Think about the state of the software industry 30 years ago. Back then, computerized devices were far more limited, and home computers were barely more than glorified calculators. Today, though, in our “there’s an app for that” society, computing power is king, and the software business is extremely profitable. Quite a bit has changed in the computing world over the last three decades, but legal view of software patents has stayed relatively the same.

But that might change based on the outcome of one crucial Supreme Court case.

On March 31, the Supreme Court of the United States will hear arguments in Alice Corp. v. CLS Bank, a case that will, at the very least, clear up case law from the federal circuit and could conceivably upend the software industry as we know it.

According to Linda Thayer, partner at global IP law firm Finnegan, the claims in Alice are “Interesting, but, as some people have pointed out, these might not be the best claims to address this issue. But, it was the most ripe and made it to court,” so it will be the test case for the patentability of software. She noted that the Supreme Court needs to step up and weigh in with a standard, and speculates that the decision won’t be about the claims in the case specifically, but more about the big picture.

The primary issue that the Court needs to clear up, says Thayer, is the application of the “101 filter,” refering to Section 101 of the Patent Act of 1952 which stands as the first threshold to deciding if an invention can be patented. Thayer believes that, based on the history of the statute, Congress’ intent was that it “not be a strict filter, just to eliminate things that are natural ideas or not made by man.” She anticipates the Court leaving 101 as a broad filter, letting anything man-made through, then looking at other statutes, like 102, 103, 112 etc. to see if something is new or novel. 

One reason why this case is getting so much attention is that it closely relates to the patent troll issue. Studies show that nearly half of all troll litigation deals with software patents, so there is a strong overlap between unwanted litigation and specious patents. “A lot of troll patents were issued when the patent office was underfunded,” Thayer explains. “The examiners were not well trained and lacked tools to search as to why claims were not patentable.” She says that the solution is not to limit the 101 filter but rather to let patent claims through and crack down on how patents are examined in light of 102, 103 and 112 grounds.

Since the federal circuit cannot come to an agreement, the only avenue is the Supreme Court. The arguments occurring on March 31 won’t be settled for several months, but there is no doubt the case will reverberate for a long time, though probably not 30 more years…


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The future of software patents, part 1