Opinion Analysis: The Uncertain Expansion of Judge-Made Exceptions to Patentability
Although Alice Corp. v. CLS Bank was identified by this website and many other commentators as a major case on patent law, the Supreme Court’s unanimous resolution of the case does little to change, or even to clarify, pre-existing law. The case becomes the fourth Supreme Court decision since 2010 to hold patent claims invalid based on judicial exceptions to patentability. While Alice Corp. is only an incremental addition, the continuation of that larger trend is hugely important because, as the Court itself acknowledges, the judge-made doctrine in this area has the potential to swallow all of patent law.
Alice Corporation is a holder of several issued patents directed to computerized methods for mitigating so-called “settlement risk” in financial transactions – i.e., the risk that one party won’t live up to its obligations. As a concrete example of the problem, Alice’s brief posited a transaction in which one party wants to buy, and another to sell, Japanese yen for U.S. dollars. The dry language of the brief explains that “[o]ne risk associated with such transactions is that only one side will perform the exchange” at settlement, and the risk of such “one-sided performance is referred to as ‘settlement risk.’”