The long running and heated debate over the extent to which software should be patentable has recently garnered significant media attention. The debate is due, in part, to the abstract nature of software patents, the large awards handed down in infringement cases and the fact that software patents are regularly asserted by non-practicing entities (NPEs) against Fortune 500 companies and other large corporations. Additionally, the U.S. Court of Appeals for the Federal Circuit has been unable to resolve the uncertainty resulting from the U.S. Supreme Court’s ruling in Bilski that the machine-or-transformation test is not the exclusive test for determining patent-eligibility under Section 101 of the Patent Act. This environment of uncertainty has led to a number of conflicting and arguably irreconcilable decisions.
While Congress is currently considering several legislative proposals addressing NPEs, it appears unlikely that it will involve itself in the software controversy any time soon. However, an opportunity exists for the Supreme Court to weigh in on the debate. Petitioners in two cases have recently asked the high court to provide a clear rule on whether computer-implemented inventions are patent-eligible subject matter under Section 101 of the Patent Act.
In the first case, Alice Corp. has requested the Supreme Court to review an en banc decision of the Federal Circuit addressing whether Alice’s computer-implemented methods for conducting financial transactions are patentable. In its decision, the deeply fractured Federal Circuit failed to produce a majority opinion. The panel of 10 judges penned six separate opinions, totaling over 130 pages. The judges were evenly split, five to five, as to whether the method claims at issue were patent eligible. As such, the court failed to establish a clear test for assessing patent eligibility of software patents.
In the second case, WildTangent, Inc. has petitioned the Supreme Court to review a decision issued by a three-judge panel of the Federal Circuit holding that Ultramercial, Inc.’s claimed invention for a computer-implemented method for monetizing copyrighted materials is patentable. In its petition to the Supreme Court, WildTangent asserts that the Federal Circuit’s decision has created a framework where almost all computer-implemented methods are patent eligible and are given a “free pass” under Section 101 of the Patent Act. WildTangent goes on to assert that the Federal Circuit has contradicted itself and, further, has defied previous Supreme Court holdings.
In sum, a ripe opportunity exists wherein the Supreme Court can set forth clear standards for software patents. It is unlikely that the present uncertainly will be resolved without the Supreme Court weighing in. A decision from the high court could offer a straight-forward test on software patent eligibility. Such a decision would have significant economic impact, as hundreds of thousands of existing software patents could be affected.
For additional information, please contact Nathan Oleen or Joe Orlet.