US Appeals Court Calls Software Patents Into Question
In what could be a potentially far-reaching case (if not eventually overturned by the Supreme Court), on October 30, 2008, the U.S. Federal Court of Appeals for the Federal Circuit has issued an opinion in In re Bilski which denies patent coverage to an invention implementing a method of hedging risk in the field of commodities trading. It specifically rejects part of the analysis used under the State Street Bank case which was the basis of the modern (i.e. post-1998) boom in software patent filings.
The Bilski case upholds the patent office’s rejection of an invention as patentable; it was not decided in the context of the assertion of a patent against an alleged infringer. However, the basics principles in the case would seem also to be applicable to issued patents.
The full impact of the case needs to be considered — it is not in itself a rejection of the possibility of software having patent protection, but instead a very significant restriction on the kinds of software that can be protected by patents in the United States. Patent protection for software in the EU has (since rejection of legislation on the subject in 2005) been subject to greater limitations than in the United States.
This case has obvious implications for the open source software movement, as the possibility of patent problems with open source software has been a cause of uncertainty in many situations.