CLS Bank v. Alice Corp.


  • Case Number: 1:07-cv-00974

Sup. Ct. 13-298

Decision by the Supreme Court.

Summary: Alice Corporation sent correspondence to CLS Services and CLS Bank (collectively “CLS”) claiming that CLS infringes upon three Alice patents. CLS filed an action for declaratory judgment in the District Court for the District of Columbia asserting non-infringement, patent invalidity, and patent unenforceability. During the course of this trial, a similar case captioned In re Bilski progressed through the Federal Circuit and the Supreme Court. Judge Collyer ultimately granted summary judgment for CLS, declaring the patents asserted by Alice to be directed to an unpatentable subject matter.  Alice appealed the ruling to the Court of Appeals for the Federal Circuit, where a three-judge panel of the Federal Circuit reversed the District Court’s opinion and held that Alice’s patents are patentable.  CLS petitioned for a rehearing en banc, which was granted.  The Federal Circuit issued a fractured opinion with no clear majority, but affirming the District Court’s decision. Alice petitioned for certiorari, which was granted. The Supreme Court heard oral arguments on March 31, 2014 and issued its opinion on June 19, 2014.

Timeline of Important Events:

  • May 24, 2007 – CLS files Complaint seeking declaratory judgment that it has not infringed upon Alice patents, that Alice patents are invalid, and that Alice patents are unenforceable (Filing #1). The Complaint alleges that Alice had sent CLS several communications indicating that Alice believes CLS infringes upon Alice patents with every settlement of foreign exchange transactions. CLS also alleged that Alice indicated it believed CLS’ infringement constituted willful infringement, and therefore was subject to treble damages.
  • August 16, 2007 – Alice files Answer to the CLS Complaint and Counterclaims (Filing #6). Alice’s Counterclaim alleges that CLS infringes upon three Alice patents.
  • May 19, 2008 – Alice files Memorandum on substance of patents and scope of discovery pursuant to the court’s order (Filing #27). Alice explains the process behind the patents they received, and how they believe CLS infringes upon their patents.
  • May 19, 2008 – CLS files Memorandum on substance of patents and scope of discovery pursuant to the court’s order (Filing #28).
  • March 6, 2009 – CLS files Motion for Summary Judgment (Filing #43 and 43(a)). CLS contends that summary judgment is appropriate because the claims in Alice’s patents are invalid because the inventions they purport to claim do not fall within the scope of patentable subject matter provided by 35 U.S.C. § 101.
  • April 3, 2009 – Alice files Motion for Partial Summary Judgment as to subject matter eligibility (Filing #53). Alice contends that CLS is incorrect in arguing that the subject matter of Alice’s patents are beyond the scope of 35 U.S.C. § 101 and, furthermore, seeks partial summary judgment that two patents are directed to patent-eligible subject matter.
  • June 12, 2009 – Court files and order demanding both parties to show cause why the court should proceed with the case and not stay the action pending the outcome of In re Bilski, 545 F.3d 943 (Fed. Cir. 2008) to which the Supreme Court granted certiorari on June 1, 2009 (Filing #71). The question of law in In re Bilski is very similar to that in the action between CLS and Alice, and Judge Collyer noted that both parties’ memoranda in support of summary judgment relied heavily on the Federal Circuit opinion in Bilski.
  • June 15, 2009 – CLS files its response to the court’s June 12 Order (Filing #72). CLS encourages the court to proceed with oral arguments pertaining to its non-infringement claims because those are unrelated to the question in Bilski. However CLS suggests that it would be appropriate to stay the claims of the case relating to invalidity and lack of patentability pending the outcome of Bilski.
  • June 15, 2009 – Alice files its response to the court’s June 12 Order (Filing #73). Alice encourages the court not to stay the case, arguing that Bilski only “processes” and not “machines,” which are of question in this action.
  • August 5, 2010 – Alice files Amended Answer and Counterclaim (Filing #90). Alice includes one additional patent in this counterclaim, patent 7,725,375.
  • August 19, 2010 – CLS files Reply to Alice’s Amended Answer (Filing #93).
  • August 27, 2010 – CLS files renewed Motion for Summary Judgment following the Supreme Court’s decision in Bilski v. Kappos, 130 S. Ct. 3218 (2010). CLS argues that the Supreme Court’s decision in Bilski preclude Alice from asserting its patents against CLS because mental processes and abstract ideas are not patentable. CLS also argues that Alice’s patent claims fail the machine or transformation test as adopted by the Supreme Court in Bilski.
  • September 23, 2010 – Alice files renewed cross-motion for partial summary judgment (Filing #96).
  • October 8, 2010 – CLS files Reply memorandum in support of its renewed motion for summary judgment (Filing #97).
  • March 9, 2011 – Opinion and Order (Filing #104). The court determines that the patents asserted by Alice are directed to unpatentable subject matter, and grants summary judgment in full for CLS.
  • March 18, 2011 – Alice files Notice of Appeal to the Court of Appeals for the Federal Circuit (Filing #108). Alice’s appeal is based on the argument that “unlike the claims at issue in Bilski, its method claims are (1) tied to a particular machine or apparatus—i.e., they are to be performed on a computer; and (2) not directed to an abstract idea, but rather are limited to a particular practical and technological implementation which requires a particular series of concrete steps performed by an intermediary.”
  • July 9, 2012 – In a two-to-one ruling, the Court of Appeals for the Federal Circuit reverses the District Court for the District of Columbia, holding that Alice’s patents in question were not abstract directed to unpatentable subject matter, but rather are directed to practical applications of invention falling within the categories of patent eligible subject matter defined by 35 U.S.C. § 101 (CAFC Filing). CAFC holds “when—after taking all of the claim recitations into consideration—it is not manifestly evident that a claim is directed to a patent ineligible abstract idea, that claim must not be deemed for that reason to be inadequate under § 101.” Judge Prost dissented from the majority opinion and issued a dissenting opinion. Judge Prost contends that the majority failed to follow the Supreme Court’s instructions in both its approach and holding. Judge Prost argues that both the method claims and the system claims in the Alice patents are abstract and invalid, though he acknowledges that the system claim is a “closer question” because the Supreme Court has not yet addressed this question.
  • August 22, 2012 – CLS files Petition for Rehearing En Banc (CAFC Filing).
  • September 5-10, 2012 – Many companies and organizations file amici curiae briefs in support of plaintiff/appellee/petitioners CLS including: Google Inc.; Hewlett-Packard Co.; Red Hat, Inc.; Twitter Inc.; LinkedIn Corp.; British Airways PLC; SAP America, Inc.; eHarmony, Inc.; LP; Red Hat Inc.; Intuit Inc.; Public Knowledge; and Electronic Frontier Foundation (CAFC Filings).
  • October 9, 2012 – The Court of Appeals for the Federal Circuit announces that it will rehear the case en banc (CAFC Filing). CAFC vacated the July 9, 2012 opinion, and requested the parties to submit new briefs addressing 1) the appropriate test for determining when a computer-implemented invention is an unpatentable abstract idea; and 2) whether an invention is claimed as a method, system, or storage medium matters when assessing patentability. The CAFC did not announce a new date for oral arguments en banc.
  • November 30, 2012 – Plaintiff-Appellee CLS files Principal Brief for en banc hearing.
  • December 14, 2012 – United States files brief as amicus curiae in support of neither party.
  • January 10, 2013 – Defendant-Appellant Alice Corp. files Response Brief for rehearing en banc.
  • January 25, 2013 – Plaintiff-Appellee CLS files Reply Brief.
  • February 8, 2013 – Rehearing en banc before the full panel of judges for the Federal Circuit.
  • May 8, 2013 – Federal Circuit issues en banc opinion affirming the District Court.
  • December 7, 2013 – Supreme Court grants Alice’s petition for certiorari.
  • March 31, 2014 – Supreme Court hears oral arguments.
  • June 19, 2014 – Supreme Court issues its opinion in favor of CLS Bank.

This video was inspired by John Oliver’s Real Animals, Fake Paws project. You can hear the full audio of the oral argument here.