After a key Supreme Court decision this summer, courts are shredding software patents and trolls

Most people would find it absurd to grant 20-year patent monopolies on ideas like “up-selling” a customer or using a guarantor in a sales transaction. Now, the courts finally think so too.

In a fit of common sense, federal court are using a landmark Supreme Court decision from this summer to invalidate a host of silly patents that involve no more than old ideas performed on a computer.

In the the short term, the recent court decisions amount to victories for companies like [company]Google[/company]and [company]Amazon[/company] that have been plagued by so-called patent trolls. In the long term, they may help restore some credibility to America’s troubled patent system.

Update: Tim Lee at Vox has excellent case-by-case breakdown of the dozen or so decision invalidating patents under the new Supreme Court ruling.

Go ask Alice

In a major decision known as Alice, the Supreme Court finally offered some clarity in June about when software can be patented. The court did not, as many hoped, ban software patents altogether, but it did impose a strict test to limit them.

The Alice case itself involved a patent that described the ancient concept of escrow implemented on a computer. The Supreme Court affirmed a long-standing rule that abstract ideas can’t be patented and, importantly, added that simply using a computer processor to carry out the idea didn’t change that fact. The escrow patent was no more.

Now, other patents are meeting the same fate. Earlier this month, the country’s patent appeals court sided with Google in a dispute over whether the idea of using a computer to introduce a guarantor to a sales transaction should count as “patent eligible subject matter.”

The appeals court emphatically declared it should not, stating that the “claims in this case do not push or even test the boundaries” of an eligible patent, and added that the idea of a guarantor is “beyond question of ancient lineage.”

[pullquote person=”Brian Love” attribution=”Brian Love, Santa Clara University”]”It now seems pretty clear that Alice raised the bar for software patentability and did so considerably.”[/pullquote]

Amazon, meanwhile, enjoyed a similar victory this month in a dispute with a patent troll named Tuxus Technologies LLC that claimed to own the idea of using a computer to ask customers to make another purchase once they had chosen to make a first one.

A federal court in Delaware, pointing to the Alice decision, chose to shred the troll’s patent:

“It claims the fundamental concept of upselling — a marketing technique as old as the field itself. While the additional limitations of the claim do narrow its scope, they are insufficient to save it from invalidity,” wrote the judge.

These are hardly the only patents that tech companies have attacked using Alice. In recent weeks, Google has killed a patent for the idea of employee match-making, while [company]Microsoft[/company] has invoked Alice in order to ask a court to find that a software patent was invalid.

Other industries are doing the same. [company]American Airlines[/company] defeated a patent that described using a computer to convert airline points, while [company]Wells Fargo[/company] invoked Alice to wipe out a patent related to bank transfers.

A rare bright spot for patent reform

The spate of Alice-related rulings is good news for companies plagued by nuisance patent cases. But it also comes as a consolation prize of sorts for patent reform advocates who are still feeling stung by a decision by Senate Democrats to pull the plug on a bipartisan bill that would have undercut the power of patent trolls like Intellectual Ventures.

That bill would have helped change the economic calculations that drive patent trolling but, in its absence, Alice is at least cutting down on the broad, flimsy patents that trolls favor in the first place.

“It now seems pretty clear that Alice raised the bar for software patentability and did so considerably,” according to Brian Love, a patent law authority at Santa Clara University.

In an email exchange, Love added that Alice has jolted the perspective of the Federal Circuit Court of Appeals, the appeals court that many blame for permitting so many low quality patents in the first place.

“For now at least, Federal Circuit analysis of software patentability has focused where it should — on identifying whether claims actually describe something meaningfully more than well-known algorithms — and not, as it often has in the past, on whether claims include magic words like ‘computer’ and ‘network’,” noted Love.

It’s not all good news, however. While Alice is providing a way for big companies to destroy some of the most egregious patents, there are many more where those came from. As a result, the trolls may simply shift tactics and target smaller companies that can’t afford to bring Alice-style challenges — which can easily cost a million dollars or more — in federal court.

The recent Alice cases do, however, shine more light on the broken state of the patent system which, critics charge, favors patent lawyers and clever drafting rather than innovation — which is supposed to be the point of patents in the first place. The recent Google and Amazon decisions are below; you can decide for yourself if the ideas they describe deserve a 20-year monopoly.

Google CAFC

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Amazon s 101 Ruling

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