WHAT THE U.S. SUPREME RULING ON PATENT LAW MEANS FOR THE SOFTWARE TECH INDUSTRY
The Supreme Court largely chose to uphold the status quo in the world of software patents today with a unanimous ruling in the case of Alice Corp. v. CLS Bank.
The court upheld the most recent ruling on the case from the U.S Court of Appeals for the Federal Circuit, invalidating patents held by Alice relating to using a computer to manage an intermediated settlement.
“We hold that the claims at issue are drawn to the abstract idea of intermediated settlement, and that merely requiring generic computer implementation fails to transform that abstract idea into a patent-eligible invention,” Justice Clarence Thomas wrote.
The decision is based on precedent set in previous patent cases, including Bilski v. Kappos and Mayo v. Prometheus, which provide a framework for figuring out whether an idea is patentable. In each case, the court ruled that companies can’t patent abstract ideas, and it held to that conviction with this ruling.
“Stating an abstract idea while adding the words ‘apply it with a computer’ simply combines those two steps, with the same deficient result,” Thomas wrote.
That’s good news for a lot of tech companies, and bad news for patent trolls and other companies that are using similar patents to extract licensing fees from firms that create software applications touching on similarly abstract ideas.
Aside from that, today’s ruling hasn’t changed much for companies that hold software patents. The court didn’t choose to invalidate all software patents, and declined to put in place new procedural rules that would make it easier for companies to defend against patent infringement allegations, something that some tech companies advocated for in briefs submitted to the court.
If there’s one thing that’s clear from today’s ruling, the question of software patent legality won’t be resolved quickly or easily. Justice Sonia Sotomayor was joined by Stephen Breyer and Ruth Bader Ginsburg in a concurring opinion that agreed with much of Thomas’s argument, but argued that business method patents, including software patents, were invalid.
What’s more, the ruling leaves open the possibility for future litigation based on the Supreme Court’s wording. All software is based on taking an abstract idea and applying it with a computer. Microsoft won a judgment against Motorola Mobility last year based on a patent it holds for synchronizing a calendar.
It’s unclear yet if keeping a calendar synchronized in multiple places will fall under the Supreme Court’s definition of an abstract idea, but that certainly seems like a possibility.
Update: Microsoft welcomed the decision today, saying the following in a statement emailed to GeekWire.
“Microsoft is pleased that the Court has confirmed existing law that abstract ideas are not eligible for patent protection, and distinguished the Alice patent from software inventions. Software powers nearly every inventive device, service and product in our world today, and providing patent protection for software-enabled technologies is critical to incentivizing innovation in every industry and sector of the economy.”
David Kappos, the former U.S. Under Secretary of Commerce for Intellectual Property, similarly commended the court for the pat it took in its ruling today.
“Today’s decision affirms software’s critical role in modern innovation and the need for patent protection,” he said in a statement emailed to GeekWire. “Software innovations are powering the latest technologies in every industry, including IBM, Ford, GE, DuPont and others, creating American jobs and driving our economy. This decision helps maintain a positive climate for technology innovation in the United States.”
The full text of the opinion is embedded below.