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US Supreme Court Rules Abstract Software Patents are a No Go

by on20 June 2014 1198 times

In a somewhat surprising decision the US Supreme Court has rules that patents that cover an “abstract idea” are not valid. This was the final outcome of a battle between two financial institutions, Alice Corp and CLS Bank. The story is one that has played out very often, Alice Corp. holds the patent for the concept of an electronic escrow system. CLS wants to use the same type of system, but as the patent held by Alice Corp is so vague and abstract they cannot do so without running the risk of infringing.

To get around this they ask the courts to invalidate the patent due to it being obvious. Alice Corp, not wanting to lose their patent counter sued and the fun began. In 2013 the case went all the way to the Supreme Court. Once there the world watched to see what the outcome would be. It the patent was upheld it would not be a good thing for CLS and many others. If it went against Alice Corp it could be a change in the fundamental way that patents are awarded.

CLS attempted to prove that the patent for the abstract idea was obvious and there was nothing new in it. They felt that all Alice Corp did was add some generic software and run it on a computer. Alice Corp felt differently. They felt that because they defined specific steps in the process that was enough.

The US Supreme Court did not agree with Alice Corp saying that it was an abstract idea with the words “apply it with a computer” tacked on. In the end the ruling said that the steps “simply recite the concept of intermediated settlement as performed by a generic computer. They do not, for example, purport to improve the functioning of the computer itself or effect an improvement in any other technology or technical field.”.

We know that there are a large number of people that were watching this case and hoping for this precedent to be set. We imagine that there will be some new appeals, suits and other legal wrangling happening in the next few months based on this. We fully expect Samsung to go after what little remains of Apple’s settlement with this in hand. If they can further invalidate the patents that Apple is trying to claim they can possibly walk away with a victory. Apple, on the other hand may find some of their existing patents invalidated and some of the ones they had planned rejected.

Maybe this will actually be the start of some real reform in the patent world?

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Last modified on 20 June 2014
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