Alice Corporation v. CLS Bank International

PETITIONER: Alice Corporation Pty. Ltd.
RESPONDENT: CLS Bank International, et al.
LOCATION: CLS Bank International

DOCKET NO.: 13-298
DECIDED BY: Roberts Court (2010-2016)

CITATION: 573 US (2014)
GRANTED: Dec 06, 2013
ARGUED: Mar 31, 2014
DECIDED: Jun 19, 2014

Facts of the case

Alice Corporation (Alice) is an Australian company that owns the '479, '510, '720, and '375 patents, all of which have to do with a computerized trading platform that deals with financial transactions in which a third party settles obligations between two others so as to settlement eliminate risk. Settlement risk is the risk to each party in an exchange that only one party will pay its obligation. Alice's patents address that risk by using the third party as the guarantor.

On May 24, 2007, CLS Bank International (CLS) sued Alice and sought a declaratory judgment of non-infringement and invalidity of the '479, '510, and '720 patents. Alice countersued and claimed infringement. CLS moved for summary judgment by arguing that any possible infringement could not have occurred in the United States and that Alice's claims were drawn from ineligible subject matter. Alice filed crossmotions, and the district court denied both motions. In the meantime, the '375 patent processed, and Alice amended its complaint to include this patent. Both parties renewed their crossmotions. For the purposes of these motions, the district court assumed that all asserted patent claims required electronic implementation and granted summary judgment in favor of CLS. The district court held that Alice's patents were invalid because they were directed at an abstract idea and that those claims could preempt the use of the abstract concept of a neutral intermediary to facilitate exchange and eliminate risk. The U.S. Court of Appeals for the Federal Circuit affirmed.


Are claims regarding computer-implemented inventions—including systems, machines, processes, and items of manufacture—patent-eligible subject matter?

Media for Alice Corporation v. CLS Bank International

Audio Transcription for Oral Argument - March 31, 2014 in Alice Corporation v. CLS Bank International

Audio Transcription for Opinion Announcement - June 19, 2014 in Alice Corporation v. CLS Bank International

Justice Thomas has our opinion this morning in case 13-298, Alice Corporation versus CLS Bank International.

This case comes to us on a writ of certiorari to the United States Court of Appeals for the Federal Circuit.

Section 101 of the Patent Act defines the subject matter eligible for patent protection.

For more than 150 years, this Court has held that.

Section 101 contains an implicit exception and that exception is that laws of nature, natural phenomena and abstract ideas are not patentable.

Our Section 101 cases have explained that granting a patent monopoly on these building blocks of human ingenuity would impede innovation rather than promote it.

Petitioner Alice Corporation called several patents that disclose a scheme for mitigating settlement risk.

That is the risk that only one party to a financial transaction will pay what it owes.

In particular, the patent claims that issue are designed to facilitate financial transactions by using a computer system as a middleman.

Respondent, CLS Bank filed a suit against the petitioner arguing that the patent claims that issue are invalid.

The District Court held that, the patent claims were ineligible under Section 101 because they are drawn on an abstract idea.

The en banc Federal Circuit affirmed.

In an opinion filed with the clerk today, we affirm the judgment of the Federal Circuit.

First, we hold that the claims at issue are directed to a patent ineligible concept specifically the abstract idea of intermediated settlement.

Like the concept of hedging which was the subject of our 2010 decision in Bilski, intermediated settlement is a fundamental economic practice long prevalent in our system of commerce.

Thus, like hedging, intermediated settlement is an abstract idea beyond the scope of Section 101.

Next, we hold that nothing in petitioner's claims transforms the abstract idea of intermediated settlement into a patent-eligible invention.

That is because petitioner's method claims simply recite the concept of intermediated settlement as performed by generic computer.

Under our Section 101 precedence and instruction to apply an abstract idea using a generic computer is not enough to transform that abstract idea into a patent-eligible invention.

Petitioner's system and media claims are patent-ineligible too because they add nothing of substance to the underlying idea.

For these reasons and other set forth in our opinion, we affirm the judgment of the Federal Circuit.

The opinion of the Court is unanimous.

Justice Sotomayor has filed a -- a concurring opinion in which Justices Ginsburg and Breyer have joined.