Since 2019, the Supreme Court has called for the views of the Solicitor General in five Section 101 cases, and each time the government has recommended granting certiorari. Yet, the Court has declined to take up any of those cases. That is not just malpractice, it is intentional malfeasance. No one knows what the test means, the Federal Circuit has begged for help, Congress is paralyzed, and the Supreme Court that created the test refuses to provide clarification. This would be tragically funny if not so much was at stake.

Our patent system is paralyzed by the abstract-ideas doctrine and since the Supreme Court wanted to act as a legislative body and overwrite the statute, it is long past time for the Supreme Court to provide the necessary clarification. Given the technologies that are implicated, it is imperative that the Supreme Court take up the USAA v. PNC Bank case and provide that guidance.

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