Many people agree that the current U.S. patent system is broken in some form or another, especially when it comes to technology. I’m all for having a process in place for individuals to protect their intellectual property so that they are recognized and rewarded for their inventions and creativity, but the hoarding of patents and the entire “patent troll” industry shines a harsh light on the faults in the system.

Well, the Court of Appeals for the Federal Circuit may have made a pretty big step in the right direction as they delivered a ruling that should restricts patents for software and business methods. Basically, the court emphasized that these patents need to meet one of two specific criteria for them to be valid – a patent needs to be tied to a specific machine or it needs to change something from one “state” to another.

On the surface, the ruling would seem to invalidate most current software patents. Things like Amazon’s “One-Click” patent or Channel Intelligence’s Wish-List patent could be first on the chopping block, but with most rulings, there’s definitely some wiggle room for interpretation. Both could claim that their patents are tied to their Web servers or that they “change the state” of their website using the patented concept. Obviously both are a huge stretch, but it’s those huge stretches that allow patent trolls to patent some fairly obvious ideas so that they can sue others later.

It will be some time before we see any impact this latest ruling will have on the patent industry. There’s a good chance an appeal will be sent to the Supreme Court and even if the Supreme Court agrees with the ruling, the effects of the decision will likely take some time to be implemented. Either way, it definitely does seem like a pretty big step in the right direction.