02 September 2014

CLS wins legal battle in settlement 'patent' dispute

19 June 2014  |  3397 views  |  0 zeroes

The US Supreme Court has found in favour of CLS Bank in a long-running patent dispute with Alice Corporation over the abstract notion of intermediated settlement.

Alice owns four patents on electronic methods and computer programs for financial-trading systems on which trades between two parties are settled by a third party in ways that reduce counterparty or settlement risk.

Alice approached CLS - which was set up as a neutral counterparty to the international FX industry in 2002 - citing patent infringement and demanding a licensing deal.

The Supreme Court ruling caps extended litigation in which all three levels of the federal court system - the district court, the court of appeals, and now the Supreme Court - have come down in favour of CLS.

In its opinion satement, the Supre Court said: "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-eligible invention."

Alan Marquard, chief legal officer, CLS Bank, welcomed the decision: "Alice's attempt to patent the abstract idea of financial intermediation was rightfully rejected by the Supreme Court. Financial intermediation is critical to the safe and effective operation of all global markets, and we are proud to have led the fight against a very real risk to the economy and the financial ecosystem."

The case was seen as a critical test of patent-eligibility as regards generic business methods.

Mark Perry, lead counsel for CLS Bank, says: "The Supreme Court correctly rejected the attempt of Alice Corporation, a non-practicing entity or "troll," to foreclose productive companies like banks from practicing the ancient economic method of intermediated settlement. As the Court explained, patent law does not allow someone to monopolise a fundamental abstract idea, and implementing the idea on any generic computer does not change this result. We are delighted with the result."

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