The Supreme Court has tossed out an Australian company’s patents for business software in a closely watched case that offers new guidance on the standards for awarding patents.
Raleigh-based Red Hat (NYSE: RHT) was among the companies filing briefs against the patents.
The justices on Thursday unanimously agreed with a lower court ruling that invalidated Alice Corp.’s patents for managing risk in financial trades.
New York-based CLS Bank International had claimed the patent simply took an idea that has been around for thousands of years and programmed it to run through a computer.
Dozens of technology firms including Google and Facebook filed briefs in the case urging the court to create clearer rules for software that can be patented.
In a brief filed earlier this year, Red Hat called for reforms in patent law.
The Raleigh-based open source software and services firm said so-called software patents “can have a perverse effect on software technology.”
“Red Hat is committed to the free and open source software community, and this leads us naturally to seek reform in the law relating to software patents that would promote creativity and innovation,” said Rob Tiller, vice president and assistant general counsel, at Red Hat.
“Software patents can have a perverse effect on software technology – they can hinder innovation rather than encouraging it. The CLS Bank case presents a great opportunity for the Supreme Court to address this problem.”
In the brief, Red Hat declared:
“This case offers an opportunity to restore the historical and well-founded boundaries for patentable subject matter that exclude abstract ideas of the type generally involved in software from patent eligibility. This course correction will both bring clarity to the law and remove a significant barrier to technology innovation.”