Supreme Court Limits (but Doesn't End) Software Patents

Just adding a computer to an idea doesn't mean it's patentable, the court rules.

  he Supreme Court will begin hearing oral arguments on the President Obama's health care reform bill in Washington The United States Supreme Court is seen one day before the court will begin hearing arguments on the constitutionality of President Barack Obama's health care reform bill, in Washington on March 25, 2012. UPI/Kevin Dietsch     (National Journal)

A unanimous Supreme Court narrowed the reach of software patents Thursday.

The Court ruled that simply involving a computer in an idea doesn't mean it's patentable. The justices tossed out several patents belonging to Alice, an Australian financial services company, and the ruling could invalidate other similar patents.

But the Court didn't go as far as many patent critics had hoped, declining to strike down all software patents. Critics argue that a rise in litigation (especially over software patents) is suppressing innovation and limiting consumers' access to technology.

The Supreme Court has long ruled that "abstract" ideas are generally not patentable. Alice's patents covered a computer system for facilitating financial transactions. CLS Bank challenged the patents, and the high court agreed that a patentable invention must do more than just add a computer to an otherwise abstract idea.

"Merely requiring generic computer implementation fails to transform that abstract idea into a patent-eligible invention," Justice Clarence Thomas wrote for the Court.

Google, Facebook, Amazon, and other technology giants had urged the Court to issue a broad ruling against software patents. In a brief to the Court, the companies wrote that abstract software patents "have become a plague on computer-related industries."

Other companies, including Microsoft and Adobe, agreed that the Court should throw out Alice's patents, but warned against a sweeping blow against all software patents. Those companies said the Court had no reason to "risk the potential uncertainty and unforeseen impacts" by addressing the patentability of all software.

Ultimately, the Court was careful to craft a narrow ruling. Thomas wrote that "many computer-implemented claims are formally addressed to patent-eligible subject matter," but the Court offered little guidance on what kinds of software patents might still be valid.

The ruling comes after the Senate abandoned legislation to crack down on "patent trolls" — firms that file frivolous patent claims to extort settlements out of companies. Many tech companies argue that patent trolls have become a drain on the economy.