On December 6, the Supreme Court heard the case of Alice Corporation Pty. Ltd. v. CLS Bank International. The issue in the case, according to SCOTUSblog, is “whether claims to computer-implemented inventions – including claims to systems and machines, processes, and items of manufacture – are directed to patent-eligible subject matter within the meaning of 35 U.S.C. § 101 as interpreted by this Court.”
Petitioner owns the patent on a computer system that “facilitates financial computer transactions.” Respondent argues that patent is too abstract and thus not valid, characterizing what is claimed as “fundamental and ancient.” At the Federal Circuit, the case caused a massive divide of the bench, with ten judges issuing a total of seven different opinions. Among them, seven concluded that the petitioner’s patent was too abstract and lacked subject matter eligibility.
A general principle of patent law is that one cannot patent an “abstract idea,” and commentators believe that this case will help clarify just what is an abstract idea in the software context. Many are also hopeful that such clarity will help quell abuses in the patent industry, particularly those of trolls.
Tech companies like Google and Facebook have taken the side of the respondent, and believe that making software patent eligibility too inclusive will encourage infringement cases, thus creating greater market uncertainty and the need to divert company resources to legal action. On the other end of the spectrum are Microsoft and IBM, which as owners of multiple software patents stand to lose a lot if software eligibility is narrowed. and are concerned that such a ruling could have unforeseen and pernicious effects on other technology-related patents.
Software patents are big business, and no doubt there will be passionate rhetoric from both sides of the debate. There are some who portend that the Supreme Court may take this opportunity to kill software patents entirely, which would retroactively invalidate many previously acceptable patents. While we can only speculate on how the Supreme Court will handle this issue, we can at least look how the lower courts reacted. As mentioned above, seven of the ten judges at the Federal Circuit found petitioner’s patent too abstract. Dissenting Judge Pauline Newman stated, “There has never been a case which could do more damage to the patent system than this one.” The Court will hear arguments next year, and projects to have a ruling issued sometime in the summer.