Supreme Court Weighs In Regarding Patentability Of Financial Products

The Supreme Court issued another significant patent ruling this week, holding in Alice Corp. Pty. Ltd. v. CLS Bank that patent claims directed to financial methods and systems that are otherwise unpatentable are not made patentable just because they are implemented on a computer.

The patent at issue concerned a method and system for using an intermediary to mitigate "settlement risk" in financial transactions. According to the Court, the idea of intermediated settlement was an "abstract idea" well-known in finance and thus not entitled to patent protection. The Court further held that the use of a conventional computer system to implement that abstract idea did not constitute a patentable application of the idea, and thus held that the patent was invalid.

The framework for determining whether a patent is directed to an "abstract idea" is expected to be the subject of further debate, particularly in view of the Supreme Court's pronouncements in Mayo v. Prometheus, Bilski v. Kappos and now Alice.

The Court's ruling also underscores the importance of avoiding generic approaches to drafting patent applications on computer-implemented inventions.