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What will the Supreme Court rule about the Patent Software case?

post Tuesday April 1, 2014

Tags: alice corporation, cls bank, law, supreme court


In June 2014, the U.S. Supreme Court will rule about the case between Australian company Alice Corp Pty Ltd. and CLS Bank International. In 2007 CLS Bank challenged Alice Corp for using a similar computer system that facilitates financial transactions. The question for the Supreme Court was whether the patents were eligible or not. It will most likely turn out to be a win for Alice Corp, but the Supreme Court said that they would want to avoid any radical change to existing law.

In 2010, Bilski v. Kappos was a case similar to CLS Bank v. Alice Corp. If the Supreme Court wants to avoid any huge attention and pronouncements at the moment, they could do the same ruling as the case in 2010. The expectation was that the court would offer guidance on the business method patents. However, the judges eventually issued a 9-0 decision.

The case between CLS Bank and Alice Corp is very important for tech companies, which are often being ‘attacked’ by patent trolls. Patent trolls are companies that hold patents solely for suing other companies. A relatively narrow ruling is less desirable than a broad ruling for tech companies, because they can only fend off some of the lawsuits filed by the patent trolls. Some tech companies are in favor of a narrow ruling though. For example, IBM Corp holds a lot of patents and wants to be able to sue other companies for using their technology.

The discussion about the eligibility of patents is a very recent subject of debate. Companies that often get sued for patent infringement are on the side of CLS Bank, this list includes Google Inc, Verizon Communications Inc. and Hewlett-Packard Co. Only a small amount of companies supported Alice Corp, Cummins Inc. is one of them.

In May 2013 the U.S. Court of Appeals for the Federal Circuit in Washington D.C.  ruled for CLS, but the judges disagreed about which legal test to apply. Even until today, several judges disagree with each other about the matter. Some say the patents are too abstract to be eligible and previous rulings of the Supreme Court also say that abstract patents are often not eligible, while other judges refer to the ancient Greek inventor Archimedes for their preference of a broad ruling.

Furthermore, the court should not only take the desires of Alice Corp. and CLS Bank into account. The decision of the Supreme Court will have effect on a much bigger scale than just these two companies. If the Supreme Court rules for a broad application, it could create monopolies and eventually decrease the amount of competition. However, if the court chooses for a narrow approach, the possibility of less innovation in technology is also plausible.

Source: reuters

Image courtesy of Renjith Krishnan  / 

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