An Abdication of Duty: The Supreme Court Denies Certiorari in USAA v. PNC Bank

Written by Ben Esplin

Earlier this week, the Supreme Court denied certiorari in USAA v. PNC Bank. By declining to review the case, the Court quietly put an end to USAA’s bid to restore $223 million in jury verdicts that had been wiped out by the Federal Circuit under the guise of 35 U.S.C. § 101 patent ineligibility.

This denial is incredibly frustrating, but unfortunately, it is not surprising.

In my previous analysis of the Federal Circuit's decision, I wrote about the sheer absurdity of how the "abstract idea" is currently being defined. In USAA, the Federal Circuit took a highly concrete, real-time digital image processing and optical character recognition (OCR) system and reduced it to "the abstract idea of depositing a check using a handheld mobile device.”

This is the logical endpoint of a broken system. As I documented extensively in my five-part series on the patent eligibility requirement of 35 U.S.C. Section 101 (which you can read in Part I, Part II, Part III, Part IV, and Part V), the jurisprudence and institutional application of the Alice/Mayo test is a disaster. To argue that this test is functioning in a smooth, predictable, or logical manner to regulate patentability is completely indefensible.

What makes the Supreme Court’s reticence to address this problem so profoundly infuriating is a simple, historical truth: The Court created this mess in the first place.

The entire modern "patent eligibility" crisis is a judicial fabrication ipwatchdog.com. There is not a single shred of textual impetus in 35 U.S.C. § 101 for the hurdles we face today ipwatchdog.com. There is no mention of "abstract ideas," "laws of nature," or "natural phenomena." Those are judicial exceptions, manufactured entirely out of thin air by the Supreme Court.

Because this eligibility test is entirely a creature of the Court's own making, there is no valid excuse for the justices to sit on their hands. Often, when the Court denies review, observers claim they are prudently waiting for the legislature to clarify the statutory boundaries. But that defense is completely empty here. The Court is not waiting for Congress to clarify the legislature's work; they are waiting for the legislature to clean up the Court's work. 

By repeatedly ducking these cases, the Supreme Court is abdicating its basic institutional responsibility. They wrote the Alice/Mayo test, left "abstract idea" completely undefined, and have watched for over a decade as lower courts used that ambiguity to decimate valid portfolios and stifle American innovation.

For practitioners and innovators, the USAA denial is a stark reminder that we cannot rely on the courts to provide a stable foundation for software-related IP. It reinforces what we preach at Esplin & Associates: building a defensible moat requires a highly deliberate, multi-layered approach. If the Supreme Court refuses to define the boundaries of the rules they invented, we must architect our clients' intellectual property to survive the chaos.