On March 31, 2014, the United States Supreme Court will hear arguments for Alice Corporation Pty. Ltd. v. CLS Bank International, a case that may decide when software inventions are patent eligible subject matter. The case has broad implications for the United States economy. Software is a critical component of products that make up much of the economy, and is integral to everything from automobiles to dating. The Supreme Court’s decision could have profound implications for both established corporations and startups.
Many of the most basic software inventions that are used in today’s products and services are of very recent origin, so that fundamental software technologies are still covered by active patents. Just as in the early days of the automobile, radio, television, and other new industries, the rapid growth of the technology has resulted in a dramatic increase in patent litigation. This litigation has exacerbated long standing concerns about whether software inventions should be afforded patent protection.
Software Patentability Has Been In Dispute for Decades
Since the 1970s, the Supreme Court has tried to resolve when implementations of algorithms and abstract ideas could be protected with patents.In deciding Parker v. Flook (1978), the court concluded that phenomenon of nature and mathematical formula are patentable if there is some other inventive concept in their application. In Diamond v. Diehr (1981) the court held that applications of laws of nature and mathematical formula are patentable if transforming or reducing an article to a different state or thing. These rulings resolved into a practical rule that software inventions were patentable if the software was embodied in a machine like a computer.
The Supreme Court brought this bright line rule into question with its Bilski v. Kappos (2010) decision, which held that the machine test was only a guideline for determining whether a software invention was an unpatentable abstract idea or a patentable practical implementation. This quickly led to a split in the Federal Circuit, the appellate court for patents, which reached two very different decisions about when software was patentable. The Supreme Court attempted to give direction in Mayo v. Prometheus (2012), stating that “…a patent must do more than simple state the law of nature while adding the words ‘apply it.'” It didn’t help. A ten judge panel of the Federal Circuit quickly deadlocked again on CLS Bank, and software patentability.
The Supreme Court’s Decision Will Only Resolve the Problem if it Includes a Better Test. Many have argued that the very nature of the abstract versus practical criteria make an easily testable bright line rule for software patentability impossible. Although ideologically consistent, all past rulings lack clear guidance as to when an invention is an abstract idea and when it is a patentable practical implementation. Experienced patent judges can’t agree on when software is patentable under the abstract/practical test because it provides no rule as to when there is a protectable practical application of an abstract idea.CLS Bank gives the Supreme Court the opportunity to define a workable test.
The test that the Supreme Court establishes for software patentability will likely at least appear to be consistent with the court’s past rulings. And the test must be so clear that patent examiners and judges can consistently apply it.
A Possible Solution
There is a rule that is used by the European Patent Office that satisfies these criteria. It is likely that the CLS bank decision will employ a variant of this EPO rule to distinguish between an abstract idea and a practical implementation.
The European patent convention currently precludes the patenting of programs for computers, and presentations of information. However, the EPO regularly patents software inventions that include an inventive technical solution or technical contribution that is used to apply an abstract algorithm.
The technical solution is an inventive and non-obvious step that is employed by the software invention to solve a problem that must be overcome when implementing an algorithm. It is not enough to recite the computer performs the algorithm. The patent must claim a technical solution that enables the implementation of the algorithm.
The technical solution test is consistent with the spirit of the US Supreme Court’s earlier rulings requiring a practical implementation for software patentability. In addition, the test has a long precedential history and is well understood by patent practitioners prosecuting international patents. This technical solution test could provide immediate guidance for implementing the Supreme Court’s stated desire that more is required than merely executing an algorithm on a computer for a software invention to be patentable subject matter.
A form of the technical solution test is also used in another of the worlds’ largest patent offices, China’s State Intellectual Property Office. China requires that software inventions solve the technical problem to be patentable.
By adopting a variation of the technical solution test, the Supreme Court could resolve the confusion as to when software inventions are patentable. As a result, true software innovations could continue to be patented while abstract ideas are denied patent protection. Of course, no one knows how the Supreme Court will rule, but given the long precedential history and the limited number of options, an adoption of the technical solution test is a very likely outcome.
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