Software Is Patentable

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History in the US Patent Office: In 1996, the U.S. Patent and Trademark Office adopted its "Final Computer Related Examination Guidelines." As with all final guidelines, these were later replaced with the next version of the guidelines. In face, the patent office has established numerous final guidelines, with each new edition reflecting the latest cases from the U.S. Federal Circuit Court of Appeals and the United States Supreme Court. The guidelines used by the U.S. Patent and Trademark Office were extensively rewritten for the latest edition (2013) of the Manual of Patent Examination Procedure, and can be found in Section 2106 of the MPEP. These guidelines are designed to assist patent examiners in handling hardware and software related inventions. Since hardware and software are almost always interchangeable, it is not surprising that these guidelines reflect both types of computer related inventions. Although the guidelines assist in analyzing all requirements for patentability, they are most important in connection with determining whether these types of inventions are statutory and therefore patentable.

Supreme Court Cases: Even these guidelines, however, have become outdated with the 2014 Alice Corp. v. CLS Bank decision of the Supreme Court. In this case, the Supreme Court determined that a computer-implemented invention for managing settlement risk was unpatentable as being directed to an abstract idea. The Court set forth a two-part test for analyzing whether or not a claim is unpatentable for claiming an abstract idea. First, it is necessary to determine whether or not the claim is "directed to" an abstract idea. Because it is possible to identify an abstract idea for every invention ever patented, the Supreme Court must intend for this test to be something other than a determination as to whether it is possible to identify an abstract idea for the claimed invention. Rather, in order to be brought within the first part of the Supreme Court's test, the claim must be "directed to" the abstract idea, and the abstract idea be of the right type of "abstract idea" (as the Court has used that term). If a patent claim is "directed to" the right type of abstract idea, then it is necessary to determine whether or not the claim contains an "inventive concept" outside the abstract idea. The Court has defined this phrase to mean "an element or combination of elements that is 'sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.'" While the Court did not provide a great deal of guidance as to when claims include this type of inventive concept, the Court did imply that claims that improve an "technological process," or otherwise improve the functioning of the computer, will include an inventive concept.

This decision, and the Courts previous Bilski v. Kappos decision, has made it more difficult for some business method patents to become patented. The Supreme Court has rejecting several previously established tests for determining when business methods and software are patentable (in particular, the tests developed by the Federal Circuit in their State Street Bank and In re Bilski decisions). Although the Supreme Court has clearly rejected these previously created rules for analyzing the patentability of software implemented inventions, the Court has not create clear guidelines as to how these inventions should be analyzed. We have the two part test created by the Alice Corp. decision, but it can be quite difficult to actually apply this test to new fact patterns.

One thing that is clear is that software can still be patented. But not all software can be patented. If software merely implements an abstract idea (such as a fundamental economic principle), then a claim to that software will likely be rejected by the courts and the patent office as being directed to an unpatentable abstract idea. In contrast, if the software is designed to improve the functioning of a computer or some other type of technology, then that software should be considered patent eligible. In many cases, unfortunately, an invention falls in between these two ends of the spectrum, and it is not clear how these software inventions will be treated under the current law.

Current Patent Office Guidance: The patent office has recently (December 2014) set forth Interim Guidance on Patent Subject Matter Eligibility. This Guidance clarifies how the Patent Office will be treating these inventions under the two-part Alice Corp. test--at least until the Supreme Court discusses this topic again.

For a more detailed discussion on the current state of software patents under the Supreme Court's Alice Corp. decision, see the Bitlaw discussion of "Are Software and Business Methods Still Patentable after the Alice_Corp.?"