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Alice Corp. Pty. Ltd. v. CLS Bank Int'l

Supreme Court of the United States

March 31, 2014, Argued; June 19, 2014, Decided

No. 13-298


 [*212]  [1978]   JUSTICE Thomas delivered the opinion of the Court.

The patents at issue in this case disclose a computer-implemented scheme for mitigating “settlement risk” (i.e., the risk that  [**2352]  only one party to a financial transaction will pay what it owes) by using a third-party intermediary. The question presented is whether  [****7] these claims are patent eligible under 35 U.S.C. §101, or are instead drawn to a patent-ineligible abstract idea. We hold that the claims at issue are drawn to the abstract idea of intermediated settlement, and that merely requiring generic computer implementation fails to transform that abstract idea into a patent- [***302]  eligible invention. We therefore affirm [1979]  the judgment of the United States Court of Appeals for the Federal Circuit.

Petitioner Alice Corporation is the assignee of several patents that disclose schemes to manage certain forms of financial risk. 1 According to the specification largely shared by the patents, the invention “enabl[es] the management of risk relating to specified, yet unknown, future events.” App. 248. The specification further explains that the “invention relates to methods and apparatus, including electrical computers  [*213]  and data processing systems applied to financial matters and risk management.” Id., at 243.

The claims at issue relate to a computerized scheme for mitigating “settlement risk”—i.e., the risk that only one party to an agreed-upon  [****8] financial exchange will satisfy its obligation. In particular, the claims are designed to facilitate the exchange of financial obligations between two parties by using a computer system as a third-party intermediary. Id., at 383-384. 2 The intermediary creates “shadow” credit and debit records (i.e., account ledgers) that mirror the balances in the parties’ real-world accounts at “exchange institutions” (e.g., banks). The intermediary updates the shadow records in real time as transactions are entered, allowing “only those transactions for which the parties’ updated shadow records indicate sufficient resources to satisfy their mutual obligations.” 717 F. 3d 1269, 1285 (CA Fed.  [*214]  2013) (Lourie, J., concurring). At the end of the day, the intermediary instructs the relevant financial institutions to carry out the “permitted” transactions in accordance with the updated shadow records, ibid., thus mitigating the risk that only one party will perform the agreed-upon exchange.

 [**2353]  In sum, the patents in suit claim (1) the foregoing method for exchanging obligations (the method claims), (2) a computer system configured to carry out the method for exchanging obligations (the system claims), and (3) a computer-readable medium containing program code for performing the  [***303]  method of exchanging obligations (the media claims). All of the claims are implemented using a computer; the system and media claims expressly recite a computer, and the parties have stipulated that the method claims require a computer as well.

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573 U.S. 208 *; 134 S. Ct. 2347 **; 189 L. Ed. 2d 296 ***; 2014 U.S. LEXIS 4303 ****; 110 U.S.P.Q.2D (BNA) 1976; 82 U.S.L.W. 4508; 24 Fla. L. Weekly Fed. S 870; 2014 WL 2765283


Notice: The LEXIS pagination of this document is subject to change pending release of the final published version.


CLS Bank Int'l v. Alice Corp. Pty, 717 F.3d 1269, 2013 U.S. App. LEXIS 9493 (Fed. Cir., 2013)

Disposition: Affirmed.


patent, abstract idea, eligible, settlement, invention, recite, intermediary, transactions, generic, hedging, intermediated, patent-eligible, ineligible, transform, shadow, technological, records, steps, institutions, instructions, obligations, patent-ineligible, functions, parties, media, mathematical formula, natural phenomena, conventional, implemented, third-party

Patent Law, Subject Matter, General Overview, Utility Patents, Process Patents