On June 19 2014 In Alice Corp. v. CLS Bank U.S. Supreme Court held that merely requiring a generic computer to implement an abstract idea fails to transform the abstract idea into a patent-eligible invention, and affirmed the Federal Circuit’s judgment finding claims directed to mitigating settlement risk invalid under 35 USC § 101.(1)

Some extracts of the case:

“On their face, the claims before us are drawn to the concept of intermediated settlement, i.e., the use of a third party to mitigate settlement risk. Like the risk hedging in Bilski, the concept of intermediated settlement is “ ‘a fundamental economic practice long prevalent in our system of commerce.’”

“…the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention. Stating an abstract idea “while adding the words ‘apply it’” is not enough for patent eligibility.”

“The representative method claim in this case recites the following steps: (1) “creating” shadow records for each counterparty to a transaction; (2) “obtaining” start-of-day balances based on the parties’ real-world accounts at exchange institutions; (3) “adjusting” the shadow records as transactions are entered, allowing only those transaction for which the parties have sufficient resources; and (4) issuing irrevocable end-of-day instructions to the exchange institutions to carry out the permitted transactions.”

“…the relevant question is whether the claims here do more than simply instruct the practitioner to implement the abstract idea of intermediated settlement on a generic computer. They do not.”

Read the full decision

Links and other Commentaries:

A Post-Alice Playbook: Practical Strategies for Responding to Alice-Based Rejections by Robert Plotkin, Esq.

The Supreme Court invalidates a software patent in Alice Corp. v. CLS Bank by Rob Tiller

Preliminary Examination Instructions for Determining Subject Matter Eligibility in view of Alice Corp. v. CLS Bank by The USPTO