SCOTUS nixes patent on financial risk software in closely watched case

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The Supreme Court of the United States has tossed out an Australian company's patent for business software in a closely watched case that clarifies standards for awarding patents.

The justices ruled unanimously Thursday that the government should not have issued a patent to Alice Corp. in the 1990s because the company simply took an abstract idea that has been around for years and programmed it to run through a computer.

The decision makes clear that to obtain a patent, a company's idea must actually improve how a computer functions or make other technical advancements. It could also help give technology firms a stronger defense against so-called patent trolls — companies that buy up patents and force businesses to pay license fees or face costly litigation.

The software at issue allows a neutral third party to make sure all parties to a financial trade have lived up to their obligations. New York-based CLS Bank International claimed the patent was invalid.

"We conclude that the method claims, which merely require generic computer implementation, fail to transform that abstract idea into a patent-eligible invention," said Justice Clarence Thomas, writing for the court.

Dozens of technology firms — including Google and Facebook — submitted friend of the court briefs in the case, asking the high court to restrict the free flow of software patents they say are often too vague and can block other companies from innovation. But other companies, such as IBM, warned that too many new restrictions could nullify thousands of existing patents and discourage companies from investing in research and development.

Patents give inventors legal protection to prevent others from making, using or selling a novel device, process or application. The Supreme Court has ruled in the past that abstract ideas, natural phenomena and laws of nature cannot be patented.

The U.S. Court of Appeals for the Federal Circuit had ruled that Alice Corp.'s patent was invalid, but only five of the 10-member panel of judges could agree on why.

The Obama administration had also urged the court to invalidate the Alice patent and urged the justices offer more clarity to help lower courts decide what is and isn't valid. The administration said several factors should be considered, including whether the software improves how the computer functions or uses a computer to improve how another technological process works.

Companies have spent millions fighting patent troll litigation from firms that buy up patents from others and make money by asserting infringement and demanding licensing fees or settlements.

The case is Alice Corp. v. CLS Bank International, 13-298.


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  1. Great observation Smith. By my lights, speaking personally, they already have. They counted my religious perspective in a pro-life context as a symptom of mental illness and then violated all semblance of due process to banish me for life from the Indiana bar. The headline reveals the truth of the Hoosier elite's animus. Details here: Denied 2016 petition for cert (this time around): (“2016Pet”) Amicus brief 2016: (“2016Amici”) As many may recall, I was banned for five years for failing to "repent" of my religious views on life and the law when a bar examiner demanded it of me, resulting in a time out to reconsider my "clinging." The time out did not work, so now I am banned for life. Here is the five year time out order: Denied 2010 petition for cert (from the 2009 denial and five year banishment): (“2010Pet”) Read this quickly if you are going to read it, the elites will likely demand it be pulled down or pile comments on to bury it. (As they have buried me.)

  2. if the proabortion zealots and intolerant secularist anti-religious bigots keep on shutting down every hint of religious observance in american society, or attacking every ounce of respect that the state may have left for it, they may just break off their teeth.

  3. "drug dealers and traffickers need to be locked up". "we cannot afford just to continue to build prisons". "drug abuse is strangling many families and communities". "establishing more treatment and prevention programs will also be priorities". Seems to be what politicians have been saying for at least three decades now. If these are the most original thoughts these two have on the issues of drug trafficking and drug abuse, then we're no closer to solving the problem than we were back in the 90s when crack cocaine was the epidemic. We really need to begin demanding more original thought from those we elect to office. We also need to begin to accept that each of us is part of the solution to a problem that government cannot solve.

  4. What is with the bias exclusion of the only candidate that made sense, Rex Bell? The Democrat and Republican Party have created this problem, why on earth would anyone believe they are able to fix it without pushing government into matters it doesn't belong?

  5. This is what happens when daddy hands over a business to his moron son and thinks that everything will be ok. this bankruptcy is nothing more than Gary pulling the strings to never pay the creditors that he and his son have ripped off. they are scum and they know it.