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6th SCOTUS Ruling On Patent Law This Term

In a unanimous decision, the Supreme Court of the United States sided with CLS Bank in invalidating patents held by Australia-based Alice Corp. This is the sixth and final SCOTUS ruling on patent law this term. Each ruling was unanimous. Each ruling narrowed patent law.

Alice Corp owns several patents covering computer systems that assist with closing transactions by avoiding settlement risks. CLS Bank stated that the Alice Corp patents were invalid because they covered abstract ideas. Abstract ideas are not protectable by a patent under US Law. The district court agreed, finding that the Alice Corp invention “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” and is therefore abstract and un-patentable.

On appeal, the US Court of Appeals for the Federal Circuit reversed the ruling. Upon review a second time, the very same court affirmed the lower court ruling, reversing itself.

Upon granting cert, the Supreme Court ruled that taking an abstract idea and simply tying it to a “generic computer cannot transform a patent in-eligible abstract idea into a patent-eligible idea.” This is the correct ruling, as illustrated by the unanimous decision.

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