Supreme Court Will Review Software Patents

CLS Bank case ruling may limit patent eligibility for tech companies.

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The U.S. Supreme Court on Friday agreed to rule on a case that may limit what qualifies as a software patent, which is causing a sharp division among tech companies concerned about their lucrative war chests of software patents.

The high court will determine whether CLS Bank International infringed on Alice Corporation's patents for its computer-based financial transaction system. The case began in 2007, when Alice accused CLS Bank of infringement. The U.S. Court of Appeals for the Federal Circuit reviewed the matter but in May it was unable to reach a majority opinion on Alice's patent eligibility. Attorneys for CLS Bank argued during the case that patents held by Alice, a software company, are invalid because the patents represent an abstract idea that does not require the use of a computer, according to court documents.

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If the top court decides that the patents held by Alice are invalid, such a ruling could make it difficult to file a patent infringement lawsuit using a software patent. Companies including Google and Facebook support CLS Bank, arguing that broad eligibility for software patents will lead to more infringement lawsuits. Companies including Microsoft and International Business Machines, which have decades worth of software patents at stake, argue that a ruling on the case could limit legal protection of technology-related patents.

The Supreme Court will hear arguments in March or April and rule by the summer. The high court's recent decisions reflect that the justices have a narrow interpretation of what qualifies as a patent, including a decision in June that restricted the ability of Myriad Genetics to patent the human genome.

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