Monday, June 30, 2014

Business Method Patents and Alice Bank: A Supreme Court Decision Clarifying Nothing

At long last, last week, the Supreme Court decided what was to be a landmark case Alice Bank v CLS (CLS) defining which business method patents can receive protection and which should not.  You can exhale now.  The decision clarified nothing and might well have made things worse.

The central issue in CLS was what types of business methods constitute “abstract” ideas and are therefore not eligible for protection.  Those of us who practice patent law were hoping for a definition of the term “Abstract” so that we could more reliably predict which business methods might merit a patent and which ones would not (other considerations aside).  Instead, the decision turned on whether the claims at issue were either “known” and/or “preempted” all uses of the claimed idea.

But, whether a claim preempts all use of an idea relates to the breadth of the claim.  U.S. law has never (until now) recognized breadth as a measure of a claim’s validity.  Moreover, according to long settled U.S. law, patent owners have the right to “exclude” others from practicing the claimed invention.  In other words, claims are supposed to allow patentees to preempt others from using that idea.  Yet the CLS decision flies in the face of this law.  Also, whether a claimed invention is “known” relates to novelty or newness.  But, novelty is already enshrined in other laws. 

Fortunately, the situation is not without hope.  Business methods are still theoretically patent eligible.  But, there is no clear cut test to use to sort the wheat from the chaff.  Without saying so, the Supreme Court seems to be applying a test like that that they use for determining whether a work is art or pornography: we know it when we see it.  In light of this ambiguity in the law, inventors and entrepreneurs would be wise to run their ideas by a Patent Attorney for evaluation before proceeding with an application.

We at the Villhard Patent Group would enjoy the opportunity to discuss your ideas with you.  For more information about us see or call us at 512-897-0399.  We look forward to hearing from you.