Thursday, June 19, 2014

Patent - Computer Software Patents: Down But Not Out

     The U.S. Supreme Court just issued its decision in Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 572 U.S. __ (2014) (slip opinion, June 19, 2014).  This decision was eagerly anticipated as a referendum on the viability of computer software patents. The Supreme Court unanimously found that these particular patent claims, directed to a method, a system and media, were drawn to patent ineligible matter under 35 U.S.C. § 101 (courts interpret this Section to exclude laws of nature, natural phenomena, and abstract ideas).  The Supreme Court, however, did not categorically invalidate all computer software patents.

     The Supreme Court applied the two-step framework it set forth in Mayo Collaborative Services v. Prometheus Labs., Inc. 566 U.S. ___ (2012):  that to be patent eligible, a claim must include an inventive concept beyond an underlying fundamental principle such as a law of nature, natural phenomenon, or abstract idea.

     The Court first determined that the patent claims were directed to an abstract idea, the concept of an intermediated settlement.  The Court then examined whether the claim elements contained an "inventive concept" sufficient to transform the claim into a patent-eligible application.  In this case, the Court determined that the method claim elements did nothing more then instruct a user to implement the abstract idea on a computer. The Court also determined that the computer system claims were similarly flawed because none of the hardware limitations offered a meaningful limitation.  Thus, these patent claims were found to be patent ineligible.

     Given the Court's decision, I suspect that a small fraction of computer software patents will be found invalid under the Mayo framework because those patent claims use a computer to implement an abstract idea.  I believe that the majority of computer software patents will remain valid.

- HP

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