Supreme Court Appears Ready to Strike Against Software Patents

But how heavy of a hand the justices will use remains unclear.

National Journal
Dustin Volz
March 31, 2014, 9:43 a.m.

Just how far down the rab­bit hole should Alice go?

That was, fig­ur­at­ively, the ques­tion be­fore the Su­preme Court on Monday, as justices con­sidered the prop­er scope of soft­ware pat­ent eli­gib­il­ity in what many on­look­ers have called the most im­port­ant in­tel­lec­tu­al-prop­erty case in years — and one that could strike a hard blow against the grow­ing prob­lem of pred­at­ory pat­ent lit­ig­a­tion, or pat­ent trolling.

The nine justices heard or­al ar­gu­ments for an ap­peal brought by the Aus­trali­an-based Alice Corp., which has claimed that CLS Bank In­ter­na­tion­al vi­ol­ated its pat­ents on a com­puter pro­gram meant to re­duce the risk of non­pay­ment dur­ing fin­an­cial trans­ac­tions.

CLS, and the Obama ad­min­is­tra­tion, main­tain that there is noth­ing in­nov­at­ive about Alice’s tech­no­logy. They say Alice’s pat­ents de­ploy an ob­vi­ous and ubi­quit­ous fin­an­cial ser­vice — an es­crow ac­count — and merely tacks on the words “on a com­puter” in their fil­ings.

Alice main­tains that its pat­ents pro­tect le­git­im­ate in­nov­a­tion, the kind that has al­lowed Amer­ic­an en­tre­pren­eurs to thrive for cen­tur­ies. A de­cision is ex­pec­ted in late June.

The is­sue is com­plex, a prob­lem ex­acer­bated by a wildly splintered rul­ing from the fed­er­al cir­cuit last year. But sev­er­al justices on Monday signaled they agreed on prin­ciple with CLS, des­pite in­ton­ing that they have a daunt­ing task of fig­ur­ing out ex­actly what stand­ard should be ad­op­ted when re­view­ing the qual­ity of soft­ware pat­ents.

Justice Steph­en Brey­er al­most im­me­di­ately began chal­len­ging the valid­ity of Alice’s pat­ents, sug­gest­ing that tak­ing an “ab­stract” idea — which is carved out in cur­rent law as not pat­entable — and ap­ply­ing it dir­ectly to a com­puter without sub­stan­tial, tech­no­logy-spe­cif­ic modi­fic­a­tion is not enough to jus­ti­fy pat­ent pro­tec­tions.

“My moth­er, who used to look at my check­book, when she saw that in fact I had writ­ten more checks than I had in the ac­count, she would grab it (and yell) ‘Stop!’ Brey­er said. “If you say, ‘com­puter stop’, you have an in­ven­tion “¦ but if you say, ‘moth­er stop’, you don’t?”

Brey­er at­temp­ted to get any­one to of­fer him what they thought would be an ap­pro­pri­ate stand­ard for pat­ent eli­gib­il­ity, but both sides de­murred. The justice, some­what ex­as­per­ated, summed up the ag­on­iz­ing de­cision be­fore the Court: “If you go all the way and say nev­er, you rule out real com­puter in­ven­tions.”

Justice An­thony Kennedy ad­di­tion­ally ex­pressed doubt that the tech­no­logy be­hind Alice’s pat­ents couldn’t be built dur­ing a week­end by a couple of col­lege-age com­puter en­gin­eers work­ing in a Sil­ic­on Val­ley cof­fee shop.

“My guess is that that would be fairly easy to pro­gram,” Kennedy said. “The in­nov­a­tion is cer­tainly not from us­ing a com­puter to make it work.”

Justice Ant­on­in Scalia may have been the sole voice on the bench to at least en­ter­tain Alice’s view in full, ask­ing: “Why isn’t do­ing it through a com­puter not enough?”

He ad­ded: “Was the cot­ton gin not an in­ven­tion be­cause it just means you’re do­ing through a ma­chine what people used to do by hand? “¦ Why is a com­puter any dif­fer­ent in that re­spect?”

{{ BIZOBJ (video: 4852) }}

Chief Justice John Roberts ad­ded that he is un­sure wheth­er a clear test, such as one ad­vanced by the Obama ad­min­is­tra­tion, would really clear up con­fu­sion for Dis­trict Courts re­spons­ible for re­view­ing in­fringe­ment suits.

In re­sponse, So­li­cit­or Gen­er­al Don­ald Ver­rilli at­temp­ted to as­suage con­cerns that a stricter, clear­er test on pat­ent qual­ity would hamper in­nov­a­tion, not­ing that “when we say something is not pat­ent eli­gible, we’re not say­ing they can’t do it; we’re say­ing they can’t mono­pol­ize it.”

Monday’s hear­ing has drawn heavy in­terest from a who’s who list of large tech gi­ants, many of whom filed amicus briefs re­flect­ing their views of soft­ware pat­entab­il­ity. While vir­tu­ally none was will­ing to de­fend Alice’s pat­ents out­right, some, such as IBM, Mi­crosoft, and Adobe, ex­pressed con­cern that a broad rul­ing could re­duce the pro­tec­tions on good-qual­ity pat­ents, thereby un­der­min­ing tech­no­lo­gic­al in­nov­a­tion, a con­cern Alice’s coun­sel tried to echo.

“This would in­her­ently de­clare, in one fell swoop, hun­dreds of thou­sands of pat­ents in­val­id,” said Carter Phil­lips, warn­ing against a bright-line rule on soft­ware pat­ent eli­gib­il­ity. “The con­sequences of that are un­know­able.”

Oth­er com­pan­ies, in­clud­ing Google, Face­book, and Twit­ter, have ar­gued in fa­vor of stronger pro­tec­tions against bad soft­ware pat­ents. But vir­tu­ally none of the ti­tans agrees on ex­actly what should be con­sidered an eli­gible soft­ware pat­ent, leav­ing the Court with a de­cision lack­ing.

Also watch­ing with in­terest is Cap­it­ol Hill. The Sen­ate Ju­di­ciary Com­mit­tee has been grap­pling for months with how to strike a le­gis­lat­ive com­prom­ise that would cur­tail the grow­ing prob­lem of pat­ent trolling, which some es­tim­ates say cost the eco­nomy tens of bil­lions of dol­lars an­nu­ally.

Monday’s ar­gu­ments marked a cap­stone of a term sprinkled with pat­ent cases. Last month, the Su­preme Court heard back-to-back cases ex­amin­ing the ap­pro­pri­ate­ness of mak­ing losers pay the win­ner’s leg­al fees in a pat­ent in­fringe­ment suit.

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