Monday, 31 March 2014

Software Patents on Trial - will the USSC finally provide clarity? Part 1...

Today (31 March), the United States Supreme Court (USSC) is scheduled to hear oral arguments in Alice Corp v. CLS Bank. This case follows on the heals of Mayo v. Prometheus Laboratories from 2012 and Association for Molecular Genetics v. Myriad Genetics from 2013, and indicates a strong desire by the USSC of clarifying that tricky issue of patentable subject matter.

In Prometheus, the Court held that patent claims directed to a method of optimizing therapeutic efficacy of a drug comprising administering the drug to a patient and measuring a level of metabolite of the drug are invalid as not patentable subject matter. In Myriad, the Court held that patent claims directed to a method for screening patients based on the presence of mutated DNA, and patent claims directed to isolated genes, are invalid as not patentable subject matter.

Now, in CLS Bank, the Court is being asked to review a lower court’s holding that patent claims directed to computer implemented methods (often called “software patents”) are not patent-eligible. Remarkably, this is the first USSC case on the viability of software patents in over 40 years. In that time, not many would disagree that the lower US courts have made a fine mess of the issue. The Federal Circuit decision that led to the USSC granting certiorari in CLS Bank involved a panel of 10 judges and resulted in seven different opinions. It is safe to say that the Federal Circuit cannot agree a single standard for analyzing patent-eligibility with respect to software-based inventions.
Some people already know
what to do with Software Patents
This uncertainty is a serious problem due to the importance of software patents. More than 40,000 software patents are now issued in the US every year. The vast majority of cases brought by “patent assertion entities” (i.e., “trolls” or “non-practicing entities”) involve software patents. Most countries around the world allow software patents in one form or another (even despite attempts to eliminate them – see here on the debate generated by New Zealand).

The statistics about the CLS Bank case specifically are also astounding. Alice Corp. holds the patent at issue, and CLS Bank (allegedly) uses the patented methods to make settlements of over $1 trillion every day! Perhaps more importantly, though, the patent at issue has claims that are not remarkable. If they are held to be ineligible for patent protection, the validity of thousands of issued patents will become quite uncertain.

Clearly, then, the stakes couldn’t be higher. Roughly 40 amicus briefs were filed, from parties in favor of maintaining software patents (e.g., IBM, which not-so-coincidentally also happens to be the company perennially obtaining the most US patents) to parties opposed to software patents (e.g., Google as well as the US Government).
Hallowed halls -
but can they save us from uncertainty?

The USSC decision is due to be released in June/July. Much has been said on this case (see, e.g., Patently-O here) and much speculation will follow the oral arguments. This blogger merely hopes that, whatever the decision, the holding is clear and definitive.

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