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 patentableEligible to be patented. To be patent-eligible, an invention must fall into the categories listed in 35 U.S.C. § 101 (i.e., process, machine, manufacture, or composition of matter) and cannot be an abstract idea or a law of nature. 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 CircuitSee CAFC would come together, even though a quick look through their recent decisions on software patents doesn’t show much consensus at all:
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Bancorp Services, LLC v. Sun Life Assurance Co. of Canada, 687 F. 3d 1266 (Fed. Cir. 2012) (software was not patentableEligible to be patented. To be patent-eligible, an invention must fall into the categories listed in 35 U.S.C. § 101 (i.e., process, machine, manufacture, or composition of matter) and cannot be an abstract idea or a law of nature. subject matter)
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Dealertrack, Inc. v. Huber, 674 F.3d 1315 (Fed. Cir. 2012) (software was not patentableEligible to be patented. To be patent-eligible, an invention must fall into the categories listed in 35 U.S.C. § 101 (i.e., process, machine, manufacture, or composition of matter) and cannot be an abstract idea or a law of nature. subject matter)
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CyberSource Corp. v. Retail Decisions, Inc., 654 F. 3d 1366 (Fed. Cir. 2011) (software was not patentableEligible to be patented. To be patent-eligible, an invention must fall into the categories listed in 35 U.S.C. § 101 (i.e., process, machine, manufacture, or composition of matter) and cannot be an abstract idea or a law of nature. subject matter)
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Ultramercial, LLC v. Hulu, LLC, 657 F. 3d 1323 (Fed. Cir. 2011) (software was patentableEligible to be patented. To be patent-eligible, an invention must fall into the categories listed in 35 U.S.C. § 101 (i.e., process, machine, manufacture, or composition of matter) and cannot be an abstract idea or a law of nature. subject matter)
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Research Corp. Technologies v. Microsoft Corp., 627 F. 3d 859 (Fed. Cir. 2010) (software was patentableEligible to be patented. To be patent-eligible, an invention must fall into the categories listed in 35 U.S.C. § 101 (i.e., process, machine, manufacture, or composition of matter) and cannot be an abstract idea or a law of nature. subject matter)
The muddle that is the CLS decision has managed to bring some temporary harmony to the software patentA generalized term referring to patents whose subject matter extends to computer-implemented code, which have been the subject of great controversy, including but not limited to how they interact with open source software. Although software patents are often denigrated, there is no accepted definition. However, there are a variety of methods for identifying software patents for empirical analysis. See Bessen, A debate: no one likes what the Federal CircuitSee CAFC 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 CircuitSee CAFC 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 patentableEligible to be patented. To be patent-eligible, an invention must fall into the categories listed in 35 U.S.C. § 101 (i.e., process, machine, manufacture, or composition of matter) and cannot be an abstract idea or a law of nature. 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 trollAn entity in the business of being infringed — by analogy to the mythological troll that exacted payments from the unwary. Cf. NPE, PAE, PME. See Reitzig and Henkel, Patent Trolls, the Sustainability of ‘Locking-in-to-Extort’ Strategies, and Implications for Innovating Firms. can’t be all bad. I’m just sayin’.