Alice Corp. v. CLS Bank Int'l

Background

Alice Corporation is the assignee of patents that describe a computer-implemented scheme to reduce “settlement risk” by using a third-party intermediary that keeps “shadow” account records and instructs banks to carry out permitted transactions. CLS Bank operates a global currency-transaction network and challenged those patents, arguing they were invalid or not infringed. The patent claims cover a method, a computer system, and a computer-readable medium. Lower courts held the claims ineligible as an abstract idea; the Federal Circuit affirmed en banc and this Court reviewed the case.

Reasoning

The Court framed the question as whether these claims are directed to an abstract idea and whether their steps add an “inventive concept.” It found the claims recite the abstract economic practice of intermediated settlement, similar to the hedging idea in earlier cases. The Court then held that implementing that idea with routine computer functions—creating and updating electronic records, obtaining balances, and sending instructions—does not transform the idea into a patent-eligible invention. System and storage-medium claims failed for the same reason.

Real world impact

The decision limits the ability to patent commonplace financial and business methods that merely use generic computer technology. It makes it harder for patent owners to claim broad monopolies over basic economic practices implemented on ordinary computers. The ruling affirms the Federal Circuit judgment and applies to the patents before the Court.

Dissents or concurrances

Justice Sotomayor, joined by Justices Ginsburg and Breyer, concurred, noting method-of-business claims are not patentable and agreeing with the outcome.