Limits of software patenting to be decided by US Supreme Court

The US Supreme Court is to rule on the divisive issue of what kinds of software are eligible for patent protection, in a case being closely watched by the technology industry.
The court's review - which doesn't yet have a clear timetable - may prove key to deciding under what circumstances companies can be sued for using certain software in their products. It could also have far-reaching impacts on how some technology companies value their intellectual property, which often includes software-based patents.
The court said in a one-line order that it would hear a case brought by Alice Corporation Pty, an Australian company which holds a patent for a computer system that facilitates financial transactions. The patent is challenged by CLS Bank International as part of a six-year legal fight. An appeal court hearing recently found that the method wasn't valid for patenting - but couldn't agree on why.
The Supreme Court took no action on another case raising the same issue involving a patent dispute between WildTangent Inc and Ultramercial Inc.
The deep interest that the software industry and patent experts have in what is a threshold issue in patent litigation was underscored by the number of companies and industry groups that asked the court to decide the issue.

Interested parties

Companies including Google, Hewlett-Packard, Facebook and Netflix had already signalled their interest in the issue by asking the court to hear the WildTangent case. Many also filed briefs in lower courts.
The first US software patent was awarded in April 1968, for a method of sorting data: its applicant, Martin Goetz, reasoned that the sorting method's "inventive step" - its special method of achieving its end - could be protected under patent law, but not by copyright law which would only protect the specific code he had written, but not the sorting method the code employed.
Patents are only awarded if they include an "inventive step" and are non-obvious. In a brief analysis of the issue being considered by the US Supreme Court, the US patent specialist lawyers Kelley Drye & Warren say that:

The issue with computer-implemented inventions typically is whether the patent is simply claiming some broad mathematical concept, thought process or other basic tool of innovation. The concern is that giving someone exclusive rights to basic tools of innovation (mathematical equations) would keep others from using those tools, thus stifling innovation: how much progress would be made if only one person was allowed to use addition, subtraction or multiplication.

They add:

For example, a concern often is whether someone has simply claimed “do a mathematical computation that people have done before by hand or in their mind, but use a computer to do it instead.” The mathematical computation aspect concerns patentable subject matter issues, but the more visceral reaction often is that’s not an innovation given how obvious it would have been to use a computer to do the computation once computers were available

The decision could have enormous impacts if the US Supreme Court decides that some software cannot be patented, especially that which applies to carrying out mathematical calculations. A number of "standards-essential patents" used by smartphones for connecting to wireless and mobile networks in effect embody the implementation of a mathematical formula.
If the court decides that those can't be patented, it would at a stroke wipe out substantial amounts from the intellectual property of a number of companies.

Struggling to apply

With the rise of computer-based products in recent years, courts have struggled to apply patent law. Some legal experts, including the Electronic Frontier Foundation, a digital civil liberties group, say that courts are too keen to uphold patents on ideas that are too vague to deserve protection.
Such vague patents can be used against big tech companies, which say they are forced to spend money defending lawsuits instead of investing in research and development. Technology companies are particularly concerned about litigation brought by so-called "patent trolls," defined as companies that hold patents only for the purpose of suing other companies seeking to develop new products.
Companies differ over what type of patent protections software products should receive. While some, like Google, favour looser protections, others, like IBM, would prefer that most software be eligible for patenting.
The US Court of Appeals for the Federal Circuit, which has primary responsibility for interpreting patent law, has struggled to adopt a test that judges can use to review software patent claims, with various judges reaching different conclusions.
"Hopefully, the case will accomplish at the Supreme Court what it could not at the Federal Circuit: greater clarity in the law," said Alice's attorney, Carter Phillips. CLS's attorney, Mark Perry, declined to comment.
The legal question boils down to how innovative an invention should have to be to receive legal protection.

Questions over the law

The law in question is the US Patent Act, which states that anyone who "invents or discovers a new and useful process, machine, manufacture, or composition of matter," or an improvement of an existing one, can get a patent.
An invention related to an abstract idea can be patented, but it must include a way of applying the idea.
Mark Lemley, a patent law expert at Stanford Law School, wrote in a brief filed on behalf of Facebook and others that the appeals court had left the law "hopelessly confused."
Lemley wrote in an email on Friday that he expects the high court to agree with the appeals court that the patents in question were not patent eligible.
"But the devil will be in the detail of the court's opinion," he added.
Dennis Crouch, a professor at the University of Missouri School of Law who blogs about patent law, said he is amazed that courts have yet to determine once and for all that software can be patented.
The confusion has led patent lawyers to play down the software elements of inventions when applying for patents at the US Patent and Trademark Office, he added.
"My hope is that this case will be a vehicle for the Supreme Court to clarify the law so that we can get back to business rather than playing language games at the patent office," Crouch said.

Source: theguardian