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Abstract Software Patents are Out, Says Supreme Court

Abstract Software Patents Warrant SCOTUS

The Supreme Court of the United States of America (SCOTUS) yesterday ruled that software patents based upon abstract ideas are invalid. In the ruling, the Supreme Court ruled that abstract software patents (where arguments had ended on March 31st) that are essentially based on an idea and an idea alone are not valid. This is basically the Supreme Court ruling that you cannot simply claim a patent on a process by simply taking it and adding the idea of adding a computer system to it and suddenly having it become a legitimate patent. Unfortunately, though, the US Patent and Trademark Office (USPTO) has granted thousands of such patents over the decades without any real oversight or analysis of whether or not they’re legitimate patents.

What is interesting is how the USPTO will take the SCOTUS’ ruling and apply it to how they approve patents. The court ruling itself was born out of the court case of Alice Corporation Pty. Ltd. v. CLS Bank International which saw a patent troll, Alice Corp. suing a bank, CLS Bank International for infringing upon their patent which they claimed to have ‘invented’ years ago. The core of this abstract software patent lawsuit actually had multiple patents at the core of it which dealt with an electronic escrow system. This escrow system has a third party hold the money while two pending balances are shown to both sides during the transaction. The problem with this patent is that it does not do much more than take a computer and apply it to an already existing process. The court found that the steps involved in this patent process were not novel enough to be patented and specifically stated that the steps that Alice Corp. took were no more than “stating an abstract idea while adding the words ‘apply it with a computer.'”

The judgement was delivered by Justice Clarence Thomas and went,

The patents at issue in this case disclose a computerimplemented scheme for mitigating “settlement risk” (i.e., the risk that only one party to a financial transaction willpay what it owes) by using a third-party intermediary.The question presented is whether these claims are patenteligible under 35 U. S. C. §101, or are instead drawn to apatent-ineligible abstract idea. We hold that the claims at issue are drawn to the abstract idea of intermediated settlement, and that merely requiring generic computerimplementation fails to transform that abstract idea into apatent-eligible invention. We therefore affirm the judgment of the United States Court of Appeals for the FederalCircuit.

As you can see, the Supreme Court’s decision regarding abstract software patents is not necessarily striking down all software patents, but rather ones that do nothing more than apply a computer to solve a process that technically already exists. The truth is that the Supreme Court should not have to get involved in these patent cases, but because the USPTO has not had any guidance and hasn’t established their own guidelines they’ve effectively forced someone else to deal with this problem. And now that the Supreme Court has made this decision, it is final and now the USPTO has to abide by it when they make decisions regarding granting patents, meaning that the USPTO is going to need to actually do their jobs and review patents to see whether or not they fall within the lines of today’s judgement or not.

This is without a doubt a win against patent trolls and will likely serve as an example for a lot of current and future lawsuits where a patent troll is seeking to extract money from a company because they have created some abstract software patent that doesn’t actually do anything new or novel.