Supreme Court Refines Software Patent Eligibility in Alice Case

June 19, 2014

The U.S. Supreme Court on Thursday ruled that implementing an abstract idea using a computer does not make an invention patent eligible.

On a 9-0 vote, the court ruled for CLS Bank International, which challenged patents held by Australia-based Alice Corporation Pty Ltd for a computer system that facilitates financial transactions. The court added some clarity to a confused area of the law concerning when software can be patented.

In May 2013, the U.S. Court of Appeals for the Federal Circuit ruled for CLS but the judges were split 5-5 on which legal test to adopt.

In Thursday’s majority opinion, Justice Clarence Thomas wrote the outcome was largely determined by the court’s 2010 ruling in a case called Bilski v. Kappos.

“We hold that the claims at issue are drawn to the abstract idea of intermediated settlement and that merely requiring generic computer implementation fails to transform that abstract idea into a patent-eligible invention,” Thomas wrote.

The legal question boiled down to how innovative an invention should be to receive legal protection.

The U.S. Patent Act states that anyone who “invents or discovers a new and useful process, machine, manufacture, or composition of matter,” or an improvement of an existing one, can get a patent. An invention related to an abstract idea can be patented, but it must include a way of applying the idea.

Google Inc., Dell Inc. , Verizon Communications Inc., and Microsoft Corp. were among the companies that filed legal papers weighing in on the issue.

The case is Alice Corp. v. CLS Bank, U.S. Supreme Court, 13-298.

(Reporting by Lawrence Hurley; Editing by Howard Goller)

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