Alice Corporation owned patents relating to a computer-implemented financial settlement system, essentially a method for reducing counterparty risk through an electronic intermediary. CLS Bank challenged patentability.

The Supreme Court introduced a two-step test: first, determine whether the claim is directed to an abstract idea, such as a mathematical concept, a business method or a law of nature. If it is, one must then identify an additional 'inventive concept', something more than merely applying the abstract idea on a computer.

Applying an abstract idea on a generic computer is not enough for patentability. The invention must make a genuine technical contribution.

The ruling sent shockwaves through the tech and fintech industries, invalidating thousands of patents. For European companies, EU rules expressly exclude computer programs as such from patentability, while still allowing patents for computer-implemented inventions that produce a further technical effect.