George Mason University Antonin Scalia Law School

Trading Technologies v. CQG: Federal Circuit Gets One Right On Software Patents

dictionary entry for the word "innovate"The Federal Circuit issued another important opinion yesterday affirming that software is a patentable invention in the United States. In Trading Technologies Int’l, Inc. v. CQG, Inc., the court determined that a graphical user interface (GUI) for a commodities trading platform was patent eligible. Ten law professors, including CPIP Senior Scholars and others, filed an amicus brief in support of Trading Technologies, explaining that its GUI patents were a patentable inventions under § 101 of the Patent Act and that this is exactly the type of twenty-first-century innovation the patent system is intended to promote and secure. (CPIP’s Adam Mossoff was one of the co-authors of the amicus brief as well.)

The accused infringer in this case argued that Trading Technologies’ two patents were unpatentable because they were an “abstract idea” under § 101 of the Patent Act. This opinion arose from the infringer raising this defense in response to Trading Technologies’ lawsuit against it for patent infringement. Despite the defendant’s arguments that the patents merely broadly referred to the abstract idea of “commodities trading,” both of the GUI patents describe technological improvements in the interface that commodities traders use. The court discussed how the inventors’ specific improvements in this GUI program increases the efficiency and accuracy of trading—a real-world, valuable function in a twenty-first-century technological innovation. Thus, these patents cover inventions that are more than just an abstract idea.

As described by the law professors’ amicus brief, the defendant’s broad argument about the “abstract idea” exclusion in patent law would eviscerate the patent system. Any invention can be described at a high level of abstraction, and thus an overly broad understanding of “abstract idea” would invalidate patents on thousands of legitimate patents on valid inventions, such as the telephone, GPS, typewriters, and optical discs. In this case, the court properly recognized that this framing of the “abstract idea” rule in patent law necessarily incorrect. Hopefully, this decision will stem the tide of massive invalidations of patented innovation, as more courts recognize the value in software inventions and that patents are important for promoting and securing this innovation.