UK: Alice Corp - A wonderland Or Mad Hatter's Tea Party: Software Patents Revisited

It is not possible to obtain a patent in Europe for a program for a computer "to the extent that a patent or application for a patent relates to that thing as such". In the United States, however, that has not been the case and this has proven a fruitful source of dispute in the Courts. This may be about to change.

Software and business-method patents have had an interesting journey in the US Supreme Court over the past 55 years and during this time the level of technological innovation and the desire to protect the results of this innovation have grown exponentially.  On 19 June 2014 the US Supreme Court issued a decision in the case of Alice Corporation Pty Ltd v CLS Bank International et al which has caused some concern for the owners of such patents and perhaps hope for others.. 

Alice Corp had registered several patents regarding a scheme for mitigating settlement risk using a third-party intermediary.  CLS Bank originally raised an action against Alice Corp on the basis that Alice Corp's patent claims were invalid, unenforceable and not infringed.

The Supreme Court's decision was based on the exception of "laws of nature, natural phenomenon and abstract ideas" to the general patentability of new and useful subject matter under the US Patent Act. (Superficially similar to the UK position) Considering the power a patent holder can have in relation to matters covered by his patent it is easy to understand the importance of the reasoning behind this exception; to prevent monopolies over abstract ideas or natural occurrence.

Referring to a 2012 case involving Mayo Collaborative Services, the Supreme Court affirmed the need to assess whether the patent claims in question represent an abstract idea and, if so, whether the remainder of the claims include features which cause the claims to be patentable. It was decided by the Supreme Court that Alice Corp's method claims were focused on an abstract idea - intermediated settlement - and accomplished nothing further than instructing the application of the abstract idea using an "unspecified, generic computer".  Similarly, Alice Corp's system claims fell in the eyes of the Supreme Court on the basis that they were "purely functional and generic".

It was made clear by the Supreme Court that claims which instruct the implementation of the abstract idea on a generic computer or which limit the abstract idea to a "particular technological environment" do not provide the requisite features to move the concept from mere abstract idea to patentable matter.

The decision of the US Supreme Court suggests that new patent applications may require more detailed drafting including greater disclosure of technological features.  Perhaps most concerning to patent holders is the effect this decision could have on the current US software and business-methods patents held by companies throughout the world.  Many patents are held which could be assessed as simply applying a computer to an abstract idea.  Time will tell whether any, and how many, of these patents will die in the aftermath of the Supreme Court's decision. 

Companies and individual inventors alike place great reliance on patents to protect their interests in their property.  Concerns have been raised that if the protection which patents have been offering is threatened there will be a substantial decrease in innovation and disclosure as companies turn instead to secrecy to guard their interests in their property.

© MacRoberts 2014

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