Following the Supreme Court of the United States’ decision in Alice Corporation Pty. Ltd. V. CLS Bank International (Doc. 12-298), multiple federal trial-level courts have rejected software patents based on Alice. Additionally, the Federal Circuit Court of Appeals, the federal appeals court responsible for patent case appeals, has already begun to apply the Alice holding to strike down several similar software patents. According to one recent article entitled Software Patents are Crumbling, Thanks to the Supreme Court, between the Alice ruling on June 19, 2014 and September 12, 2014, there were 11 federal court rulings on the patentability of software, and in all 11, the software patent was invalidated. That Alice holding and its aftermath highlight the importance of having a competent and experienced software expert witness when involved in a software patent litigation.
In Alice v. CLS Bank, the Alice Corp owned multiple patents covering software that facilitated and mitigated settlement risks between multiple parties in a business deal. It appears from the record that the Alice Corp was a non-practicing entity (NPE) that did not actually implement or use its patented technology. NPE’s are also known as “patent trolls” depending on which side of the patent litigation a person or entity favors or supports.
Alice Corp alleged CLS Bank infringed on those patents when CLS Bank began using similar technology. Alice Corp sought to press settlement based on the infringement or it would enforce its rights in the courts. In response, CLS Bank commenced a declarative action against Alice Corp in federal court. A declarative judgment is a binding judgment defining a legal relationship between parties. Thus, CLS Bank’s declarative action sought a judgment finding that the Alice Corp’s patents were invalid, and/or that CLS Bank did not infringe such patents. One of CLS’s arguments was that the Alice Corp patents covered abstract concepts and ideas that are ineligible for patent protection under US patent law.
The Supreme Court agreed with CLS Bank and found that Alice Corp’s patents were not eligible for patent protection under US patent law. The key basis for such ruling was that the Alice Corp was essentially claiming coverage of an abstract idea, law of nature, or natural phenomena that were implemented by a computer. As such, the Court held that Alice Corp’s patents were ineligible for patent protection under 35 U.S.C. §101 absent something more showing that the Alice Corp had added an inventive concept (e.g. had solved a technological or scientific problem) that transformed the abstract idea into patent eligible invention.
While the early indication is that the courts are interpreting the Alice decision as generally undermining the validity of software patents, it is still not clear how far reaching the impact of the Alice decision will be. What is clear is that the role of qualified software expert witnesses in software litigation following the Alice case is even more important that it was previously. Such software experts will be invaluable in assisting the parties, their counsel, the Judge and the jurors to sort out what is and what is not an abstract concept or idea, and whether an inventive concept has or has not been added to such abstract concept to transform it into a patent eligible invention (i.e. one that solves a technological or scientific problem). This process is highly complex and requires someone capable of understanding the nuances and details of the claims, the history and building blocks of the technology in question, as well as the intricacies of one or more potentially large code bases. Ideally, that same person can also translate such complexity so as to make it understandable for the non-technical people involved.
At Eureka Software, our team of software engineers, analysts, and consultants has experience in a wide-variety of industries including travel, oil and gas, finance, broadcasting, publishing, and legal. Our founder, Monty G. Myers, is a veteran software industry executive and testifying software expert witness with over 30 years of hands-on experience architecting, developing, managing, and leading software technology projects. Mr. Myers has the software and litigation experience necessary to effectively advocate for your client. For more information, please contact our office today by calling 866-936-9292 or visit our webpage here to use the convenient and easy contact form.