US Supreme Court Decision on Abstract Idea

The Supreme Court has issued its opinion in Alice v. CLS Bank case.

In the case Alice v. CLS Bank: Alice Corp. owned several patents covering a computer system that helps with closing financial transactions by avoiding settlement risk (the risk that comes with any financial transaction if one party cannot uphold its end of the bargain). CLS Bank claimed the patents were invalid because they were nothing more than an abstract idea, and U.S. patent law has long held that abstract ideas cannot be patented. The district court agreed, finding the invention—which “simply provides the formula, or manner, in which to use an electronic intermediary to exchange obligations as a way to hedge against the risk of loss”—abstract, and therefore unpatentable.

But the U.S. Court of Appeals for the Federal Circuit—the appellate court that has exclusive jurisdiction over patent appeals—reversed that ruling, holding that implementing this invention on a computer system made it somehow nonabstract.

The Supreme Court court stated that if you have an idea so abstract that it cannot be patented, simply tying it to a “generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention.” It also stated that tying an abstract idea to “purely functional and generic” hardware similarly would not make the idea patentable.

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