THE LEDE: Companies and groups on all sides of the patent reform debate are claiming victory after a Thursday decision from the Supreme Court struck down certain software patents.
The court ruled unanimously that patents in the case Alice Corp. v. CLS Bank — which added a software component to a common financial transaction — were invalid because they merely applied a computer to an abstract idea. Abstract ideas are not patentable, and adding a computer doesn’t change that, the court ruled.
The ruling comes after the Senate shelved its efforts to rein in “patent trolls,” the companies that profit by suing and threatening to sue using broad and vague patents. Those who pushed for broad patent reform say the ruling justifies their cause.
Jon Potter — president of the Application Developers Alliance, which includes Google, Yahoo and thousands of app developers — said the case highlights the problematic patents being issued by the U.S. Patent and Trademark Office (PTO). “The question for Congress and for app developers is how many of these mistakes has the PTO made? And how will Congress help patent troll victims that are abused by hundreds of trolls wielding thousands of patents that never should have been issued?” he said in a statement, calling on Congress to pass patent reform that allows defendants to challenge broad patents.
The Main Street Patent Coalition, which includes a number of retail groups, agreed that the ruling was good for business and also claimed that it would help limit activities of patent trolls. “Overbroad and abstract patents like the one invalidated today provide the ammunition for patent trolls to prey on businesses,” spokesman Michael Meehan said in a statement. The court’s decision to strike down Alice’s patents “further proves that the time to reform the patent system is now, and that reform should include measures to improve patent quality in order to relieve businesses and the courts from claims involving unwisely issued patents,” he said.
The ruling was also a victory to many software companies who have advocated for more narrow patent reform and warned that an overly broad ruling could invalidate all software patents and undercut their businesses.
Microsoft Deputy General Counsel Horacio Gutierrez said the company is pleased that the court “distinguished the Alice patent from software inventions” when striking down the patents. “Software powers nearly every inventive device, service and product in our world today, and providing patent protection for software-enabled technologies is critical to incentivizing innovation,” he said in a statement.
Victoria Espinel, head of BSA/The Software Alliance — which represents Microsoft, Adobe and IBM — called the decision “a victory for innovation” since it helps clarify the rules of the road for software patents. “The opinion makes clear that real software inventions are patentable under US law and that merely connecting an abstract idea to a computer doesn’t make it patentable,” she said in a statement.
Adobe Vice President of Intellectual Property Dana Rao said the “ruling supports true innovators while helping reign in the abuse of the system by the patent trolls” and urged Congress to continue its work to address the patent troll problem.
Intellectual property lawyers at Trading Technologies also praised the narrow ruling. “This ruling will not have any broad impact because very few patent claims are even arguably directed to a fundamental economic practice or to just applying such a practice on a computer,” Steve Borsand and Jay Knobloch said in a statement. With its narrow ruling, the court “did not adopt suggestions to strike down software patents and did not even touch the basic standard of patent eligibility for software inventions and innovations,” the pair said.