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?”
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.