In the Courts - Alice v CLS Bank: United States Supreme Court establishes general patentability test

• Author: Julia Powles
• Position: Researcher, University of Cambridge, UK
• Pages: 14-18

2014 | 4p. 14 | IN THE COURTS

ALICE v. CLS BANK:

United States Supreme Court

establishes general

patentability test By Julia Powles,

Researcher,

University of C ambridge, UK

Every patent must satisf y the requirement for patentable subject-matter – or, as it is

sometimes known, patent eligibi lity, or the requirement for “an inventi on”. In effect,

the claimed invention must be the s ort of thing that could lead to a patent.

Most countries dene subj ect-matter negatively – things are patentable unless th ey are

excluded by statute or case law. Once this requireme nt is satised, the assessment

then turns to fact-specic criteria such as novelty, non-obviousness, industrial appli-

cability, and sufcient d escription. If the subject-matter requirement is not satised,

then it’s game-over for the patent.

Subject-matter is a negligible c oncern for the vast majority of patents. However, due

to either express or implied exclus ions, it can be a real sticking point in particul ar do-

mains – most notably, software, biotechnology, and diagnostic and business methods.

As an early ground for strik ing out patents, the subject-matter requirement may seem

attractive to patent systems sufferi ng intense backlogs and perceived misuse and

abuse. This broader context m ay reect why, in the last ve years, the United States

Supreme Court has i ssued four inuential subject-matter rulings af ter a nearly 30-

year hiatus: Bilski v. Kappos (www.wipo.int/wipo_magazine/en/2010/06/article_0009.

html), Mayo v. Prometheus, AMP v. Myriad (www.wipo.int/wipo_magazine/en/2012/06/

article_0006.html) – all covered in previous editions of this magazine – and, mo st

recently, the highly-anticipated case of Alice v. CLS Bank (www.supremecou rt.gov/

opinions/13pdf/13-298_7lh8.pdf).

ALICE’S ABSTR ACT IDEAS

Alice attracted a great deal of interest la rgely because the patents in issue involved

a business method imple mented by a computer. Many pundits seized on the case

as an opportunit y for much-needed guidance on software p atenting. However, it

was clear from the facts and the he aring that this was unlikely to happen. When the

Supreme Court iss ued its ruling on June 19, 2014, it opted for a narrow basis for its

decision, closely tied to the fac ts at hand, and omitting broader guidance (or, indeed,

any mention of the word “software”.)

The four patents in Alice concerned intermediated nancial risk settlement (i.e.

mitigating the risk that one par ty to an agreed transaction fails to pay or to satisfy

other conditions). The Supreme Court distilled the claims as variants on: a method

for exchanging nancial obli gations; a computer system congured to carry out the

method; and a computer-readable medium co ntaining program code for performing

the method. The parties to the c ase were the patentee, Melbourne-based Alice Co rp,

which had no relevant trading acti vity in relation to the patents, and New York-based

CLS Bank International, which e ngaged in $US 5 trillion settlements daily emp loying

the patented methods.

A comic strip ren dering of the issue s

addressed i n Alice v. CLS Bank