Supreme Court to Address Patent Eligibility of Software

2014 could be a landmark year for the important question of whether software can be patented, and if so in what situations. After the Federal Circuit issued a highly-fractured non-decision on software patent-eligibility in CLS Bank Int’l v. Alice Corporation Pty Ltd., the U.S. Supreme Court has agreed to hear an appeal of the case.

In the May 2013 decision that is the subject of the appeal, the Federal Circuit ruled that certain patent claims covering methods and systems for managing risk merely covered an “abstract idea” and were not patent-eligible. However, as discussed in a previous IP Spotlight post, the opinion gave no clear guidance as to why the claims were not patent-eligible, nor did it explain what types of software claims would be patent-eligible. Although a majority of the judges agreed with the result, no majority agreed upon any particular reasoning.  The published decision included seven different opinions. Half of the judges specifically found the system claims to be patent-eligible, and three of the judges asserted that all of the claims were patent-eligible.

In its Petition for Writ of Certiorari in the case,  Alice Corporation argued:

Given the importance of computers and software to our nation’s economy, the time is ripe for the Court to address these issues. The Court need look no further than the Federal Circuit’s inability to make a decision concerning the computer system claims, and the hundreds of pages of opinions proposing approaches on which a majority of the court could not agree, to recognize the enormous confusion that exists.

Alice Corporation’s petition asked a single question:

Whether claims to computer-implemented inventions — including claims to systems and machines, processes, and items of manufacture — are directed to patent-eligible subject matter within the meaning of 35 U.S.C. § 101 as interpreted by this Court?

This question is quite broad, since the Federal Circuit specifically said that software could be patented in decisions issued after the CLS Bank case (see, for example, Ultramercial v. Hulu).  In addition, the Supreme Court already answered this question in the affirmative in its 2010 Bilski v. Kappos decision when it said: “the statute itself acknowledges that there may be business method patents . . . what §273 does is clarify the understanding that a business method is simply one kind of ‘method’ that is, at least in some circumstances, eligible for patenting under §101.”

Thus, it is likely that the Court will quickly dispose of the question posed in the Petition and instead move to the question of when computer-eligible inventions are patent-eligible.  The Court didn’t resolve that question in Bilski. In an order issued in 2012, the Court directed the Federal Circuit to answer that question, but the result was a series of confusing and sometimes inconsistent decisions (including the CLS Bank case).

Because of this, it will be interesting to see whether the Court issues another narrow opinion that is focused on the particular claims at issue, or a broader opinion that provides meaningful guidance for future patent applicants.