Alice Corp. v. CLS Bank Int'l
134 S. Ct. 2347
| SCOTUS | 2014Background
- Alice owned patents claiming a computer-implemented scheme that uses a third‑party intermediary to mitigate "settlement risk" by maintaining real‑time "shadow" credit/debit records and sending end‑of‑day irrevocable settlement instructions.
- Claims included: method claims (representative claim 33), system claims (computer components configured to perform the method), and computer‑readable media claims.
- CLS Bank sued for declaratory judgment that the claims were invalid or unenforceable; Alice counterclaimed for infringement.
- The District Court held the claims ineligible under 35 U.S.C. §101 as directed to an abstract idea; the Federal Circuit affirmed en banc.
- The Supreme Court granted certiorari to decide whether the claims are patent‑eligible or whether they claim an abstract idea transformed only by generic computer implementation.
Issues
| Issue | Alice's Argument | CLS's Argument | Held |
|---|---|---|---|
| Are the asserted claims directed to patent‑eligible subject matter under §101? | Claims recite a computerized, concrete solution for settlement; therefore patentable. | Claims are directed to the abstract idea of intermediated settlement and not patentable. | Held: Claims are directed to the abstract idea of intermediated settlement and thus initially ineligible. |
| Does implementing the abstract idea on a computer supply an "inventive concept" to make claims §101‑eligible? | The computer plays a substantial, meaningful role (it is the intermediary), so implementation suffices. | The computer components are generic; mere computer implementation is insufficient. | Held: Generic computer implementation does not provide the required inventive concept; insufficient to transform the abstract idea into a patentable application. |
| Are system and computer‑readable‑media claims patent‑eligible when method claims are not? | System and media claims recite specific hardware/program storage and should be eligible. | System/media claims add only conventional computer elements and rise or fall with the method claims. | Held: System and media claims add nothing substantive beyond the abstract idea implemented on a generic computer and are ineligible. |
| Does allowing these patents risk impermissible preemption of basic economic practices? | Alice argued its claims were narrow and did not preempt all intermediated settlement. | CLS argued the claims would preempt a fundamental economic practice (clearing/settlement). | Held: Granting the patents would risk preemption of a basic economic practice; that supports ineligibility. |
Key Cases Cited
- Gottschalk v. Benson, 409 U.S. 63 (algorithm implemented on a computer is not patentable)
- Parker v. Flook, 437 U.S. 584 (mathematical formula plus conventional post‑solution activity is not patentable)
- Diamond v. Diehr, 450 U.S. 175 (computer‑implemented process that improves a technological process is patentable)
- Bilski v. Kappos, 561 U.S. 593 (method of hedging risk is an abstract idea and not patentable)
- Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66 (two‑step framework: identify abstract idea/law of nature, then ask whether claim supplies an "inventive concept")
- Ass’n for Molecular Pathology v. Myriad Genetics, 569 U.S. 576 (reaffirming exclusion for laws of nature, natural phenomena, and abstract ideas)