SAN FRANCISCO — The Supreme Court will hear a case next year that raises issues on what can and cannot be patented. The case of Alice Corporation Pty. Ltd. v. CLS Bank International raises questions about whether computer software can be patented.
The case split the US Court of Appeals for the Federal Circuit, which filed seven different opinions. In the case, Australian company Alice International obtained patent protection for software that creates a settlement between two parties exchanging goods or currency, and generates instructions to the institutions involved to carry out their agreement, the Scotusblog reported.
The case rests on Section 101 of the Patent Act, which outlines what kinds of inventions are patentable. The law states that an abstract idea cannot be patented. It tackles the patentability of software and whether "claims to computer-implemented inventions -- including claims to systems and machines, processes, and items of manufacture -- are directed to patent-eligible subject matter."
"The struggle with software patents is actually trying to come up with a reasonable line between what is an abstract idea and what isn't," said Corynne McSherry, intellectual property director for the Electronic Frontier Foundation (EFF). "That's really what's at issue -- did this patent fall on the right side of that line?"
Many intelligent and impassioned people have debated the issue of what is proper subject matter for a patent, said Jeffery Frazier, a patent attorney with a private practice in Silicon Valley.
"That's been something that's been knocked around by the courts for quite a while and it's really amazing that they haven't come up with an answer yet to software inventions," Frazier said. "It's fortunate that the Supreme Court is taking this up and I hope that they're going to provide some clarity here, and perhaps a test that practitioners can follow."
In May 2007, Alice was sued by CLS Bank International and an affiliated firm under the claim that the patent was invalid and unenforceable. Alice countersued and a Federal District judge nullified the patent, finding that none of its claims satisfied the Patent Act criteria.
Although the Federal Circuit found the method at issue in Alice vs. CLS Bank ineligible for a patent, a majority could not agree on a standard for making such decisions. Judge Kimberley Moore wrote that the case "is the death of hundreds of thousands of patents, including... many computer implemented and telecommunications patents," while judges Richard Linn and Kathleen O'Malley believe "the system claims in this case are patent eligible and are not swallowed up by the exception from patent eligibility for claims that do no more than recite abstract ideas."
"Innovation is desirable and... most people agree that profit motives of some sort are a way to maximize innovation. Where risk comes in is how to go about getting the profit motive," Frazier said.