AAI Asks Supreme Court to Consider Preemption of Competition When Determining Whether Software Patents Are Too Abstract (Alice Corp. v. CLS Bank Int’l, No 13-298)

The AAI has filed an amicus brief in the U.S. Supreme Court arguing that the Patent Act’s threshold test 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.

In Alice Corp., the Supreme Court granted cert to revisit its “abstract idea” exception to patent eligibility after the Federal Circuit, sitting en banc, invalidated Alice’s patent claims, which cover methods, processes and systems for performing intermediated settlement, or escrow, on a computer. Although a majority of the en banc court held that Alice’s method and process claims were unpatentably abstract, the Federal Circuit split 5-5 on whether the machine-embodiment of the invention (i.e., the system claim) 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, traceable to 1850s precedent, that a patent claim must be limited to the method or means of bringing about a desired effect and not the effect itself.

Here, Alice’s claims cover mathematical properties that, when interpreted a certain way by the financial industry, explain why settlement risk has been eliminated, but Alice has not claimed a method of means of causing settlement risk to be eliminated.  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 brief was written by AAI Advisory Board Members Andrew Chin and Shubha Ghosh, with assistance from AAI Senior Counsel Randy Stutz and AAI General Counsel Rick Brunell.