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U.S. ruling has implications for Canadian tech firms

A recent U.S. Supreme Court decision has important implications for Canadian IT companies, Toronto patent lawyer Aaron Edgar writes in Lawyers Weekly.

The decision in Alice Corp. v. CLS Bank International, “has caused some uncertainty surrounding the patentability of software and business-method patents,” Edgar says in the article.

Alice provides a framework to analyze whether the subject matter of a patent should be eligible for patent protection,” he writes. “The decision is important to Canadian companies in the information-technology sector as it will likely reduce the risk of infringement from non-practising entities, pejoratively referred to as patent trolls, who often assert these overly broad software and business-method patents against companies operating in the U.S.”

The case 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.”

He writes that while “the U.S. Supreme Court came to the correct conclusion that Alice Corp.’s invention was not patent-eligible, the application of the analytic framework creates uncertainty around the traditional approach to patenting software and business methods.”

The decision, writes Edgar, doesn’t provide guidance on what it actually means for an invention to be considered too abstract. While it provides U.S. companies with another layer of protection against patent trolls, Canadian companies would be wise to obtain patent protection in the U.S. as well, although this will increase time and costs in the short term.

“The decision will also likely be influential on Canadian patent examination policy, whether rightly or wrongly, and on the Canadian judiciary when the issue next arises," he says.

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