2014 | 4p. 14 | IN THE COURTS
ALICE v. CLS BANK:
United States Supreme Court
patentability test By Julia Powles,
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 dene subj ect-matter negatively – things are patentable unless th ey are
excluded by statute or case law. Once this requireme nt is satised, the assessment
then turns to fact-specic criteria such as novelty, non-obviousness, industrial appli-
cability, and sufcient d escription. If the subject-matter requirement is not satised,
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 reect why, in the last ve years, the United States
Supreme Court has i ssued four inuential 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/
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 congured 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