The Supreme Court’s decision in Alice Corp. Pty. Ltd. vs. CLS Bank Int’l, 134 S. Ct. 2347 (decided June 19, 2014) (“Alice”) is an important decision that will have an impact on software and computer-related inventions. In its unanimous decision, the Supreme Court held 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.” This article explores the background of the case and the Supreme Court’s decision.

Background

-As a brief background, Alice Corporation is the assignee of the patents at issue (U.S. Pat. Nos. 5,970,479, 6,912,510, 7,149,720, and 7,725,375), each of which is related to computer implemented methods for managing “settlement risk” – the risk that only one party to an agreed-upon financial exchange will satisfy or perform its obligation where a computer system is used as a third party intermediary to facilitate the exchange of financial obligations between two parties. In particular, the claims at issue were directed to a (1) computerized method for exchanging the financial obligations, (2) computer readable storage medium containing program code for performing the method, and (3) computer system to implement the code.