High court skeptical of software patents

The Supreme Court on Monday seemed willing to strike down contested software patents in a case that could set intellectual property precedent for years to come.

Justices on the high court expressed reluctance to issue a sweeping ruling on the legality of software patents, as arguments focused on standard software will need to meet to be granted a patent right.

“I would be really shocked if at the end of the day these patents are left standing,” said Julie Samuels, the executive director of Engine Advocacy, a coalition of tech startups including Yelp and the car service Lyft. “It seems to me the Supreme Court is going to invalidate the patent at issue, but the question really is how far are they going to go and what sort of rule they are going to set up when they do that.”

The case before the court involves Alice Corp., which owns patents on methods used for some financial schemes, and CLS Bank, a London-based company it accused of infringing on its patents. Alice’s patent covers a way to make sure that both parties are able to hand over the money they owe in a transaction.

The justices were skeptical that the patent amounted to a new invention, and compared the system to an Egyptian man with an abacus keeping track of his gold versus an old lady accounting with a checkbook. 

“So what we have different here is the computer stops rather than the abacus man stopping or my mother stopping or the guy that the grain elevator has that says ‘Stop,’ ” said Justice Stephen Breyer. “In other words, if you say, ‘Computer stop,’ you have an invention ... but if you say, ‘Mother stop,’ you don't?”

“That's just an idea,” added Justice Anthony Kennedy: “ 'Hey, let's use a computer.' ”

The Obama administration took the bank’s side, arguing in a friend-of-the-court brief that the law should allow patents “on technological innovations that improve computers’ ability to function as such,” but not that merely use a computer “for its standard functions.”

Critics have complained about an increase of patent lawsuits, stemming largely from patent “trolls” that own broad and vague software licenses and file lawsuits to extract settlements. 

Despite their attitudes toward Alice Corp.s patents, justices seemed wary of a broad ruling that would strike down the legitimacy of all software patents, an option that could jeopardize thousands of rights held by titans like Microsoft and IBM. Instead, they seemed more willing to lay out guides for future judges to consider when reviewing software patent cases.

“Basically, everything has software these days. So it would have a large impact if the court were to say that software or other computer-implemented inventions was not patentable subject matter,” said Marcus Thymian, managing partner of the Chicago-based intellectual property law firm McDonnell Boehnen Hulbert & Berghoff.

The court has previously ruled that abstract ideas cannot be patented because they are akin to a mathematical formula. But does computer software, which is essentially merely lines of code, count as an abstract idea?

The problem is that the concept of an abstract idea is, itself, abstract. 

“It's difficult to explain what an abstract idea is,” said Thymian, who worried about the perils of an overly broad ruling. Instead, he said, the court should focus on making sure other patent requirements are held fast.

“If the court makes that a low hurdle and allows the rest of the patent laws to ensure that quality patents are being issued, then we won’t have this difficulty.”

A decision in the case is expected by the summer.