Supreme Cout justices question some software patents

Some justices express skepticism about patents involving a trading platform tied to a computer

The U.S. Supreme Court could wipe out a whole swath of software and business-method patents if justices invalidate four electronic-trading patents, an attorney for patent-owner Alice said.

Reviewing an appeals court ruling invalidating electronic marketplace Alice's patents related to a computerized trading platform for currencies, the Supreme Court could, "in one fell swoop" invalidate hundreds of thousands of patents, Carter Phillips, representing Alice, told justices Monday.

Attorneys for CLS Bank, a company that sued Alice to challenge the patents back in 2007, and the U.S. Department of Justice disagreed with Phillips, saying this patent challenge relates specifically to an abstract idea running over a computer. The Supreme Court agreed to take the case after a split U.S. Court of Appeals for the Federal Circuit ruled in May 2013 that an abstract idea is not patentable simply because it is tied to a computer system

The Alice patents cover the simple idea of reconciling accounts at the end of a trading day, or operating a hedge fund, but other software patents bringing new functionality could still be patentable, said Mark Perry, representing CLS Bank.

Judges and patent examiners will have to use judgment to decide what software can be patented, despite the fractured the Federal Circuit wanting firm guidance, Perry said. "It isn't going to be a bright-line rule," he said. "This isn't the death of software patents."

A small percentage of software patents wind up in court, he added. This case, Perry said, is about a group of controversial patents that should have never been issued.

Phillips defended the Alice patents, saying they describe a complex set of instructions used to operate an international trading platform, including shadow accounts used to reconcile trades. The patents cover a "specific way of dealing with a problem," he said.

Justices seemed skeptical of the patents, with Justice Stephen Breyer comparing the Alice process to a money-counter using an abacus in ancient Egypt or his mother taking away his checkbook when he ran out of money.

"What we have different here is the computer stops [trading] rather than the abacus man stopping," Breyer said. "There is an abstract idea here. It's called solvency."

But Breyer also said he was struggling with how to rule because the court's decision could have broad implications on some types of patents or on innovation.

Justice Anthony Kennedy suggested that a small group of engineers in Silicon Valley could write software covering the Alice processes over a weekend. Phillips agreed that may be possible, but suggested that didn't diminish the uniqueness of the invention.

Chief Justice John Roberts countered that the Alice patents appear to describe a complex process, judging by a flow chart that accompanied the patent materials. "There are a lot of arrows ... in different directions," Roberts said.

Perry, echoing the Federal Circuit decision, suggested that if a person can complete a process with a pencil and paper, that process shouldn't be patentable just because it is tied to a computer. But Roberts questioned that argument, suggesting that software can often make a process much simpler.

"What if you can do it without a computer but it's going to take 20 people 100 years?" he said.

Some critics of software patents were encouraged by justices' questions. Based on the questions, it appears likely that the court will invalidate the Alice patents, said Julie Samuels, executive director of Engine Advocacy, a trade group for tech startups.

"I'd be really surprised at the end of the day if these patents are left standing," she said after the hearing.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is grant_gross@idg.com.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags governmentlegalsoftwareintellectual propertypatentU.S. Department of JusticeAnthony KennedyU.S. Supreme CourtU.S. Court of Appeals for the Federal CircuitStephen BreyerJohn RobertsJulie SamuelsAliceCLS BankEngine AdvocacyCarter PhillipsMark Perry

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Grant Gross

IDG News Service
Show Comments

Cool Tech

Breitling Superocean Heritage Chronographe 44

Learn more >

SanDisk MicroSDXC™ for Nintendo® Switch™

Learn more >

Toys for Boys

Family Friendly

Panasonic 4K UHD Blu-Ray Player and Full HD Recorder with Netflix - UBT1GL-K

Learn more >

Stocking Stuffer

Razer DeathAdder Expert Ergonomic Gaming Mouse

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?