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For U.S. high court, a year of discontent with patent rulings

By Lawrence Hurley

WASHINGTON (Reuters) - The U.S. Supreme Court has shown growing discontent with the country's top patent court, throwing out five of the six rulings it reviewed this year as being too protective of intellectual property rights.

Thursday's ruling in a hotly anticipated case, Alice Corp v. CLS Banks, emerged after the patent court, known as the U.S. Court of Appeals for the Federal Circuit, failed to resolve a key legal question. The patent court had split 5-5, effectively upholding a lower court decision but offering no clear guidance, prompting the Supreme Court to take the case.

In Thursday's unanimous decision, the only one to uphold the patent court this year, the Supreme Court modestly cut back on software patents by ruling that simply implementing an abstract idea using a computer does not make an invention eligible to be patented.

The high court is taking more cases from the patent court than it has in the past. This term's six cases are the most in a single nine-month term since the Federal Circuit was set up to handle patent cases in 1982. The term ends this month.

Although the Supreme Court often takes cases in order to reverse lower court rulings, the rate of reversal of the Federal Circuit has prompted considerable debate within patent law circles.

Some lawyers suggest it signals the Supreme Court has concerns over how the Federal Circuit is handling patent law, which is increasingly important to the economy due to the rise of the technology industry.

"We see the Supreme Court pruning back the more pro-patent stance that the Federal Circuit had taken," said Gregory Stobbs, a patent expert at Harness Dickey law firm.

Almost as striking as the reversal rate has been the unanimity on the high court. While the nine Supreme Court justices often are split, on patent rulings they were unanimous.

"Every decision has basically said the Federal Circuit was being too pro-patent," said Daniel Nazer, an attorney at the Electronic Frontier Foundation, which favors fewer patent protections. Even when the high court upheld the appeals court ruling in the software case, it effectively faulted five of the judges who had offered a different interpretation of the law.

PATENT TROLLS

The majority of this term's Supreme Court rulings delivered blows to so-called patent trolls, defined as companies that hold patents only for the purpose of suing firms seeking to develop new products.

The software patent ruling was one of them. It followed Supreme Court decisions in three other patent cases that experts view as being detrimental to patent trolls.

In two related rulings issued in April, the court made it easier for winners of patent lawsuits to have legal fees paid by the opposing party. Then, in early June, the Supreme Court ruled in favor of Nautilus Inc in a patent infringement case in which the court clarified how unclear, or "indefinite" a patent could be before it would be deemed invalid.

The patent court came under further scrutiny last month when Randall Rader quit as chief judge and later announced plans to leave the bench after he admitted sending an email praising a lawyer who appears before the court.

Now the question is whether the Supreme Court will go on taking as many patent cases. The Federal Circuit's new chief judge, Sharon Prost, who ascended to the role in May, is viewed as more in alignment with the Supreme Court than was Rader, who was generally viewed as being in favor of broad patent rights.

The software case illustrates just how Rader and Prost differed on the law: They were on opposite sides, with the Supreme Court embracing Prost's interpretation of the law.

Similarly, in another appeals court case decided in April involving Apple Inc and Google Inc's Motorola Mobility unit, the two judges again differed on their interpretation of the law.

(Additional reporting by Diane Bartz and Daniel Levine)

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