National Australia Bank may finally earn a return on a speculative, 17-year old investment in a technology company, if a decision by the US Court of Appeals stands.CLS Bank, which clears many foreign exchange transactions, will have to negotiate a royalty with NAB-controlled Alice Corporation Pty Ltd over a patent held by the latter that, in practice, describes the operating model of the specialist foreign exchange bank.The court released its ruling last Monday in Washington. At issue is a patent claimed over a method devised by Melbourne inventor Ian Shepherd that assists banks in eliminating the risks of a failure to settlement on foreign exchange contracts.Shepherd, through his company Alice Corporation Pty Ltd, filed a series of patents in the early 1990s in the US and elsewhere.NAB acquired a stake in Shepherd's business in 1995. The bank has invested A$25 million in Alice Corporation since that time. It holds 50 per cent of the ordinary shares and all of the preference shares in the company.Alice Corporation's patents describe a method by which banks exchange obligations through the use of shadow credit and debit records held by a supervisory institution. The patents describe the priority order and limitations that apply in processing the obligations, and the need for each bank that uses the supervisory institution to maintain a credit balance in the shadow records.The significance to CLS Bank of these patents, assuming they are valid, is that the approach closely parallels the business methods adopted by the bank.Established in 1997 by several of the world's major banks, CLS Bank is a collaborative enterprise that aims to curtail (and almost eliminate) settlement risk.  It arose from the then usual practice of delayed settlement on foreign exchange transactions. Scores of banks and other financial institutions now own CLS including NAB and Australia's other major banks. CLS began to settle foreign exchange transactions in 2002. The bank now claims to settle more than two-thirds of foreign exchange transactions measured by value.Alice Corporation, according to court documents, "engaged in prolonged, and ultimately fruitless, negotiations with CLS to license its invention."In 2007, CLS began legal proceedings to have the Alice Corporation patents ruled as void on three grounds. One was that the US-headquartered bank, in fact, conducted its operations through a UK-based subsidiary (which meant US patent law did not apply).A second was that there were no grounds to issue a patent in the first place, including on the basis that the invention was obvious.A third was that Alice Corporation deceived the US Patent and Trademark Office and failed to disclose prior art such as the Swiss Interbank Clearing system.In 2011, a single judge of the United States District Court ruled in favour of CLS Bank. Alice Corporation, with NAB's backing, appealed.The appeals court centred its analysis on the second ground advanced by CLS, whether or not Ian Shepherd's invention was patentable. This included an analysis of whether or not the ideas behind the patent were "abstract" - a hot topic in US intellectual property law.By