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Software Patents Need to Get Specific, Says Supreme Court

By Steve Anderson, Contributing TMCnet Writer

The issue of patents in the software arena has been a tough one to follow for some time. There's a lot of back and forth, as major companies duke it out and the various non-practicing entities—less charitably known as “patent trolls”—getting involved in the issue. But a new decision from the Supreme Court is about to make things a little more interesting throughout the entire sphere of patent law, as the Court found that software patents that don't cover a specific software process can't be valid.

The decision came as part of an ongoing patent battle between Alice Corp and CLS Bank, two major names in financial institutions who have been slugging away at each other over a set of patents for the last several years, according to reports. The patents in question were established over an “intermediated settlement” system, a sort of “electronic escrow” system in which a third party holds money while a business process is being transacted and concluded accordingly.

CLS Bank believed that the patents—held by Alice Corp at last report--were invalid, as said patents reflected what amounted to a basic idea, so in a bid to head off a future threat from Alice Corp, CLS Bank went to court. Meanwhile, Alice Corp countersued, alleging patent infringement, and in late 2013, the issue ultimately reached the Supreme Court, where Alice Corp sought to prove that its patents weren't simply on a generic idea, but also required specific software steps that both carried out the process and were worthy of a patent's protection.

The Supreme Court, meanwhile, disagreed with Alice Corp's assertion, noting that the additional software steps amounted to, essentially, “stating an abstract idea while adding the words 'apply it with a computer.'” Alice Corp's software steps were basically representations of standard practices—making changes to account balances, keeping records and the like—and thus little more than basic principles run through a computer system.

Some have already taken to call this the “death of software patents,” a consummation that was devoutly wished by many sides of the patent concept. While that's not likely to be the case, ultimately, what this may well do is put a few new standards into the patent arena. More specifically, this may tighten up the operation a bit so as to ensure that which actually gets a patent is a clear, actionable idea, not just a vague idea someone had. Much in the same way that no one can hold the copyright on the letter “E”, no one can hold a patent on software that's essentially “do this, but with a computer.” That's likely going to be a welcome development on many fronts, though less welcome on others, particularly those of people whose patents weren't all that great to begin with.

It's going to take quite some time to see how this all boils down throughout the ecosystem of not only currently existing patents, but also patents that have yet to appear. Will the patent process take longer to go through as a result? Will the patents that are issued be more valuable? It's hard to say just what may be, but one thing is quite clear: the world of software patents won't be the same for the impact.