Are computer-implemented inventions directed to patent eligible subject matter?  This question is now before the Supreme Court in Alice Corporation v. CLS Bank Intl.  Oral arguments are set for March 31 and the decision is expected in June 2014.

The patent at issue (U.S. Patent 7,725,375) is directed to an escrow system to reduce risk in settling financial transaction. The Federal Circuit, the court below, considered en banc the patent eligibility (35 U.S.C. 101) of claims of this patent.  But the court was so deeply fractured that the ten judges issued six different decisions and could not muster a majority rationale.

And then following its CLS decision, the Federal Circuit handed down decisions in two similar cases.  In the first, Ultramercial, Inc. v. Hulu, LLC, the Federal Circuit three-judge panel found patent eligibility, and in the second, Accenture Global Services v. Guidewire Software, Inc., a panel found no patent eligibility.

Judge Newman in one of the opinions in the CLS case said that “[t]here has never been a case which could do more damage to the patent system than this one.”   Even former Federal Circuit Chief Judge Paul Michel has weighed in on the issue in a recent amicus brief, saying that the courts have gone down “a dangerous road” by holding patents invalid for claiming abstract ideas. There are powerful business, legal and academic interests and voices on both sides of the issue, and the case is being very carefully watched.

For a number of reasons we believe that the Supreme Court is unlikely to hold that all computer-implemented inventions (e.g., software inventions) are patent ineligible, but rather the Court will likely deliver a nuanced approach as to which are and are not patent eligible.  Hopefully, the Court’s opinion will provide effective guidance to inventors, patent practitioners, investors and businesses as to which computer-implemented inventions are patent eligible and how they should be disclosed and claimed in patent applications.  We will continue to keep you advised.


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