Software patents take a beating at the US Supreme Court
As LWN reported back in early April, the Supreme Court of the US (SCOTUS) has been looking at the patent-eligibility of software, through the lens of the case Alice Corp. v CLS Bank International. On June 19, the court released a unanimous ruling [PDF] throwing out Alice's patents. Its rationale for doing so will have a profound effect on patent litigation in the software industry.
To briefly review the dispute, Alice held patents on a method, system, and process for a particular type of financial risk hedging: namely, that one party to a set of financial transactions won't pay at one or more stages in the set. This risk is known as "settlement risk". Alice's patents describe using a computer to keep track of the transactions between the parties. If the computer determines that a party does not have sufficient funds to pay their obligations to the other side, then the transaction is blocked. The relevant patents are #5,970,479, #6,912,510, #7,149,720, and #7,725,375. Litigation started in 2007, eventually winding its way up to the Supreme Court.
Ruling
Writing for a unanimous court, Justice Thomas begins with a brief description of what the patents claimed. There are effectively three different types of claims made: "(1) the foregoing method for exchanging obligations (the method claims), (2) a computer system configured to carry out the method for exchanging obligations (the system claims), and (3) a computer-readable medium containing program code for performing the method of exchanging obligations (the media claims)
" (page 3 of the ruling). Thomas goes on to describe the history of the litigation in this case, which was covered in our April article.
Thomas begins the rationale for the court's ruling by quoting §101 of the Patent
Act: "Whoever invents or discovers any new and useful process,
machine, manufacture, or composition of matter, or any new and useful
improvement thereof, may obtain a patent therefor, subject to the
conditions and requirements of this title.
" He notes that the
Supreme Court has held for a long time—most recently in its ruling last
year in Myriad—that the text of §101 means that there are limitations on what can be patented, namely: "Laws of nature, natural phenomena, and abstract ideas
" (Myriad, quoted on page 5 of the Alice ruling). However, since every invention to some extent incorporates these patent-ineligible components, the fact that an invention relies in part on an abstract idea does not automatically render the whole invention patent-ineligible.
The ruling then goes on to cite the court's recent ruling in
Mayo, which established a test to determine which inventions that
incorporate abstract ideas are patent-eligible: "First, we determine
whether the claims at issue are directed to one of those patent-ineligible
concepts
" (page 7). If it is so directed, then the court looks at
"the elements of each claim both individually and 'as an ordered
combination' to determine whether the additional elements 'transform the
nature of the claim' into a patent-eligible application
" (page
7). This is what Thomas refers to as "a search for an 'inventive concept'
" (page 7).
The court then applies this "Mayo test" to Alice's
patents. Beginning with the first step of the test, Thomas notes that these
patents do incorporate, to a strong extent, an abstract concept, as
"these claims are drawn to the abstract idea of intermediated
settlement
" (page 7). Thomas cites previous Supreme Court case law,
emphasizing its ruling in Bilski (throwing out a patent on financial risk hedging), as illustrating examples of other patent-ineligible "inventions" that simply boil down to abstract ideas. Turning directly to Alice's patents, Thomas notes that intermediated settlement is an old financial idea: "Like the risk hedging in Bilski, the concept of intermediated settlement is 'a fundamental economic practice long prevalent in our system of commerce'
" (page 9).
Thomas then applies the second step: looking at what else is in the
patent claims, individually and in combination, to see if there's anything
more to Alice's "invention". The method claims, which describe how the
financial obligations will be exchanged, don't pass the court's test
because they "merely require generic computer implementation
"
(page 10). In what might be the most important part of the ruling for
determining where the Supreme Court draws the line for "computer-implemented
inventions", Thomas is careful to stress that while some inventions
involving computers may be patent-eligible, he notes that the mere fact
that a computer is used as part of an "invention" is not on its own
sufficient to turn an abstract idea into something eligible for a patent
(pages 13-14):
The remainder of the patents, which are the system and media claims, didn't hold up either. With regard to the system claims, Alice had claimed that there was a particular computer hardware configuration it used to implement the "invention". When the court looked at that configuration, it didn't find anything more than the components of a generic general-purpose computer. Since Alice had stated in an earlier brief that if its method claims fail, so do its media claims, the court threw out the media claims as well. Having demonstrated the court's rationale for invalidating Alice's patents, Thomas concludes the ruling by upholding the Court of Appeals for the Federal Circuit's decision to throw out the patents.
Justice Sotomayor also gave a one-paragraph opinion concurring with the court, which was joined by Justice Ginsburg and Justice Breyer. In that opinion, Sotomayor notes that the three of them would completely throw out business methods as unpatentable.
Reactions
The reaction by individuals and organizations with a professional and/or
political interest in US patent law has been strong and polarized. Gene
Quinn, a pro-software-patent lawyer and blogger on ipwatchdog.com, was rather unhappy with
the decision, depicting it as "intellectually
bankrupt
". He noted that this ruling will invalidate many types of
software patents: "On first read I don’t see how any software patent
claims written as method or systems claims can survive challenge.
"
That's a strong assertion, but it doesn't really hold up. For instance, if such a software patent claim was really so novel that it couldn't be boiled down to implementing an abstract concept on a generic general-purpose computer, it might indeed stand up to litigation.
In a press release, the Free Software Foundation (FSF), unsurprisingly, expressed delight at the ruling, but was not completely satisfied. The FSF noted in the release that it continues to seek a clear and total ban on software patents through legislative change.
In an opinion
article for SCOTUSblog, former
Director of the US Patent and Trademark Office David Kappos lauds the
decision, as he finds it tacitly endorses the patentability of software:
"This week’s decision reaffirms that from the point of view of the
patent system, software languages are no different from other vernaculars –
they are a medium of expression that can be used to capture and convey
ideas.
" Referencing Diehr, an earlier Supreme Court case upholding a patent on a machine for curing rubber that included a computer, Kappos emphasizes how the court's Mayo test draws a line based on inventiveness: "the difference [between patentable and unpatentable software] is the presence or absence of a definitive invention versus abstraction. Diehr’s new and useful process for curing rubber was held to be innately patentable — the fact that it happened to be manifest in a software language was tributary.
"
I found all three of those reactions to hold merit. The court's clear statement that a mere incorporation of a general-purpose computer is insufficient for an "invention" to be patentable will, as Quinn put it, "render many hundreds of thousands of software patents completely useless
". However, the FSF and Kappos both pick up on the subtleties of the decision: the ruling does not outright abolish software patents, and even explicitly recognizes that certain computer-implemented "inventions" remain patentable.
While those working in the free and open source software world, which has been threatened and restricted by software patents, should celebrate, the ruling in Alice is not an outright victory for software patent abolitionists. There will likely be a flurry of cases challenging software patents, which will better define the boundary the court has set in this case. However, only legislative change, such as by adding language to the patent statute similar to that proposed by Richard Stallman ("developing, distributing, or running a program on generally used computing hardware does not constitute patent infringement
") will lead to abolition.
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