Alice corp. v. Cls Bank International

Short Description

Supreme Court ruled that abstract ideas implemented using a computer are not patentable without an inventive concept.

Facts

Alice Corporation owned several patents on a computer-implemented scheme for mitigating settlement risk in financial transactions. CLS Bank claimed the patents were invalid under Section 101 of the Patent Act as being directed to abstract ideas. The district court agreed with CLS, finding the patents invalid. The Federal Circuit initially issued conflicting decisions, leading to Supreme Court review.

Issue / Question

Whether computer-implemented inventions that apply abstract ideas are patentable under Section 101.

Findings / Reasoning

The Supreme Court applied a two-step test from Mayo: Step 1 – Determine if the claim is directed to a patent-ineligible concept like an abstract idea. Step 2 – If so, determine whether it contains an 'inventive concept' sufficient to transform it into a patent-eligible application. The Court found that Alice's claims were directed to the abstract idea of intermediated settlement, and merely implementing it on a generic computer did not add anything inventive.

Suggestions / Implications

Software patents must now show specific, inventive features beyond generic computer implementation. Many business method patents became vulnerable after this ruling. Patent applicants should draft claims with technical improvements clearly described.

Judgment / Date

June 19, 2014 – Supreme Court unanimously invalidated Alice Corp.'s patents.