The U.S. Supreme Court case of Alice Corporation Pty. Ltd. v. CLS Bank International, decided on June 18, 2014, is an appeal by defendant CLS Bank International of a decision of the U.S. Court of Appeals for the Federal Circuit (CAFC) affirming the district court’s ruling that Alice Corporation’s (Alice) patents are invalid under 35 U.S.C. § 101 for being abstract ideas.
Alice’s patents are directed to a computerized method, a computer-readable medium containing program code for performing the method, and a computer system that implements the program code. More particularly, the patents are directed to a computerized trading platform that deals with financial transactions in which a third party settles obligations between two others so as to eliminate the risk of non-payment. Alice’s patents address that risk by using the third party as the guarantor. The CAFC held, and the Supreme Court affirmed, that the concept of reducing settlement risk by facilitating a trade through third-party intermediation is an abstract idea that is not patent-eligible subject matter under 35 U.S.C. § 101. The Supreme Court held that claims directed to an idea or concept must include meaningful limitations that prevent the claims as a whole from covering every practical application of the idea or concept.