Pro-patent firms team up in brief to U.S. SC in case over patent eligibility

By Jessica M. Karmasek | Mar 20, 2014

WASHINGTON (Legal Newsline) -- Financial, health care, gaming and data analytics firms have joined forces with leading patent law academics in support of a patent owner's case before the U.S. Supreme Court, arguing the case could prove "monumental" for inventors, small businesses and the nation's economy.

Trading Technologies, a financial software firm based in Chicago, was among the 46 that signed on to an amicus brief filed with the nation's high court in Alice Corporation Pty. Ltd. v. CLS Bank International and CLS Services Ltd.

The Supreme Court granted Alice's petition for writ of certiorari in December, and has set oral arguments in the case for March 31, after the U.S. Court of Appeals for the Federal Circuit, sitting en banc, failed to reach an agreement in the case

The case challenges software method and system patent eligibility under 35 U.S.C. ยง101 -- in particular, claims directed to computer-implemented inventions, such as computer software and hardware.

Alice asserted four patents -- U.S. Patent Nos. 5,970,479; 6,912,510; 7,149,720; and 7,725,375 -- directed to the formulation and trading of risk management contracts against CLS, the alleged infringer.

In May, the Federal Circuit -- which handles all U.S. patent appeals -- ruled 7-3 against patent eligibility of the method claims and 5-5 on the system claims, leaving a lower court's ruling that the system claims were ineligible in place.

And unless the high court overturns the decision, all of Alice's claims are ineligible.

"The question here is whether computer-implemented inventions that are not directed to a scientific truth should be deemed ineligible even if such inventions are novel, nonobvious, and otherwise patentable," the pro-patent amici wrote in their 36-page brief in support of Alice.

"In light of Section 101's expansive language unambiguously making 'any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof' eligible for patent protection, the answer to this latter question must be 'no.' There is no doubt that a computer-implemented invention qualifies as a 'machine' (e.g., a computer programmed to carry out an invention), a 'process' (e.g., the series of steps performed by the programmed computer to carry out an invention), and an 'article of manufacture' (e.g., the programmable media on which software comprising the computer instructions is stored)."

They continued, "Moreover, given that a general purpose computer is a 'machine' within the meaning of the statute, it also follows that software providing new and useful functionality to a computer is an 'improvement' of such a 'machine.'"

Click here to read the full brief.

Steve Borsand, executive vice president for intellectual property at Trading Technologies, said Wednesday his company has never been involved in an amicus "quite like this."

"It's pretty unusual," he said, noting that just about every industry is being represented in the brief, ranging in size from large, publicly-traded companies to startups.

Some of the amici companies are competitors, and some are even adversaries in patent litigation, he added.

"The point being, computers and software are the basis of all aspects of our economy, so this affects all sorts of companies," he said.

For that reason, Borsand said the Supreme Court needs to proceed carefully.

"What we're saying is, don't myopically look at the facts in a vacuum here," he said.

If incorrectly interpreted, the case could end up rendering many inventions ineligible for patent protection.

"You don't want to come up with a bad interpretation of one part of the law to justify an end in this case," Borsand said.

"If a patent should go down, take it down under the proper provision. Otherwise, there will be consequences for other patent holders."

Borsand contends if a patent claim is reciting concrete, tangible things, then it should be straightforward.

"Then it's not abstract," he said. "You pass the (Section) 101 bar. Now, you can move on to determine if you're really entitled to a patent."

It simply doesn't make sense to "let in" the most simple, mundane inventions, he argues.

"(Section) 101 is the ticket into the door, so to speak," Borsand said. "Basically, CLS is saying if you've come up with some sort of software invention, we're going to hassle you at the door. But someone who comes up with a minor improvement to a screwdriver or toilet can walk through the door, no questions asked.

"Isn't that an archaic view? We think so."

And despite what other parties may argue -- and the ongoing rhetoric across the nation -- Alice isn't about patent trolling, Borsand noted.

"If you read some of these briefs, they start getting into that," he said. "But it's not about that. That has nothing to do with (the case).

"It's a red herring."

From Legal Newsline: Reach Jessica Karmasek by email at patents@legalnewsline.com.

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