By J. Duffy, N. Raffoul, A. Brion

On June 19, 2014, the Supreme Court of the United States decided the matter of Alice Corp. v. CLS Bank International. This case determined the validity of Alice’s patent claims, which pertained to a computer-implemented scheme for mitigating “settlement risk” by using a third-party intermediary.

The Court essentially rehashed a two step framework for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patentable applications of those concepts.  In the first step, the Court likened the Alice claims directed to an “intermediated settlement” to those in the Court’s Bilski decision that dealt with “risk hedging”.  In doing so, the Court found that Alice’s claims concerned an abstract idea.  In the second step, the Supreme Court found that the computer functions in the claims were “well-understood, routine, conventional activities previously known to the industry” and that each step did no more than require a generic computer to perform generic computer functions. The Court additionally found that viewing these separate components as “an ordered combination” of steps did not change the results of the analysis. Therefore, the Court decided the claims were invalid.

While this case will undoubtedly receive a lot of coverage in the world of patents, it is hardly a surprising one.  Alice merely reflects the recent trajectory of US patent law regarding computer-implemented business methods:  when confronted with questionable claims to a computer implemented business method, it is safer to have something more than the business method for patentability.

On a practical note, the case highlights the need to make sure that the invention (especially the invention covered in the claims!) is something more than using a computer to implement a known business method.  Interestingly enough, the outcome of this case should be familiar to Canadians, as it articulates a well-established Canadian principle for patenting software: merely using a computer is not enough to transform the unpatentable into the patentable.

For the full decision: http://www.supremecourt.gov/opinions/13pdf/13-298_7lh8.pdf

 

 

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