PublishedMay 13, 2013

CLS Bank v. Alice: Don’t Lose Your Head

The patent world was waiting with bated breath for the Federal Circuit’s decision in CLS Bank International v. Alice Corp. At last, we thought, we would have a ruling on when software is patentable and when it isn’t.

As you may have heard, we had no such luck when the decision was issued last Friday. The court fractured like a piece of cheap pottery on a cement floor.

You can read a summary of the opinions at Patently-O, and you can read our summary of the case, the briefs, and the oral argument.

For some reason, many people seem to have expected that the Federal Circuit would come together, even though a quick look through their recent decisions on software patents doesn’t show much consensus at all:

The muddle that is the CLS decision has managed to bring some temporary harmony to the software patent debate: no one likes what the Federal Circuit did.

I won’t say I think it’s a shining moment in jurisprudence, but I’m not that upset about it. The court struggled with the issue because it’s, well, hard. Of course, the reason it’s quite so hard is because the Federal Circuit created the mess in the first place by opening the door wide with the State Street Bank decision and many of its decisions since that one, but let’s not focus on the negative.

Alice Corp. has a patent on the idea of using a computer to implement an escrow. Yes, it’s ridiculous. But is it the sort of thing that should be eligible for a patent at all?

The court actually did agree, 7–3, that just claiming the process of escrow and saying it’s done on a computer isn’t even eligible for a patent. That’s something.

And five judges went further, saying that claiming a computer system where the only new part is the programming isn’t a patentable machine. That’s actually a big step, although obviously one more vote would have been better.

And there’s one more piece of good news out of all this: the troll lost. Because of the way the decision came out, the district court’s original decision was affirmed, which means that Alice’s patent is invalid.

Any ruling that hands a defeat to a troll can’t be all bad. I’m just sayin’.


Matt Levy

Previously, Matt was patent counsel at the Computer & Communications Industry Association

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