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Alice v CLS oral arguments set for March 31 by SCOTUS

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Alice v CLS will be argued before the Supreme Court on March 31, 2014.

As reported by Lyle Denniston of Scotusblog, the Supreme Court has just released its oral arguments schedule for March, 2014. The Supreme Court schedule indicates that Alice v CLS will be heard on Monday, March 31.

What is being argued

Alice holds patents to a "system" that reduces transactional risk between traders in multiple time zones. The patents are typical of those criticized for taking a well known idea and simply applying it on a computer in a fairly general fashion. CLS argues that the invention is not patentable subject matter under Section 101 of the Patent Act while Alice holds that it is.

Critically, the district court ruled the patents invalid on a summary judgment basis. If this sort of approach is upheld, it could mean that software patents, particularly weaker ones, could be disposed of quickly and cheaply in litigation, before expensive processes like discovery have been completed. As such, this would be a potent defensive weapon.

A tortured history

Much like the entire body of jurisprudence surrounding software patents, the litigation history of the case is a tortured one. The case began in District Court in Washington D.C. In a preemptive move, probably because Alice was attempting to shake CLS down for money, CLS sued Alice for summary judgment of invalidity. Alice promptly countersued CLS for infringement. The District Court Judge Collyer found the patents invalid and issued summary judgment in favor of CLS.

The case was appealed to the Court of Appeals for the Federal Circuit (CAFC). As academics have noted, and as was recently highlighted by the Wall Street Journal, the CAFC was formed under the Carter Administration with the idea of promoting invention and patents. As evidenced by the steady drumbeat of patent battles hitting the news virtually daily, and the steady drumbeat of shakedown letters reaching the in-boxes of executives at newly successful Silicon Valley start-ups, that court's parochial, pro-patent rulings have generated catastrophic results.

A three member CAFC panel reversed Judge Collyer, awarding a victory to Alice. But that victory was short-lived for Alice. After a request from CLS, and after repeated reversals and remands by the Supreme Court on subject matter eligibility, the CAFC agreed to rehear the case en banc.

The full court ruled in favor of CLS. But the decision was so fractured that there was no legally binding precedent generated. Indeed, shortly after the CAFC decision, two members of the minority in CLS essentially ignored the approach taken in that case, and generated a 2-1 victory in favor of the subject matter eligibility of a patent for a "system" that serves up content in return for sitting through an advertisement. That case, WildTangent v Ultramercial, was also appealed to the Supreme Court.

The case appealed to SCOTUS

Alice then went on to appeal to the Supreme Court (SCOTUS). Because of the enormous amount of uncertainty surrounding software patents, numerous amicus briefs were filed arguing that one or both of the Alice v CLS and Wiltangent v Ultramercial cases be taken up.

On December 6, SCOTUS agreed to hear Alice v CLS. And as reported by the Examiner, on the following Monday, SCOTUS held WildTangent v Ultramercial back until it decides Alice this Spring.

The significance for Silicon Valley

Intellectual property risk, particularly patent risk, is consuming an ever increasing amount of executive time and corporate resources in Silicon Valley. Executives must devote careful attention to intellectual property risk management. Various efforts are underway including individual and collective defensive patent aggregation, joint defense agreements, and the purchase of patent insurance.

Additionally, Silicon Valley business leaders are focusing increasing attention on Washington. In addition to reform efforts underway in the Congress, leaders hear are watching cases like Alice v CLS intently.

The Examiner is following high-profile software patent litigation and patent reform efforts closely. We plan to report further on both in the coming months.

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