Software patents take a hit, but they're far from dead

Software patents take a hit, but they're far from dead

Summary: In the Alice v. CLS decision the Supreme Court dented software patents, but they are far, far from dead.


The good news is that the Supreme Court of the United States (SCOTUS) has ruled against Alice in the  Alice v CLS business process/software patent case  (PDF Link). This is a step forward in ridding American patents of poor software, business process, and genetic patents. The bad news is that most experts think that this decision is far from striking a serious blow against such patents.


In the case, Alice International, an Australian company, had a patent, Systems and computer program products for exchanging an obligation, Patent No. 7,725,375. This patent describes a method for two parties to safely exchange currency or other financial instruments. Alice was also awarded similar patents. In May 2007, Alice was sued by CLS Bank International. CLS claimed that the patents were invalid and unenforceable. CLS also argued that Alice's patents only codified ancient business practices on a computer, thus there was no patentable invention here.

When push came to shove, SCOTUS' justices unanimously agreed with CLS. It was CLS's last argument that carried the most weight. In the decision, the Court ruled that since Alice's patent "do not, for example, purport to improve the functioning of the computer itself or effect an improvement in any other technology or technical field. An instruction to apply the abstract idea of intermediated settlement using some unspecified, generic computer is not 'enough' to transform the abstract idea into a patent-eligible invention."

In short, as the SCOTUS Blog put it, "So the Supreme Court leaves room for software patents, just not those that take an abstract idea and provide for a computer to implement it." That's not exactly a ringing endorsement against software, business process or genetic patents as a class. As the SCOTUS blog stated, "The Court limits software patents, but does not eliminate them."

Still, it is a small step forward from the 2010 business process Bilski patent decision. In Bilski v. Kappos, while the business patent owner Bilski lost his patent, SCOTUS didn't rule against software and business method patents. In Alice v CLS, SCOTUS has added that simply taking an old abstract idea and placing it on a computer doesn't make it patentable.

As Adam Mossoff, a law professor and expert in patent law at George Mason University School of Law, said, "The Court is continuing the practice it began with its 2010 decision in Bilski v. Kappos in which it strikes down patents on the grounds that they allegedly cover unpatentable subject matter like an abstract idea or law of nature. But the Supreme Court provides little to no legal guidance to the lower courts as to how to apply this decision in the future such that inventors and commercial firms working in the innovation industries can know with certainty if their discoveries or inventions are patentable or not."

Still, Mossoff continued, "The one ray of hope [for companies seeking software patents] in this decision is that, similar to its affirmation of the patentability of business methods in Bilski, the Court in Alice Corp. expressly holds that 'many computer-implemented claims are formally addressed to patent-eligible subject matter.' Thus, innovative software inventions in the high-tech industry are now definitively deemed patentable, contrary to the claims of many patent skeptics today."

Andrew Updegrove, a founding partner of Gesmer Updegrove, a top intellectual property and technology law firm, however, sees little to praise in this decision.

Updegrove said, "The primary significance of the decision may not be that it creates any new law, but that it so emphatically (i.e., by a unanimous decision) reinforces the old law that it established in Bilski v. Kappos. If that proves to be the only significance, however, one might wonder why the court took the case on at all, given the flood of cases seeking a hearing by the high court and the limited number of slots available."

"One possibility," Updergrove speculated, "might be that the court wanted to send a message to the PTO (Patent and Trademark Office) to quit issuing weak patents, and to reinforce its agreement with the administration, and many in the industry, that bad patents are hurting the economy and innovation."

Daniel Ravicher, the Public Patent Foundation's executive director, sees a little more hope for those who oppose software patents. "As expected, the Supreme Court continues to correct the old guard of the Federal Circuit's overly pro-patent perspective. Bilski, Mayo, Myriad and now Alice should end forever the nonsense that … that the Federal Circuit misinterpreted to support the patenting of business methods, software, and human genes."

But, Ravicher concluded, that this decision won't stop companies from trying to patent everything and anything. "Smart patentees will still try to get broad claims along with narrower (safer) ones as backup. Since the patent office allows you to get as many claims as you're willing to pay for, you don't have to chose between the two."

So it is that patent trolls will keep on suing, bad patents will still be granted, and the patent wars will continue.

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Topics: Enterprise Software, Legal, Patents

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  • But it may be easier to challenge them

    I'm guessing that the most trivial patents are in trouble. "Does not purport to improve the functioning of the computer" would seem to cover a lot. Likewise with computerization of abstract ideas and ancient business practices.

    I'm guessing that a lot of patent portfolios just lost a significant part of their value and the dream of software cartel based on the cross-licensing of patents just moved somewhat further from realization.
    John L. Ries
    • Things are looking ugly for patent trolls

      The court was unanimous and Justice Thomas (possibly the most conservative member of the court) wrote the opinion.
      John L. Ries
      • Thomas wrote an opinion?

        That's miracle enough in itself.
        • He does seem to write his share

          But he almost never says anything in oral arguments, which is the probable reason for the perception.

          From what I've seen of US Supreme Court opinions, the writing load is spread fairly evenly, Thomas may indeed be on the low side (but I haven't counted), but everybody writes a significant number of opinions (both majority and dissenting) during the course of a term.
          John L. Ries
        • But on the whole...

          ...I think I would have preferred Scalia in full sarcasm mode on this one. The appelant seems to have deserved it.
          John L. Ries
  • But it may be easier to challenge them

    I'm guessing that the most trivial patents are in trouble. "Does not purport to improve the functioning of the computer" would seem to cover a lot. Likewise with computerization of abstract ideas and ancient business practices.

    I'm guessing that a lot of patent portfolios just lost a significant part of their value and the dream of software cartel based on the cross-licensing of patents just moved somewhat further from realization.
    John L. Ries
    • "Does not purport to improve the functioning of the computer"

      No software can "improve the functioning of the computer".

      It works as designed (including bugs). Microcode can sort of improve the functioning - but only by changing what was implemented and didn't meet the original specifications.

      Improvements/optimizations of software doesn't change the computer - it changes the software ON the computer.

      Hopefully, this will start killing software patents.
      • I hope that too

        I'm not sure Justice Thomas entirely understood the implications of what he wrote or that his colleagues understood the implications of what they signed off on (but perhaps they did), but it could be argued on the basis of this opinion that all or nearly all software patents are illegal. I think at the very least, any patents on statistical modeling procedures are now toast (abstract concepts); and ones on cryptographic ones might well be. It would be ironic if all of the MS 300+ claims fell except for the ones on file systems, but that is a real possibility.

        While I hope that all software and business method patents go away, the precedent is old enough that the Supremes are unlikely to undo it entirely, but we just might get them clipped back enough that it will difficult to infringe on any by accident, which would be a happy outcome. I'm guessing that if any survive, they'll be the ones most intimately connected with hardware (like file systems, for example; or robots); which would be in line with the original precedent.
        John L. Ries
        • I know of no filesystem implemented in hardware...

          Other than "just an array of blocks"... but even that is implemented by the formatter microcontroller.
          • True

            We'll see what happens, but I think this decision will, in time, invalidate all or nearly all of the nuisance patent claims that have plagued the software industry for the last decade. The patents on things that are obviously math are, I think, dead. The patents on things that are less obviously math like recording formats and the like (even though they're math too), unfortunately, may survive.

            So I'm more optimistic than SJVN, but apparently less optimistic than you.

            That said, I don't see how business method patents (which are even more a nuisance than software patents are) can survive.
            John L. Ries
  • Why the Supreme Court may have taken this case

    The Federal Circuit's decision was affirmed unanimously, but I think it highly likely that by taking this case, the Supreme Court has put the Federal Circuit on notice that it is going to insist on having the last word on patent law. I know the Justices keep up on the news, so they are no doubt well aware of the many nuisance patent suits that have been litigated (or not) over the past several years. So I think the message of this case and Bilski is that the Justices think patents are too easily granted and intend to raise the standards (and interestingly enough, the Federal Circuit appears to have come around to this as well, which is helpful). How far they will go is hard to say (they probably don't know themselves yet) but the cutback will be significant, even if it doesn't go far enough (which is a real possibility as well).

    In any case, I think it highly likely that the age of easy patents is mercifully coming to an end.
    John L. Ries
    • Does this backdate?

      I mean there are loads of patents out there now that are basically "do what we've always done, only do it on a computer" type patents.

      Does this mean any case using patents that are obviously of this type can be thrown out of court before they even get to trial?

      If so there is going to be some serious pruning of patent portfolio's in future I'd imagine.
  • Excellent Supreme Court Decision

    The Supreme Court Alice decision is an excellent and well thought out decision. It is very consistent with the Court’s previous decisions relative to computer-implemented inventions.

    They wrote that abstract ideas are not patentable, but inventions that incorporate a computer (and software) can be patentable if it meets all the requirements of the US Patent Office i.e., not obvious, a proper disclosure, etc.

    Said another way…when you apply for a patent for a true invention the fact that you describe the implementation (the Specification/ the Disclosure in the patent application) using a computer and software (in part, or in its entirety) is no reason to disqualify that invention from receiving a US patent.

    The decision is good for the Software Industry as well as all industries where there is innovation and the need to protect intellectual property.

    For more insight on the Supreme Court decision see my three articles (in Jan., March, May 2014) on this subject in the web site.

    Why the Supreme Court in the Bank v. Alice Case Should Not Answer the Question on Computer-Implemented Invention.

    Misnomers, Myths, Misunderstandings and Misconceptions about Software Patents.

    Why E-mail & Word Processing Were Not Computer-Implemented Inventions: A Response to Alice v CLS Bank Oral Arguments.

    Marty Goetz
    • We'll see

      It seems to me that most software patents are for implementations of abstract concepts; or for what amount to mathematical formulae (the current opinion specifically disallows both). And I can't think of any for "inventions" that "improve the functioning of the computer".

      I think software patents will probably survive (unfortunately), but the scope will be far narrower than it has been and I think there is a good chance that the "algorithm combined with a general purpose computer" legal fiction will finally be put to sleep.
      John L. Ries
  • Finally someone gets it right!

    It's good that the Supremes ruled in that direction.
  • I wonder whatever happened ...

    to the poetry professor who managed to get a patent on (not an exact quote, but the gist of it)? Reportedly the big tech companies of the 1970s who were just coming out with color CRT displays paid him off with "nuisance money" rather than spend anything on fighting the patent in court.

    Did he just go away with the payoffs? Did the patent ever get revoked, or just expire? Did anyone sue to get the payoffs back? The only evidence needed to kill his "patent" was probably already in the courtroom: the BIBLE, of which many editions placed the words of Jesus in red. If that's not "prior use" (going back centuries), I don't know what is!

    Hopefully the court has just invalidated trivial patents such as this one for good. Now if the Congress would get rid of the PERPETUALLY renewable corporate owned copyrights on literary works and characters, we could free some authors to compose their original thoughts about favorite characters (and make some kids in day care happy with wall decorations without paying through the nose). Copyrights should only go to NATURAL persons, the heirs of the author, and expire after the traditional 70 years, unless a corporate entity is continuously and actively using the copyrighted material as a trademark.

    We would never have had "West Side Story" if the Royal Shakespeare Company had been able to retain the copyright on "Romeo and Juliet" for 4 centuries (or for that matter, "The Lion King" if someone still owned "Hamlet").
    • Tradition is actually 14 years

      Which I think is quite long enough to determine whether the work is going to be worth anything after that period. It can be renewed (for a substantial fee) for 7 year terms thereafter (initial registration fee could be something like $50; high enough to prevent the copyrighting of trivia, but low enough that just about anyone could afford it on works actually intended for publication). I figure there's no reason why the cost of copyright registration and enforcement should be born by the taxpayers if the renewal fees are set to what they're actually worth (and yes, some of that money could go to the FBI to investigate criminal copyright infringement).
      John L. Ries
  • Retribution Against Patent Trolls / Attorneys

    Well.. what needs to happen now is retribution. I believe any patent suits using overbroad method patents that clearly could have been invalidated, yet used to extort, should in fact be investigated by the FTC under Anti-Trust and Anti-Competitive laws. Furthermore, I believe treble damages should be awarded to patent troll defendants for any legal fees and lost revenue due to the trolling. Something needs to be done to take it back. If you've been sued with a Patent lawsuit and found it anti-competitive in nature, you should contact the FTC immediately. Get the ball rolling.

    Also, the patent attorneys that brought forth the patent troll litigation should indeed be required x amount of community hours put forth towards invalidating these bogus patents.

    Next, let's take a look at unfavorable settlements forced upon by patent lawsuits. I've seen ones that completely muzzle the defendant, pushes them into non-compete which forces them out of their trade, and the final insult to revoking all of your rights is usually a "No-Challenge" clause in the agreements, stating that the defendant (including all parties known or unknown related or working for) cannot challenge the patent asserted in the USPTO. By the way, the Second Circuit Court upholds that No-Challenge Clauses are unenforceable and void. I believe a swath of these settlement agreements were signed "UNDER DURESS" and have enough proof any attorney can have them void.

    Finally, I hope this prompts Congress to say "WTF?" and step in and finally get some of the other topics on patent reform enacted into law.
    • There is a little something in the US Constitution

      You might have read it. It prohibits Congress from enacting bills of attainder or ex post facto laws (you can look up either term in Wikipedia, if you're unfamiliar with them).

      Suffice it to say that if any of these folks are to be prosecuted or sued, it will have to be for acts that were illegal at the time they were committed.
      John L. Ries
      • Forgot to mention...

        ...states are also barred from enacting such laws (in terms that even constitutional fundamentalists would be bound to accept).
        John L. Ries