Will the Alice ruling change the patentability of software?

For some—depending on their point of view—the ruling has the potential to strengthen or weaken the very principle of patent rights

Software patents—and questions about whether software should actually be patentable at all—have always been a bone of contention among patent professionals. Now the Supreme Court has taken up the issue in Alice Corp. Pty. Ltd. v. CLS Bank International.

The Alice case is the latest in an encouraging trend by the Court to take a more active role in defining and sharpening interpretation of patent law. Overall, this is good news and has the potential to help evolve toward a more predictable patent system.

Alice, in particular, is a somewhat controversial case, and it has court watchers wondering whether and to what degree the ruling might change the definition of software patentability. For some—depending on their point of view—the ruling has the potential to strengthen or weaken the very principle of patent rights.

At RPX, we are fairly agnostic about the case and don't have an opinion on whether the ruling might be good or bad for the patent ecosystem. We do, however, think it is worth considering what impact the decision would have on the actual volume and scope of future litigation. We may soon be using a new definition of patentability for software, so we decided to take a look at the heart of the case to determine just how wide-ranging the Court's ruling could be.

The specific issue before the Court in Alice is whether “claims to computer-implemented inventions—including claims to systems and machines, processes and items of manufacture—are directed to patent-eligible subject matter within the meaning of 35 USC § 101 as interpreted by this Court.”

We wanted to know what impact the answer to this question might have, so we set out to determine just how much litigation actually turns on this definition. To do it, we tasked three RPX experts—two patent attorneys and a patent agent—to analyze a statistically significant cohort of 825 asserted patents. The pool comprised 433 randomly selected patents asserted by operating companies in 2012 and 392 randomly selected patents asserted by non-practicing entities (NPEs) in 2012.

Specifically, the study indicates that claims to computer-implemented inventions were common, with 39 percent of the analyzed patents including at least one claim that should be categorized as such. Further, the study showed that NPEs were more likely than operating companies to assert patents with at least one claim to computer-implemented invention (58 percent of the NPE sample set vs. 21 percent of the operating company sample).

It's worth noting that the question of computer-implemented invention is fairly broad, while the claims in Alice can be seen as somewhat narrower and subject to a petition for covered business methods review, the procedure introduced by the America Invents Act for challenging the validity of certain patents directed to financial products and services. Using this narrower criterion, our experts found that 3 percent of the sample set included at least one claim that should reasonably be categorized as a covered business method.

I’d also point out that our goal in conducting the study was to quantify in general terms the scope of the issue and to determine how broadly litigated software patents actually are. We weren't making any value judgments about the quality or inherent value of claimed inventions. There are many examples of machine-implemented inventions that would seem to be unique, significant and patent-worthy technological advances. Not all software patents are created equal, and that realization is likely to be reflected in any changes that emerge in the wake of the Alice decision.

Readers interested in further discussion of the study findings or in learning more about the methodology we used are invited to view the study at RPXcorp.com.

Mallun Yen

Mallun Yen is executive vice president of RPX Corporation. She can be reached at infor@rpxcorp.com.

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