US Supreme Court hears Alice v CLS arguments

The US Supreme Court has heard oral arguments in a long-running case that should decide whether computer-implemented inventions can be patented.

Arguments in the case – Alice Corporation v CLS Bank – started at 10am local time in Washington, DC on March 31, but a ruling is not expected until June.

In December, the court granted certiorari to Australian organisation Alice Corporation, which was sued in 2007 by CLS Bank, a provider of foreign exchange market software.

CLS Bank challenged Alice’s attempt to patent claims covering a computer system for electronic financial transactions.

Alice’s four patents were later deemed invalid, but the US Court of Appeals for the Federal Circuit reversed the decision and sent it for a re-hearing en banc (before all of its judges).

In May last year, seven judges agreed that Alice’s claims were patent ineligible but a majority of the judges could not agree on the legal rationale for that conclusion.

As a result, Alice appealed to the Supreme Court in September, claiming that the legal standards governing whether computer implemented inventions are patent-eligible remain “entirely unclear” and “utterly panel dependent”.

The Australian company added that a Supreme Court ruling would bring “much needed clarity” to the situation.

With arguments now beginning, commentators have disagreed on the implications of the case. On the Afro IP blog, Kenya-based IP academic Isaac Rutenberg said the uncertainty surrounding the dispute is a “serious problem” because of the importance of software patents

“More than 40,000 software patents are now issued in the US every year. The vast majority of cases brought by ‘patent assertion entities’ (also known as ‘trolls’ or ‘non-practising entities’) involve software patents. Most countries around the world allow software patents in one form or another (even despite attempts to eliminate them),” he said.

But patent blogger Florian Müller, who is based in Germany, said Alice’s patents do not protect software inventions.

“These are business method patents, not software patents in the sense of patents relating to software, or ‘computer-implemented’ (another term that appears in those patents), innovation. The Alice patents relate to the very basic idea of having a third party ensure, like an escrow, that a transaction between two parties only takes place if the mutual obligations are met. That's what Alice seeks to monopolise. Some of these claims are downright business method claims ... the others are business method claims camouflaging as system or programme claims,” he said.

There are nine judges at the US Supreme Court.