Alice Corp. v CLS Bank or Abstract Idea Patent Case

“We risk that in business, instead of competition in prices, products and technologies, there will soon be competition for who has the best patent lawyer,” said US Supreme Court Judge Stephen Brier during a court hearing on March 31, 2014 (case hearing challenging patents held by Alice Corp.).

Case of Alice Corp. Ltd. v. CLS Bank Int. continues to split opinions on the possibility of patenting software and business methods, which began after the sensational 2010 Bilski case (Bilski v. Kappos). It was then that the court first decided not to use the “machine-or-transformation” test as a patentability test, which, according to the Software Freedom Law Center, would subsequently cause many problems with software patents and patenting ideas in general. “The problem is that no one understands what exactly makes the idea abstract and, therefore, not eligible for patent protection,” noted well-known law professor Mark Lemley in his article, “Life after Bilsky.”

And now, the United States Supreme Court is considering a second such case. The written opinions (amicus briefs) have already been sent by Google, Microsoft, IBM, Dell, Hewlett-Packard, Trading Technologies, Red Hat and many other organizations and IT experts interested in the outcome of the litigation.

Contested “invention” of Alice Corp. is set out in four patents ( 5970479 ; 6912510 ; 7149720 ; 7725375 ) and as a whole represents the idea of ​​regulating trading operations using real-time software, namely: monitoring the solvency of the parties and payment of obligations under transactions using the escrow principle .

At the appellate court, the judges declared this business method not subject to patent protection. “The idea of ​​using resellers in transactions to minimize entrepreneurial risks is not new and has been used in business for a long time. In essence, this idea is abstract, ”the court said in its decision . However, seven out of ten judges expressed completely different opinions on why they came to this conclusion. And five out of ten judges did not agree on what standard should be applied at all in order to determine the patentability of such “inventions”.

The main difference of opinion between judges was whether a condition on the implementation of a business method using a computer could serve as a sufficient criterion for patentability.

In accordance with Article 101 of the US Code, any new and useful process, device, method of production or conversion of a substance, or also any new and useful improvement of the above is subject to patent protection. Articles 102 and 103 require a clear description of the novelty and essence of the invention, and article 112 prescribes the method of obtaining (manufacturing) and also includes a description of the process of use and implementation of the specified object.

“The mention of the use of a computer is not an inventive concept and does not add anything new to the idea of ​​reducing settlement risks through the use of mediation. The general mention in the description of the invention of such terms as “computer”, “data storage device”, “machine”, “communication controller” does not give the abstract idea of ​​materiality and is not sufficient to ensure passage of the screen 101, 102, 103 and 112 of articles ”Noted in the court decision.

At the same time, some judges believe that the wrong approach to resolving this case “will be the death of many registered and protected by law patents in the financial sphere (business methods) and patents for software technologies”. Any invention, including software, is entitled to patent protection. In addition, according to them, an abstract invention can be described from the point of view of materiality: to set out the entire process according to the scheme of interaction of transistors, capacitors and other electronic components and to unambiguously comply with the conditions of Article 101. And the fact that instead of a detailed technical description should be referred to the use of a particular device does not make this invention non-patentable.

In a jointly filed opinion, Google, Facebook, Amazon, Dell are opposed to patenting such "inventions", because such patents monopolize abstract ideas and impede the normal development of innovations. They are not a pillar, but a serious threat to the development of information technology and business. So, in 1980, about 2,000 patents for software were registered, by 1996 their number had reached 10,000, and by 2013 it had exceeded 400,000 patents and their number continued to increase. “This problem is not a minor nuisance, it is turning into a real growing plague,” Google categorically notes.

They further indicate that patents for software and business methods are inherently very similar. Currently, almost all devices used in everyday life consist of computer hardware and software. If we allow obtaining patents for abstract ideas only because they will be implemented using computer equipment, this will lead to blocking innovation in the modern economy. The creation of inventions in the IT sphere has recently become more and more difficult due to the excessive array of patents, which entail large administrative costs for acquiring the rights to use them and make the process of product development and research more expensive, and in the worst case, impossible. Concerning,

In a joint opinion, Microsoft, Adobe and Hewlett-Packard support the right to protect software patents, but they advise you to separate the grains from the chaff and figure out which of the abstract ideas are eligible for patent protection and which are not. If in their conclusion we omit about 20 pages of a detailed review of the history of IT technologies, philosophical questions and empirical discussions about the meaning and meaning of software, then we can immediately go to the main conclusions. So, in their opinion, the patent should have the right to protection if it is aimed at the specific practical application of the idea of ​​invention, improve the operation of the computer or is a new way to use computer equipment to achieve the result of the invention, and does not try to monopolize the idea as a whole.

At the same time, business methods are associated with processes in such non-technological areas as commerce and finance, and relate to intangible concepts of the organization of human activity in the entrepreneurial sphere. The invention of Alice Corp., in their opinion, is the same innovation as the description of a pharmaceutical method for treating cancer patients with the phrase "molecule aimed at treating cancer." The contested patent only imitates a real invention carried out using a specific device, including general purpose computer, and, therefore, can not pass the filter of article 101 of the US Code.

LinkedIn, Netflix, Rackspace and Twitter recall that the patent system was conceived as the main engine of innovation, its constitutional goal is to promote the progress of science, and not to slow it down. “Our programmers overwhelmingly oppose software patents,” they conclude.

The US Government also expressed its position, pointing out that three exceptions to Article 101: the laws of nature, physical phenomena, and abstract ideas clearly indicate the patentability of an invention if it is not an innovation in technology, science, or industrial production. True, this statement was made with a vague reservation about the need for a thorough study of the problem and elaboration of the issue in each case.

What do the parties themselves say. Representatives of Alice Corp. claim that their patent is a way to solve the problem that came to light in the early 1970s, namely, an attempt to eliminate the risk of non-settlement of mutual obligations in the context of a continuous trading process and the implementation of multilateral business tasks. That is, in their opinion, this is an unambiguously new and useful process, firstly, aimed at improving the interaction between participants in entrepreneurial relations and, secondly, facilitating this interaction through the implementation of this business method through a specific device (computer).

These good intentions, apparently, do not inspire CLS Bank, which at the last court hearing asked to pay special attention to the fact that Alice Corp. still has not developed software for its patent and has never put it into practice.

Summing up all of the above, we can conclude that the litigation between Alice Corp. v. CLS Bank Int. claims to become a significant precedent in the fight against patent trolls and in the resolution of disputes over software patents. By June 30, the US Supreme Court will either finally put an end to and determine the boundaries and methods for determining the patentability of abstract ideas, or everything will also remain uncertain as after the Bilsky case.

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