Why the CLS Bank case matters

Posted by Horacio Gutierrez
Deputy General Counsel & Corporate Vice President, Legal & Corporate Affairs, Microsoft

On Thursday, the Supreme Court issued a unanimous ruling in the Alice v. CLS Bank, reaffirming that abstract ideas are not eligible for patent protection. The Court correctly distinguished Alice’s invalid business method patents from valid patents that advance technology.

We applaud the Court for its ruling, and in particular their recognition that the patents in question are not software patents. The Aliceclaims describe a method for reducing risk in financial transactions, with no connection to any technological innovation.

The Court’s opinion follows closely the amicus brief we submitted with HP and Adobe, and recognizes that software inventions are eligible for patents, especially where they “improve the functioning of the computer itself … [or] effect an improvement in any other technology or technical field.” [p.15] 

Software patents are no different than other technological or industrial inventions that are patent-eligible under Section 101. Software now powers nearly every inventive device, service and product in our world today. Virtually every industry and sector of the economy has been transformed by software. The Alice decision is an affirmation that these innovations are patent-eligible.

This ruling will preserve patent protection for software-enabled technologies that is critical to incentivizing innovation in every industry and sector of the economy.