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 The court's decision may prove key to deciding under what
circumstances companies can be sued for using certain software in
their products.
The court said in a one-line order that it would hear a case brought
by Alice Corporation Pty Ltd, which holds a patent for a computer
system that facilitates financial transactions. The patent is
challenged by CLS Bank International.
The court took no action on another case raising the same issue
involving a patent dispute between WildTangent Inc and Ultramercial
Inc.
The deep interest that the software industry and patent experts have
in what is a threshold issue in patent litigation was underscored by
the number of companies and industry groups that asked the court to
decide the issue.
Companies including Google Inc, Hewlett-Packard Co, Facebook Inc and
Netflix Inc had already signaled their interest in the issue by
asking the court to hear the WildTangent case. Many also filed
briefs in lower courts.
With the rise of computer-based products in recent years, courts
have struggled to apply patent law. Some legal experts, including
the Electronic Frontier Foundation, a digital civil liberties group,
say that courts are too keen to uphold patents on ideas that are too
vague to deserve protection.
Such vague patents can be used against big tech companies, which say
they are forced to spend money defending lawsuits instead of
investing in research and development. Technology companies are
particularly concerned about litigation brought by so-called "patent
trolls," defined as companies that hold patents only for the purpose
of suing other companies seeking to develop new products.
PATENT PROTECTIONS
Companies differ over what type of patent protections software
products should receive. While some, like Google, favor looser
protections, others, like International Business Machines Corp would
prefer that most software be patent eligible.
The U.S. Court of Appeals for the Federal Circuit, which has primary
responsibility for interpreting patent law, has struggled to adopt a
test that judges can use to review software patent claims, with
various judges reaching different conclusions.
"Hopefully, the case will accomplish at the Supreme Court what it
could not at the Federal Circuit: greater clarity in the law," said
Alice's attorney, Carter Phillips. CLS's attorney, Mark Perry,
declined to comment.
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The legal question boils down to how innovative an invention should
have to be to receive legal protection.
The law in question is the U.S. Patent Act, which states that anyone
who "invents or discovers a new and useful process, machine,
manufacture, or composition of matter," or an improvement of an
existing one, can get a patent.
An invention related to an abstract idea can be patented, but it
must include a way of applying the idea.
Mark Lemley, a patent law expert at Stanford Law School, wrote in a
brief filed on behalf of Facebook and others that the appeals court
had left the law "hopelessly confused."
Lemley wrote in an email on Friday that he expects the high court to
agree with the appeals court that the patents in question were not
patent eligible.
"But the devil will be in the detail of the court's opinion," he
added.
Dennis Crouch, a professor at the University of Missouri School of
Law who blogs about patent law, said he is amazed that courts have
yet to determine once and for all that software can be patented.
The confusion has led patent lawyers to play down the software
elements of inventions when applying for patents at the U.S. Patent
and Trademark Office, he added.
"My hope is that this case will be a vehicle for the Supreme Court
to clarify the law so that we can get back to business rather than
playing language games at the patent office," Crouch said.
The case is Alice Corporation v. CLS Bank, U.S. Supreme Court, No.
13-298.
(Reporting by Lawrence Hurley; additional reporting by Dan Levine;
editing by Howard Goller and Richard Chang)
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