The invention in this particular case is a computer-implemented method of mitigating risk in foreign currency transactions so that one party won't default after another party has completed his half of the bargain. The patents involved came from an Australian named Ian Shepherd, who in 1993 filed the first of a series of patent applications that in very generic terms described a process of using a general computer to effectuate transactions between a third-party intermediary and the related parties. The concept of using an escrow agent (the third-party intermediary) is an old idea and unpatentable, but the incorporation of a computer is new in this case. After these patents were granted, Shepherd assigned them to a non-practicing entity he set up named Alice Corp.
CLS Bank International facilitates $5 trillion worth of transactions involving 17 different currencies each day and is considered "systematically important financial market utility" by the U.S. Treasury. Alice Corp sued CLS Bank for patent infringement regarding the bank's risk-mitigation system in the currency exchange market. CLS is challenging the invalidity of Alice's patents on the grounds that Alice is trying to patent a nonpatentable "abstract idea". The patents fall under the non-patentable category due to its abstractness, which is discussed in Section 101. Specifically, CLS contends that Alice has tried to patent "the basic economic concept of intermediated settlement or escrow."
Many professionals and scholars in the patent field are suggesting that in the hearing on Monday, the supreme court should move away from its reliance on Section 101 and start considering other factors such as whether the patent is too "obvious" (Section 103) or "indefinite" (Section 116) to determine its validity.
It is a highly anticipated case to say the least. On one hand we have another non-practicing entity (patent-troll) going against a prominent financial institution, while on the other we are dealing with the matter of abstractness. Whatever the decision of the Supreme Court might be, it will certainly have an impact on the patent system in both the reform against non-practicing entities as well as the determination of patent eligibility. I am definitely looking forward to the outcome of the trial.
Source: http://features.blogs.fortune.cnn.com/2014/03/28/supreme-court-to-decide-when-ideas-become-too-abstract-to-patent
Thank you for writing about this case! I think the verdict would play a key part in the future if patents so it would be interesting to read the thoughts behind the ruling. I agree that the case is a difficult one to determine since the ruling will determine if an abstract idea can become patentable. I think that if the abstract proves to be a function that is key to the innovation of the service of the company, it can be argued. It is interesting that section 103 and 116 is also requested to to be looked into. This goes to show that patent trolls can dig up a lot more meat than we thought!
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