Supreme Court to review patents on software

The Supreme Court announced Friday it will review if business methods implemented through computer software should be eligible for monopolies under patent law.

The decision to review software eligibility comes as U.S. courts continue to split over the issue, making it unclear what type of technology can be patented — and when the addition of a computer process will permit an unpatentable concept like a math formula to be eligible for patent protection.

For the technology industry, there is a lot at stake since software-related patents last for twenty years and are often used to ensnare companies in expensive litigation even when the technology at issue has been superseded for years.

The case in question pits banks against an entity called Alice Corporation that holds patents over a method for “the management of risk relating to specified, yet unknown, future events” in the financial clearance process.

The Supreme Court decided to take the issue after the Federal Circuit Court published a messy decision with seven different opinions that have left lower courts in a state of confusion.

The Federal Circuit, which critic says has gone “rogue,” has repeatedly sided with patent owners in recent years, even as the range of subjects covered by patents has expanded dramatically.

In the last few years, the Supreme Court has repeatedly attempted to exercise oversight over America’s sprawling patent regime, including through a ruling this summer that barred Myriad Genetics from patenting human genes.

The Supreme Court has also addressed software and business method patents directly in a case called Bilksi in 2010, but the case has failed to provide useful guidance to lower courts or to inventors. By taking the Alice case, the court appears set to try to introduce some clarity at last.

To be eligible for a patent, an invention must be new, non-obvious and useful. But it must also fall within the realm of subjects that are eligible for a patent in the first place (abstract ideas like math formulas are excluded), and this is the issue that the Supreme Court will revisit in the Alice case.

Meanwhile, in response to abuse of the patent system by so-called “trolls,” the House of Representatives this week passed a bill called the Innovation Act to fix the worst abuses. The bill is expected to pass the Senate and be signed into law next year.