Red Hat has filed an amicus curiae brief in a major Supreme Court case. In the brief, Red Hat makes a strong case against software patents, arguing that the legal reasoning that led to software patents was flawed and that the pending Bilski case provides the Supreme Court with an important opportunity to rectify this long-standing problem with the patent system.

The Bilski case, which we have been following closely during its ascent through the courts, is a dispute that specifically relates to patents on methods for commodities trading. The case has raised new questions about the legitimacy of business methods patents and the basis on which such patents are granted. The outcome of the case could have a particularly significant impact on the software industry if the Supreme Court uses Bilski to redefine the boundaries of patentability in a way that excludes software.

Patent law expressly forbids patents on algorithms and mathematical truths, but that hasn't stopped software companies from using loopholes in patent law to obtain patents on extremely broad software concepts. Red Hat argues that the proliferation of such patents is extremely detrimental to innovation because it creates an enormous amount of litigation risk for companies that want to develop software products.

Indeed, entire areas of technical research have become bogged down by complex patent issues. Even video encoding formats that are thought to be unencumbered by patents, for example, are rejected by major industry players due to the lack of absolute certainty.

"Far from encouraging innovation, this proliferation of patents has seriously encumbered innovation in the software industry. Software is an abstract technology, and translating software functions into patent language generally results in patents with vague and uncertain boundaries," wrote Red Hat VP Rob Tiller in the brief. "Under the Federal Circuit's previous erroneous approach, the risk of going forward with a new software product now always entails an unavoidable risk of a lawsuit that may cost many millions of dollars in legal fees, as well as actual damages, treble damages, and an injunction that terminates a business. Only those with an unusually high tolerance for risk will participate in such a market."

Although most companies and many lawmakers acknowledge that some kind of patent reform is needed, there is significant disagreement about how the issue should be approached. Congressional efforts have fallen short, which means that intervention by the courts could play a critical role in delivering much-needed fixes.

The Court of Appeals for the Federal Circuit issued a decision in Bilski last year. The court dealt a significant blow to business methods patents, but declined to provide specific guidance on whether software patents would be regarded as acceptable under the new rules. It is hoped that the Supreme Court will bring clarity to the issue with an unambiguous and authoritative ruling.

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