US Supreme Court and patents

April 3rd, 2014 at 2:00 pm by David Farrar

Stuff reports:

The US Supreme Court has grappled with the standards for software , considering the issue for the first time in decades in a case that has divided the computer industry. …

The case concerns claims that CLS Bank International, a New York-based provider of settlement services, infringed patents owned by Melbourne-based Alice Corp. The patents cover a computerised system for using an intermediary to limit the risk that one party to a derivative trade will renege on its obligations.

CLS says Alice’s patents run afoul of Supreme Court decisions that say abstract ideas aren’t entitled to legal protection. Alice, which is partially owned by National Australia Bank, said the abstract-idea exception to patent eligibility is a narrow one.

Justice Ruth Bader Ginsburg suggested that Alice’s argument was doomed by a 2010 Supreme Court decision that limited patents on business methods by rejecting a proposed patent on a system for hedging energy trades. She asked Alice’s lawyer, Carter Phillips, how his client’s idea was any “less abstract than hedging.”

Other justices were similarly sceptical. Justice Anthony Kennedy said a group of college engineering students could probably write the computer code for Alice’s idea over a weekend.

“My guess is that that would be fairly easy to program,” he said.

You can’t always tell how a decision will go by the questioning, but it sounds like the Court is skeptical over overly broad patents that block innovation, That would be a good thing.

The Obama administration is urging the court to issue a broader ruling that would put new limits on the availability of software patents. Solicitor General Donald Verrilli told the court that software was eligible for patenting only if it “improved the functioning of the computer technology” or “is used to improve another technology.”

Software can generally no longer be patented in NZ, unless it is basically embedded in a machine.

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7 Responses to “US Supreme Court and patents”

  1. davidp (3,578 comments) says:

    Alice’s patent essentially amounts to: If there are enough funds to cover a trade, then execute it. Otherwise don’t. The idea is completely obvious, and it is a common business method that has been used for thousands of years. One of the principles that the court should be ruling on is whether adding “on a computer” to a well known process makes that process patentable. For instance, “publish books” obviously isn’t patentable. So “publish books on a computer” shouldn’t be either.

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  2. thor42 (971 comments) says:

    Software patents are not needed IMO. Software *licenses* are more than sufficient.

    Linux and the BSD operating systems are only licensed and they do fine without patents. My work will shortly be moving onto a Linux platform. Other open-source software doesn’t need patents either (e.g. LibreOffice).

    SQLite doesn’t have *either* – it is public domain and the most widely-used database engine in the world (being embedded in devices like cellphones).

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  3. Fentex (923 comments) says:

    Software and Business Method patents are an unalloyed evil that invents the pretence of ownership of ideas.

    To repeat (with some editing) what I’ve written here before on the subject;

    Regarding software patents lock up ideas – they do not include detailed reproducible algorithms and code, substituting instead as broad as possible a definition of concepts so as to cover and attempt to gouge as much territory as possible when with software one has to be as specific and precise as possible to produce useful results.

    That one can ‘patent’ a software approach without specific computationally effective instruction sets makes a mockery of any claim to be rewarding effective work because unless it runs it isn’t effective software and no useful work exists to protect.

    Sans a working implementation software is nothing but an idea, and ideas cannot be owned. To claim they are is to be an enemy of free thought, free enterprise and open competition.

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  4. Jim (396 comments) says:

    “Software can generally no longer be patented in NZ, unless it is basically embedded in a machine.”

    I would love to be proven wrong, but I do not think that means what many people think. The NZ patent law change is moronic.

    Not being able to patent software ‘as such’ is not the issue. Having your software found to be in violation of a patent is the issue. The two things are not equivalent. Not even close.

    The real problem is patented algorithms like those held by the MPEG-LA patent cartel, like the thousand or so patents around the H.264 video compression standard. Those patents don’t relate to a computer program as such and are often implemented in hybrid hardware/software components. The NZ law doesn’t appear to affect that type of ‘idea that could be hardware’ patent.

    But those patents essentially prohibit anyone from making a standards-compliant video player as a computer program without licensing the required algorithms from MPEG-LA.

    It is pretty easy to think of ways to construct patents that are not about computer programs ‘as such’, but that could be used to block or extort equivalent computer programs.

    It would have been much better if the NZ law read “…computer programs as such are excluded from patent law entirely, and can not be subject to patent litigation.” or something to that effect.

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  5. Monique Angel (272 comments) says:

    Oh you’re all so cute! Banning Software patents outright = no IP = no angel investment in what could otherwise be a lucrative industry for New Zealand.
    There is limited interest in investing as Software as a Service and the other obvious sector is in the support industry providing services to Govt agencies. Again, limited returns for those not in at an early stage.
    Manufacturing isn’t going to ever flourish in New Zealand other than as an incubator for overseas companies to pick up at an early stage.
    Help me out here, what other industries have the potential to boost the New Zealand economy other than the Tech sector?
    Nation of Farmers and those who save money under the mattress, it would seem.
    Oh yeah and public servants.

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  6. Fentex (923 comments) says:

    Banning Software patents outright = no IP = no angel investment in what could otherwise be a lucrative industry for New Zealand.

    Banning software patents = No spurious legal threat to investment (from patents) = increased investment in innovation through reduction in risk

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  7. Jim (396 comments) says:

    Absolutely. Owning an idea is a ridiculous concept. Patents were introduced to protect the innovator, now they are tools for corporations with well-funded legal teams to protect their monopoly market share. Funding a startup to fight that is a fool’s game.

    I’ve worked in software development for 25 or so years, the last half of that outside NZ. With startups the biggest attraction for funding (in my humble experience) has been ability to work quickly and build a rapidly growing customer base. There are some leeches who just want to fund an IP legal team, but that’s not a good model for a true software startup.

    IP lawyers are the fallback plan of a failed business model that has amassed a fighting fund. The complete antithesis of investing in a startup.

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