Antitrust Law Daily Wrap Up, ANTITRUST NEWS: AAI amicus brief urges consideration of preemption of competition when deciding whether software patents are too abstract, (Mar 3, 2014)

By Linda O’Brien, J.D., LL.M.

The American Antitrust Institute (AAI) has filed an amicus brief with the U.S. Supreme Court, arguing that the threshold test under the Patent Act for patent-eligibility should be focused on the risk of preempting abstract ideas, including when software patents are directed to effects or results rather than the methods or means of causing those effects or results (Alice Corporation Pty., Ltd. v. CLS Bank International, Dkt. 13-298).

The Supreme Court granted certiorari in this case to review its “abstract idea” exception to patent eligibility after the U.S. Court of Appeals for the Federal Circuit, sitting en banc, invalidated the patent claims by financial services company, Alice Corporation, which cover the methods, processes, and systems for performing an intermediated settlement arrangement in the exchange of financial instruments.

The petition for review asked under what circumstances may software-implemented inventions—including claims to the systems, machines, and processes—be found ineligible as directed to unpatentable abstract ideas. Although a majority of the Federal Circuit, sitting en banc, held that Alice’s method and process claims were unpatentably abstract, the court was evenly split on whether the computer-embodiment of the invention was patent-eligible.

The AAI argues that, while it is relevant that a patent claim may be embodied in a machine (i.e., computer), the risk that a patent claim might preempt a fundamental concept or abstract idea, thereby interfering with future competition and innovation, should be the animating principle behind the Court’s application of the abstract-idea exception to patent-eligibility. The Court can institute a preemption-oriented methodology by returning to the longstanding principle that a patent claim must be limited to the method or means of bringing about a desired effect and not the effect itself.

In this case, Alice’s claims cover mathematical properties that, when interpreted a certain way by the financial industry, explain why settlement risk has been eliminated; however, Alice has not claimed a method or means of causing settlement risk to be eliminated, according to the brief. The correctness of Alice’s software system follows from mathematical properties of the system that can be stipulated; nothing in Alice’s claims recites a method or means of causing a beneficial result.

The AAI concluded by stating that the Court’s distinction between a method or means of causing an effect, and the effect itself, can be a useful framework for advancing a preemption-oriented methodology that is focused on whether a patent claim is an abstract idea or a concrete application of an abstract idea. Alice’s patent claims are not limited to any causal methods or means for bringing about an intermediated settlement; rather they are directed to the results of mathematical properties derived from stipulations about a generic computer, which suggests that the claims are unpatentably abstract.

News: Antitrust