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Intellectual Property

Eligibility of software patents unclear after U.S. decision

A recent U.S. Supreme Court decision has increased uncertainty around the patentability of software and business methods, and the resulting costs to applicants, says Toronto patent lawyer Aaron Edgar.

Alice Corp. v. CLS Bank International involved a dispute over the patentability of software “designed to facilitate the exchange of financial obligations between two parties by using a computer system as a third-party intermediary.” The Supreme Court agreed with the Federal Circuit Court that the software in question was not eligible for patent protection, as “they are directed to an abstract idea.”

“Traditionally, patents are granted on the basis of the technology, whether the invention is new or non-obvious, and now the Supreme Court has introduced a new hurdle that asks the philosophical question of whether the invention is too abstract,” says Edgar.

While the U.S. Supreme Court provided an analytic framework to determine whether an invention is a patent-ineligible abstract idea, says Edgar, it provided no guidance on how to apply that framework.

“The court held that Alice's claims were directed to an abstract idea and that the use of a generic computer failed to transform the abstract idea into a patent-eligible invention. The court has not provided guidance on what qualifies as an abstract idea or what would be a non-generic computer implementation,” he says.

Although the court recognized that many computer-implemented inventions are directed to patent-eligible subject matter, “applying the vague concepts of an ‘abstract idea’ or whether something is ‘significantly more’ than an abstract idea from the decision has not provided clarity for patent eligibility of software patents,” says Edgar.

In Canada, however, Edgar says that the Federal Court and Federal Court of Appeal recognized the difficulty in applying an 'abstract idea' test in the decisions surrounding Amazon.com's one-click patent application.

“The Canadian courts recognized that we must consider the claim as a whole and whether a computer is an essential element of the invention.”

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