Supreme Court agrees to tackle software patents again

The Supreme Court of the United States (SCOTUS) is taking on another patent case, Alice Corporation Pty. Ltd. v. CLS Bank International (PDF Link), which has the potential to rock our software patents. Whether SCOTUS will or not join the movement toward patent reform is another question entirely.

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

In the resulting patent battle, one side after the other has been on top. The U.S. Court of Appeals for the Federal Circuit (Fed. Cir.), which covers patent litigation, then took upon itself the Herculean task "of issuing clarifying standards on computer-implemented inventions — the task at which it ultimately failed because it could not assemble a majority for a single approach."

Now, SCOTUS is going to attempt to untangle the knot. Why this case matters to people outside the lawsuit, according to the Electronic Frontier Foundation (EFF), is that SCOTUS is being asked to decide "whether an abstract idea (such as using an escrow agent as part of a financial transaction) can be patented if, instead of claiming the idea itself, the applicant claims it's a computer system that implements the idea." The broader issues are whether software or business methods can be patented.

SCOTUS has made decisions on this before in recent years, notably in SCOTUS's 2010 Bilski decision, where the Court essentially punted on these vital issues. This lead to Software Freedom Law Center chairman Eben Moglen aptly observing at the time that the decision made, that it set patent reform back by a decade.

Of course, SCOTUS may not make a firm decision this time either. Certainly Fed. Ctr. didn't come to any broad conclusions. On one side, Judge Alan Lourie argued that "appending generic computer functionality" to an otherwise abstract concept was not enough to make it non-abstract, or somehow patentable.

On the other side, Judge Kimberly Moore, argued that "Let’s be clear: if all of these claims, including the system claims, are not patent-eligible, this case is the death of hundreds of thousands of patents, including all business method, financial system, and software patents as well as many computer implemented and telecommunications patents."

To Judge Moore that would be a bad thing. Opponents of software and business practice patents, and the patent trolls that go with them, would welcome such a good result.

We'll see in 2014 how SCOTUS will untie this knot, or whether the court will just issue a narrow, cutting decision to the Gordian knot of intellectual property patents. I'm hoping that SCOTUS will rid of software patents once and for all, but they've disappointed me before, and I fear they'll do so again. 

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