The nine justices of the US Supreme Court on Monday heard oral arguments about a hotly debated question as to how innovative an invention should be to receive legal protection.
The justices heard a one-hour argument in a case that will ultimately affect software companies and a wide range of businesses that sell products containing computer-implemented features. The Supreme Court is expected to hand down its ruling by the end of June.
The Supreme Court agreed to take the case after a split US Court of Appeals for the Federal Circuit ruled in May 2013 that an abstract idea is not patentable simply because it is tied to a computer system.
The case before the Supreme Court involves Alice Corporation, which holds patents for a computer system that facilitates financial transactions. The patents are challenged by CLS Bank International, which says they are not patent eligible. The Alice patents cover the simple idea of reconciling accounts at the end of a trading day.
The US Patent Act states that anyone who "invents or discovers a new and useful process, machine, manufacture, or composition of matter," or an improvement of an existing one, can get a patent. An invention related to an abstract idea can be patented, but it must include a way of applying the idea.
The Supreme Court ruled in the 1970s that an algorithm, which is a set of simple instructions on how to carry out a task, is not itself patentable. That would suggest that anything which can be carried out solely by a computer is not patentable because a computer program is by definition an algorithm.
Lower courts, however, ignored the Supreme Court ruling and affirmed patents that were written and functioned solely on computers without human interaction. Alice Corporation said that because its idea requires the use of a computer, it is patentable.