The long-awaited decision by the United States Supreme Court on business method patents was issued on June 19, 2014. Unfortunately, the decision raised more questions than it answered. The expectation was that the Supreme Court would clearly explain the difference between unpatentable abstract ideas and patentable software, including business methods. Instead, the Court issued a very narrow decision with broad, but uncertain ramifications. The Court applied a test it has previously relied upon, striking down all of the patents in the case and expressly stating that it was not opining on the patentability of software or business methods in general.
The case is Alice Corporation Pty. Ltd. v. CLS Bank International, 2014 U.S. Lexis 4303 (U.S. Supreme Court, June 19, 2014). Alice Corporation’s patents were directed to a computer-implemented process of minimizing “settlement risk” – the risk to a party in a financial transaction that the other party would not perform the transaction, by creating an intermediary using “shadow” financial records of both parties. The claims covered the computer system to perform the process, the computerized method itself, and a computer-readable medium with the instructions to perform the method.
Alice Corporation had sued CLS Bank for patent infringement. The district court had granted summary judgment for CLS Bank on the grounds that all of the claims were not eligible for patent protection as they were directed to an abstract idea. A panel of the Federal Circuit Court of Appeals had reversed the district court, but then, in an en banc hearing, affirmed the district court in a set of multiple opinions. A plurality of the Federal Circuit found all of Alice Corporation’s claims patent-ineligible, relying on the Supreme Court’s 2012 decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S.Ct. 1289 (2012).