The Supreme Court in Alice Corporation v. CLS Bank International, No. 13-298, unanimously ruled on 19/06/2014 that basic business methods may not be patented, even if computers are used to apply them.
The case involved a method for reducing the risk that the parties to a transaction will not pay what they owe. Writing for the court, Justice Clarence Thomas said that was “a patent-ineligible abstract idea.” He added, “Merely requiring generic computer implementation, fails to transform that abstract idea into a patent-eligible invention.”
The ruling appeared to be modest and in line with earlier decisions of the court that were wary of stifling innovation.
Still, it will be carefully read in Silicon Valley for indications of how specific technical ideas need to be to become eligible for patent protection. Patent claims over the way ideas are incorporated into computers, cellphones and other devices have become a challenge for many high-tech companies.
Justice Thomas indicated that the decision posed no threat to the concept of software patents. “There is no dispute,” he wrote, “that many computer-implemented claims are formally addressed to patent-eligible subject matter.”
Many technology companies have interests that tug in opposite directions. They tend to hold large portfolios of valuable patents and want to protect them. But they must also contend with “patent trolls,” companies that have obtained patents on sometimes vague concepts and that are more active in the courthouse than on the production line.
The patents at issue in this case were owned by the Alice Corporation, an Australian company that developed a method for mitigating settlement risks among multiple parties. In its Supreme Court brief, the company said the method was eligible to be patented largely because it involved shadow records updated in real time that “require a substantial and meaningful role for the computer.”
The patents were challenged by CLS Bank International, which says it clears $5 trillion in foreign exchange transactions a day using methods to ensure that both sides performed. Alice Corporation’s patents, the bank said, merely recited “the fundamental economic concept of intermediated settlement of escrow.”
A trial court invalidated Alice’s patents, saying they recited only abstract concepts. That decision was effectively affirmed by the United States Court of Appeals for the Federal Circuit, a specialized court in Washington that hears patent disputes. But the decision was badly fractured, with seven opinions, none of which commanded a majority.
The Supreme Court affirmed that judgment in Alice Corporation v. CLS Bank International, No. 13-298, saying Alice’s idea was a fundamental economic practice and “a building block of the modern economy.”
The court has long held that laws of nature, natural phenomena and abstract ideas are not patentable. The decision released, Justice Thomas wrote, was an application of that general principle. The use of a computer added nothing, Justice Thomas wrote.
“Viewed as a whole,” he wrote, “petitioner’s method claims simply recite the concept of intermediated settlement as performed by a generic computer.” The methods neither “improve the functioning of the computer” nor “effect an improvement in any other technology or technical field,” he added.
In recent rulings, the Supreme Court has been skeptical of protecting discoveries and ideas lest it hamper innovation.
In 2010 in Bilski v. Kappos, for instance, the court ruled that a method of hedging risk was not eligible to be patented. Alice’s patents were similar, Justice Thomas wrote. “Like the risk hedging in Bilski,” he said, quoting from that decision, “the concept of intermediated settlement is ‘a fundamental economic practice long prevalent in our system of commerce.’ ”
Both kinds of processes, Justice Thomas said, “are squarely within the realm of ‘abstract ideas.’ ”
In 2012 in Mayo Collaborative Services v. Prometheus Laboratories, the court added that correlations between drug dosages and medical treatment did not become eligible for patent protection just because they were linked with standard tests. The same is true, Justice Thomas wrote, with “stating an abstract idea while adding the words ‘apply it with a computer.’ ”
Source: http://www.nytimes.com/2014/06/20/technology/supreme-court-rules-against-alice-corp-in-patent-case.html?_r=0
