Can You Patent Software in the US?
Patent eligibility for software is a hotly debated topic. Whether your software is patented is a very complex question. In the past, the answer was easy: yes. But with the recent Alice v. CLS Bank decision, there are still inconsistencies and confusion about what constitutes a patentable idea. The USPTO has repeatedly attempted to narrow its interpretation, but has had difficulty reconciling the results. This article aims to clarify the patent eligibility rules.
The U.S. Patent and Trademark Office, which oversees the patent process, recently published guidelines for determining whether an invention qualifies as an abstract idea. But these guidelines can be subjective and unreliable, since individual patent examiners may apply them differently. Whether an idea qualifies as an abstract idea depends on whether it recites an abstract idea and whether the claims recite substantially more.
A broader approach to the question of whether an abstract idea is patentable is to look at Alice Corp. v. CLS Bank Int’l., which stated, “We need not labor to draw the exact contours of the ‘abstract idea’ category in this case,” and Bilski v. Kappos, which held that a garage door opener is not an abstract idea. In other words, “a good abstract idea can be a patentable invention.”
The Supreme Court hasn’t endorsed the Federal Circuit’s experiment with abstract ideas, but some justices have raised concerns over this rule. The Federal Circuit has now decided to re-hear a case called In Re Bilski, where Judge Moore would have interpreted the abstract ideas exception to narrow the scope of the exclusion for purely mental steps. The outcome of the re-hearing in Ultramercial will likely result in changes in the way abstract ideas can be patented in the US.
Patent claims may be based on an abstract idea if it recites mental processes. In Mortgage Grader, for example, the claim claimed computer-implemented systems, an anonymous loan-shopping system, a database of loan packages, and a grading module. However, the Federal Circuit held that this was an abstract idea. While the claim is technically sound, the courts are divided on this issue.
Although ideas can be patentable, they are often difficult to protect. The US Patent Office’s new guidelines seek to clarify how patentable inventions are evaluated. Patents claiming abstract ideas cannot be patented in the US, but they can be patented in the European Union. The US and European patent offices have separate patentability rules and are assessed on a broader basis. The new guidelines will help clarify the patentability assessment process for abstract ideas.
Despite its polarizing status within the US economy, business methods for patenting software are not without controversy. Although IBM and a few other companies oppose them, the recent State Street decision has led to a broadening of the patent system. While the European Union is not against software patents, it opposes the validity of business methods. This decision represents a fundamental split between the US and European standards for patentability.
While the USPTO has largely avoided addressing the issue of software patents, it has sought input from developers to improve the quality of its software patents. The March 2000 initiative suggests substantial benefits from enhanced examination, but also raises questions about whether software patents are being overpatented. The USPTO recently announced its “21st Century Strategic Plan” that includes a series of process reforms. The plan also proposes outsourcing of the review of prior art.
A business method patent involves a new way of doing business. For example, a new ATM machine might be a business method patent. In this case, the machine sends a secure code to a user’s cell phone. This business method patent is different from a process patent, which focuses on the physical material. For example, the ATM machine may be patented if it provides a new way to make a particular type of transaction.
Because the software industry is global, the need to develop harmonized policy toward the protection of software in this area is even greater. The Framework for Global Electronic Commerce (FGEIC) encourages this process. While the U.S. has successfully argued for business method patents in bilateral negotiations, the most recent agreement with Jordan explicitly requires this concept. Further, in the WIPO initiative to harmonize patent laws, the U.S. has argued against using the “technical effect” standard.
Unlike in the past, business methods are protected under patent law. The process is complicated, and the applicant needs to ensure that the method is feasible and produces useful results. Patent attorneys can help protect your intellectual property. It takes about two years to get a business method patent. There are several fees associated with the process, including the USPTO’s fees. However, it is still worth it to retain the services of a patent attorney.
Abstract ideas with external hardware
The practice of patenting abstract ideas with external hardware is nothing new. In the past, the concept of remote access to information has been used for decades. However, the claims of a patent are generally recited as generic computer implementations of an abstract idea. In this case, the patent claims concerned a system for offering media in exchange for viewing an advertisement, an abstract idea. This is because it can be accomplished by any general purpose computer.
The Federal Circuit has issued more than a hundred decisions on this question. However, synthesis of these cases is difficult. The Federal Circuit’s abstract idea test cases can be daunting. A review of each case’s holdings is necessary, but isn’t a sufficient starting point. A recent case cited by the Federal Circuit cites a Federal Circuit decision on SS 101. That case has implications for how patents are granted in other cases.
In the past decade, there have been numerous cases involving the patentability of business processes. The USPTO has enacted the Interim Guidelines for Examining Patent Applications for Patent Subject Matter Eligibility. These guidelines lay out criteria that a process must meet in order to be deemed a patentable invention. The process must be tied to a particular machine, or transform physical matter in some way. Examples of patentable processes include vulcanizing rubber or smelting ore.
The new patenting rules would require the USPTO to publish a notice on its new website and in the Official Gazette, a weekly publication. This notice would alert interested parties to file a petition for inter partes review. However, such a notice cannot claim any customer benefits. In the meantime, patent holders may outsource production of patented products to third parties. Another method to market patented products is through compulsory licenses.
This approach is often employed in patent litigation. For instance, in AT&T v. Excel Communications, the district court considered other processes, but deemed them not patent-eligible because they did not involve physical transformation. As a result, the court held that the Bilski test could not be used as the sole standard. In this case, the patent was invalidated under the In re Nuijten decision.
The Federal Circuit of the U.S. Court of Appeals (Federal Circuit) clarified that patents can only cover business methods and processes that can be linked to a machine. A method that uses judgment calls cannot be patented. The Federal Circuit also clarified that mental processes are not patentable as long as it is associated with some physical change in the subject. However, many decisions have not been made on the issue of whether a mental process can be patented.