Case Analysis: Alice Corp. v. Cls Bank (134 S. Ct. 2347 (2014))

Introduction

The Patent Statute of the US defines patentable subject matter as 'any new and useful process, machine, manufacture, or composition of matter' and any improvements.¹ But patent cannot be granted for laws of nature, natural phenomena or abstract ideas. In most of the countries, software cannot be patented unless it forms an element within a hardware or a system. However in June 2014, the US Supreme Court's ruling in the Alice Corp. v. CLS Bank sent software patents down the rabbit hole. Essentially, the Court ruled that 'implementing the abstract idea' on a computer does not make it patentable.²

Background of the Case

The patent at issue in the instant case disclosed a computer- implemented scheme for mitigating "settlement risk" i.e the risk that only one party to a financial transaction will pay what it owes, by using a third- party intermediary.³ Alice alleged that CLS Bank International and CLS Services Ltd. began using similar technology in