A decision that recently caught my attention was that of CLS Bank International v Alice Corporation, U.S. Court of Appeals for the Federal Circuit, No. 2011-1301.

The case involved the validity of patents in the software industry and the repercussions from this case could be far reaching, both in the United States and worldwide. The case centred around the validity of software patents held by Alice Corporation.

The court upheld a decision by the Washington D.C district court that patents related to a computerized trading platform were invalid as they were based on abstract ideas rather than any particular engineering concept.

Many big players in the software industry had been playing close attention to the case for a clue as to what software is patentable, as much of the industry’s profit is generated by its intellectual property.

Alice Corporation argued that its patents were valid as even though they related to an abstract idea the idea was “patentable if the computer plays a significant role in the invention.” The court disagreed though stating that the ideas were too ‘abstract’ and broad enough not to be patentable.

The court however failed to determine a standard for what is an ‘abstract idea’ is, leaving a lot of uncertainty when it comes to the validity of software patents.

A good example of an abstract concept under patent law is that the idea of a self-driving car may not be patented, but the engineering that creates a self-driving car may be patented.

Google and Dell both had filed friend-of-the-court briefs stating that "bare-bones" patents like those owned by Alice court do not innovate enough to deserve patent protection.

The court was divided on the matter and could not define a test for what an abstract idea was, meaning that future cases will be determined on a case by case basis until further clarification on the issue is handed down.

In his judgment Judge Alan Lourie sugguested that judges ask whether there are “genuine human contributions” to an invention when determining whether is should receive patent protection.

Following the ruling IBM made a statement that it believes most software inventions do qualify for patent protection, but it appears this is still a bit of a grey area as far as the law is concerned.

Alice Corporation has an Australian link with the company being part owned by the National Australia Bank Ltd.

 

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