Article by Yesha Yadav cited in unanimous SCOTUS opinion in Alice Corp. v. CLS Bank International

Professor Yesha Yadav

An article by Associate Professor Yesha Yadav, “The Problematic Case of Clearinghouses in Complex Markets,” was cited in Justice Clarence Thomas’ majority opinion in the Supreme Court’s decision in Alice Corporation v. CLS Bank International, handed down June 19, 2014.

The case examined the patentability of claims relating to the clearing and settlement of securities by market intermediaries like clearinghouses. The question before the Court was whether these claims related to a subject matter that was “patent eligible” under 35 U.S.C. § 101 (“Section 101”). The law prohibits abstract ideas, natural phenomena and laws of nature from being patented. In Alice Corp., the Court sought to determine whether Alice’s claims were patent eligible under Section 101 or patent ineligible on account of being directed towards the general abstract concept of clearing and settlement.

Justice Thomas cited Yadav’s article, published in the Georgetown Law Journal in 2013, to support the Court’s ruling that Alice’s claims were invalid on the grounds of being directed towards an abstract idea. The Court observed the significance of clearinghouses to securities markets throughout history and determined that this centrality established clearing and settlement as an abstract idea that could not be patented.

Justice Thomas delivered the opinion of a unanimous court, with Justice Sotomayor filing a concurring opinion in which she was joined by Justices Ruth Bader Ginsburg and Stephen Breyer.