WASHINGTON (AP) — The Supreme Court decided Friday to hear an appeal of a lower court decision that a federal judge called the "death" of software patents.
In a worst-case scenario for the high-tech industry, if the Supreme Court upholds the ruling it could invalidate many existing software patents or at least make them more difficult to defend in lawsuits.
Justices decided to hear an appeal from electronic marketplace Alice Corp., in its attempt to patent its computer-implemented escrow systems, software, and methods. It is being challenged by CLS Bank International.
The Supreme Court has already ruled that abstract ideas, natural phenomena and laws of nature cannot be patented but has refused so far to decide whether software, online-shopping techniques and medical diagnostic tests fit into that realm.
The U.S. Court of Appeals for the Federal Circuit determined that Alice Corp.'s patents couldn't be granted. Five of the 10-member panel agreed that Alice's attempt to patent its way of using third-party escrow accounts to overcome the risks of fraud and non-payment were not eligible to be patented. The other judges concurred in part and dissented in part.