Today’s a tough day for technology patent trolls

June 19, 2014
June 19, 2014

The US Supreme Court just issued a rare unanimous ruling that will make it harder for technology companies to patent ideas and processes—and harder for patent trolls to force companies to choose between paying up for violating broad patents or facing time-consuming, expensive litigation.

The case, between two financial companies, concerned software for clearing financial transactions; CLS Bank used a method that Alice Corp. claimed a patent on. But courts say this method—essentially, a program that checked to make sure the parties in a transaction had the needed assets to pay up—is just an abstract idea, which isn’t eligible for patent protection, even when you turn it into code.

As Justice Clarence Thomas put it in the ruling (pdf):

Stating an abstract idea “while adding the words ‘apply it’” is not enough for patent eligibility. Nor is limiting the use of an abstract idea “‘to a particular technological environment.’” Stating an abstract idea while adding the words “apply it with a computer” simply combines those two steps, with the same deficient result.

Of course, it’s never quite that simple: The decision does not ditch all software patents, and how to distinguish between acceptable software patents and those that aren’t is less than clear. Three justices added a concurrence saying they thought all business process patents should be invalidated, but the majority of the court declined to join them, perhaps fearful of the chaos it might cause in the tech sector.

The main standard now is pre-emption—if your patent would pre-empt (effectively discourage) innovation, rather than promote it, it’s no good. But it won’t necessarily be easy for courts to distinguish between “building blocks” that aren’t patentable (like the concept of an “online shopping cart,” which was already defeated in court) versus something more unique that “integrates the building blocks into something more.”

So get ready for more litigation ahead, but with a bleaker outlook for patent trolls. Patents on business processes such as “paying with a credit card online” (owned by a company that has filed 22 lawsuits this year asserting patent infringement) aren’t going to carry the weight they used to.

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