U.S. Supreme Courts Rules Against Software-Based Business Method Patent

On June 19, 2014 The United State Supreme Court handed down its ruling in the case of Alice Corporate Pty. LTD, v. CLS Bank International, a long anticipated case dealing with the viability of so-called “business process” or “business method” patents, even when that process is implemented with the assistance of a computer. In an opinion written by Justice Clarence Thomas, the Court, in a unanimous decision, ruled that where “[a] method claim does no more than simply instruct the practitioner to implement [an] abstract idea… on a generic computer… [it] is not ‘enough’ to transform the abstract idea into a patent-eligible invention.”

The Alice Corporation case centered around the patentability of a method for reducing risk that the parties to a financial transaction will not pay what they owe, making use of a computer based implementation of the methodology. Alice Corporation had argued in the case that, because the the process “required a substantial and meaningful role for the computer” that the process whet beyond being a mere abstract idea. Justice Thomas’ opinion, however, clearly declared that use of a computer added nothing to the abstract idea, and thus the process in question was non-patentable.

This Alice Corporation follows in the steps of the Supreme Court’s 2010 ruling Bilski v. Kappos, in which the Court that a method for hedging risk was “a fundamental economic practice long prevalent in out system of commerce” and that it was, in nature, an abstract idea and, thus, not subject to being patented.  In his opinion in Alice Corporation, Justice Thomas drew a parallel to the Bilski case, stating clearly that both kinds of processes are squarely within the realms of abstract ideas.

It is clear that this case, along with Bilski and the 2012 case of Mayo Collaborative Services v. Prometheus labs, will be thoroughly scoured by technology companies in an attempt to triangulate the point at which specific technology products implementing processes can become eligible for patent protection. While the precise line or demarcation for this is by no means clear yet, it is clear that the Supreme Court is setting and increasingly high bar, ostensibly in the hope of avoiding he creation of unreasonable bars to continued technological innovation.

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