ALERT: Alice STays in Wonderland ... For Now

Tangible IP, LLC
Supreme Court Leaves Software Patents Mainly Untouched

Another week, another decision from the US Supreme Court weighing on patents. Only this time, the “Supremes” must have felt it was time for a well deserved summer recess and they decided not to rock the IP boat. On June 19, 2014 the Court released the decision in Alice Corp v. CLS Bank (573 U. S. ____ (2014)). Almost immediately, news outlets and social media exploded with excitement over possible implications of the decision for software patents. Are software patents now ineligible? Do countless patent owners lose all value in their software patents? After some different interpretations of the decision, the Supreme Court Blog appears to settle the debate by summarizing the decision as: In Alice Corp. v. CLS Bank, the Court limits software patents, but does not eliminate them.
The case concerned four patents held by Alice Corp. covering methods and computer systems for hedging against counter-party and settlement risks. The issue before the Court was whether claims in Alice’s patents are (in)eligible under Section 101 of the Patent Act as abstract ideas. The Court reiterated Mayo v Prometheus, decided in 2012, as the test for the inventive step that separates patent ineligible abstract ideas and patent eligible applications of concepts. Applying the Mayo test, the court found Alice’s patents invalid as abstract ideas, regardless of whether the claims tied the abstract ideas to a computer.
Further, rather than delve into extensive analysis of the Section 101 abstract ideas doctrine, the Court found that the patent claims were similar enough to claims in Bilski v. Kappos, a case it decided in 2010, to be construed as abstract ideas.
"… we need not labor to delimit the precise contours of the “abstract ideas” category in this case.  It is enough to recognize that there is no meaningful distinction between the concept of risk hedging in Bilski and the concept of intermediated settlement at issue here.  Both are squarely within the realm of “abstract ideas” as we have used that term."
Hence, the Court warned against over-expansive interpretation of the Section 101 abstract ideas doctrine by stating that doing so may “swallow all of patent law” since at some level “all inventions may rest on abstract ideas." Opponents of software patents could have had their big day if the court took the approach to expand Section 101; possibly to declare software abstract ideas per se, and then apply the part of the decision that would make it irrelevant whether the software was tied to a computer for patent eligibility purposes. That did not happen as the Court exercised some restrain.
Still, for opponents of software patents, the decision is a partial victory. It may be harder to get software patents. Some current software patents may become invalidated at the USPTO or not stand up in court when asserted.
On the other hand, the aspect of the decision overshadowing defeat for software opponents, and the victory for supporters, is that the Court assessed the abstract ideas doctrine in a way strongly suggesting it is not inclined to broaden the doctrine in future cases to render software as per se patent ineligible. In fact, the Court hinted at why it did not reach the issue of software patentability in general: "There is no dispute that ...many computer-implemented claims are formally addressed to patent-eligible subject matter." In this respect, Alice was a trend reversal from a set of cases in 2013-2014 where the Court weighed in against patent holders . Thus, the decision was a breathe of fresh air for those who still believe that patent protection is a cornerstone to support innovation.
Louis Carbonneau, Founder & CEO
Louis Carbonneau,
Founder & CEO

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