What Can Be Patented and What Can’t Be Patented?
A common misconception on patentable subject matter is that biological and biotech inventions always get patented but data that represents a mathematical formula or commercial method is not always patentable. This is not always true as applications must be considered on a case to case basis.
In US Patent law, there are two criteria used in determining patent eligibility of an invention. First is to determine whether the invention falls under the four statutory categories of patentable subject matter and secondly, whether the invention is patent-eligible subject matter.
Patentable Subject Matter
In the past, patentable subject matter included “anything under the sun that is made by man” according to the Patent Act of 1952. 35 U.S.C. Section 101. The said section establishes the patentability of inventions and reads thus;
“Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.”
By dint of this provision, there are four categories of patentable subject matter. These categories are classified thus:
- Compositions of matter.
Processes can be said to refer to “invention actions”, which means that consist of a series of steps or acts to be performed. Machines, manufactures and compositions of matter on the other hand refer to “things” or “products”.
The anything under the sun optimism is still alive for mechanical and electronic systems which pass the novelty, non-obviousness, and written description requirements of the Patent Act. For example, 3D Printing Startups have patented their products, such as Chitubox patents and Xometry patents. In particular, Xometry has focused on machine learning predictions of manufacturing patents.
However, that optimism has recently dimmed for software inventions which today account for a significant part of the economy, as shown through the ubiquity of Google and Facebook. In his seminal blog, Why Software Is Eating the World, Andreessen noted how a number of software companies such as Amazon, Netflix, Spotify, Pandora, Zynga, Pixar, Shutterly, Snapfish, and Google have emerged and gained ascendency over their brick-and-mortar brothers.
Of course these companies turned to patents to protect their position. According to Forbes, Kodak, the bankrupt company which invented the digital camera sold its 1,100 patent portfolio to a dozen licensees. These included Microsoft, Google, and Apple. The total amount paid was $525 million. To protect its Android mobile operating system from competitors, Google purchased Motorola Mobility last spring for $12.5 billion. Microsoft also bought 800 patents from AOL last year for more than $1B, but then turned around and sold 70% to Facebook for $550m in cash.
The Alice Test
The high profits in patent assets have led to IP conflicts, and has led to tougher requirements for software patents. In Alice Corp. v. CLS Bank International, 573 U.S. 208 the Supreme Court examined claims related to computer systems and computer-readable media and came up with the now settled Alice Test.
The Alice Test is a two-step analysis used to determine patentability of an invention. The first step involves determining whether the claimed invention is based on an abstract idea. The abstract idea must be sufficiently general to be a concept, or “abstract and vague”.
The second step involves determining whether the claims of the idea, considered both individually and as an ordered combination, transform the nature of the invention into a patent-eligible application. In other words, the invention must have a transformational element to qualify as patent-eligible and not just have a conventional methodology.
In the Alice case, the Court found that the claims were directed at the abstract idea of mitigating settlement risks and held the view that the claims were “nothing significant more than an instruction to use the abstract idea intermediated settlement using an unspecified generic computer” and therefore ruled that the claims were ineligible.
The solution to avoid patent eligibility concerns is to draft a detailed description that supports how other developers can implement the invention, and also to claim with specificity modules that in combination enable the computer to improve performance (either processing speed or improved analysis/output such as improved image processing results, among others).
While there are some cases where computer programs do meet the requirements for a patent, they do not qualify as “pure” inventions under European patent law. Patentable subject matter for computer programs must be “technical,” which means it must solve a technical problem or have an industrial application.
Although the European Patent Office does not have a definitive definition of what is considered “technical,” the wording used in different European countries varies widely. Attempts to harmonize the language used in patent applications to avoid confusion in the European patent system have been unsuccessful.
The US Supreme Court’s decision in Alice v. CLS Bank paved the way for software patents, but that precedent has a dark side as well. Patent examiners are now using the Alice Test in deciding whether a computer program is a legitimate invention, and if so, how it should be patented. For this reason, an application for patent protection for a computer program must contain both the computer program and its implementation, and the claimed elements must transform the claimed invention.
Software Patents for Startups
Cybersecurity technology and image processing technologies face less abstract idea objections than other software technologies. Startups such as Fireblocks to Axonius have patented their solutions. Numerous other cryptography inventions have been patented as shown here.
A significant number of startups focus on software and machine learning to improve user experience. These new companies are driven by efficiency and use AI to optimize their core business processes. Over 200 companies are trying to automate the extremely expensive process of drug development within the pharmaceutical industry alone! A group of medical researchers developed an AI tool that allows you to ask any question about medical data. The AI then generates a custom SQL query which is used to retrieve relevant data from the database. Once deployed, database administrators (DBAs) once needed to translate questions into SQL query can move on to other pressing tasks.
AI startups in the transportation sector also create value by optimizing shipping, thereby greatly reducing empty and idle transports.
Software intensive startups that are likely to benefit from software patenting include:
AI Startups OpenAI and Midjourney
Crypto Startups Bitget and BingX
Insurance Startups such as ManyPets and Clearcover
Legal Startups including Filevine and Casetext
Marketplace Startups such as Upshift and Homeaglow
Fintech Startups such as Paymob and PalmPay
Payment Startups from Payoneer and Sendwave
Proptech Startups such as Crexi and PropStream
SaaS Startups such as Budibase and Cribl
DTC Startups such as Yepoda and Pair Eyewear
Ecommerce Startups including Faire Wholesale and Whatnot
Edtech Startups include ApplyBoard and Cluey
AR/VR and metaverse companies have long patented their solutions. Metaverse Startups such as Meta, oVice and Reworld are patent heavy and sample patents can be viewed here.
Agriculture Startups such as Cisbay, WayCool and Nutrien have been busily patenting their technologies. For examples of agtech and biotech patents are here.
Climate Tech Startups such as Enpal and Universal Hydrogen and energy Startups such as Hoymiles and Easee rely on patents to protect their capital intensive business models. Example of climate tech patents can be found here.
Electric Car Startups such as Zeekr and Motional are challenging the incumbent Tesla Motor. For example electric car patents from Tesla, see here.
Hardware Startups such as OBSBOT make electrical hardware robots and patenting in such robotics is routine, as can be seen here.
Traditional medical device companies are hotbeds for patents. More recently software based startups are rising fast. For example:
Healthcare Startups such as Kindbody and SonderMind
Digital Health Startups including Medadom and Rocket Doctor
Medtech Startups including SpaMedica and Horizon Therapeutics
Fitness Startups such as FitCoach and NutriSense
These companies apply wearable monitoring and software to optimize patient monitoring.
Software development is also affected. AI-powered code completion and generation tools, such as TabNine and TypeSQL, are being developed and made available for use. TabNine is trained using around 2,000,000 files from code repository GitHub. It is trained to predict the tokens it will encounter based on previous tokens. It learns complex behaviors to achieve this goal, including type inference in dynamically-typed languages.
Zecoda is now applying AI to website design. Enter your sketch, and voila! Your website will appear at the other end!
AI is used in automating repetitive tasks and is the way forward for software to automate software development repetitive tasks, remove the (stupid) hurdle from design to code and accelerate product development.
In sum, AI is automating the process for numerical analysis, data collection, and finally processing and production of relevant codes. AI’s applicability in many application areas and near-human performance AI-powered software can cause a paradigm shift in how people handle their personal and professional problems. These are just a few of the many ways that AI is rapidly transforming software development.
The patentability of business methods depends on the legal jurisdiction in which the invention was made. Generally, business methods do not qualify as patentable subject matter. However, they can be patented if they solve a technical problem, which is also necessary for a patent to be granted. This rule applies even to business methods that are implemented through new computer systems. These computer systems are considered a ‘practical application’ by the patent office.
In some cases, business methods are not deemed patentable. In the Alice case an example of a ’method of doing business’ that was ruled patentable, affirmed the position that a method of doing business can be patented. The Alice case followed the two-step test laid out in the Mayo v. Prometheus, 566 U.S. 66 decision.
Whether a method of doing business is patented depends on its potential to benefit society. Some businesses, for example, rely on a computer program that automatically generates a report for their clients, but do not have any way to analyze the results. While this may be a useful or saleable result of a business method, it does not meet the requirements of a patent. If this is the case, a business method cannot be patented.
It goes without saying that increasing productivity with biotech products is an economic necessity as these innovations improve the lives of people around the world, increase the rate of job creation, and rein in health care costs. This is why the industry is growing exponentially. But biotech is not a panacea. The industry is always working hard to discover the next breakthrough in health care. So a biotech company can be one step ahead of the competition by pursuing these new technologies.
Patents are a fundamental component of the innovation system, but biotech is unique in that it depends on intellectual property. For this reason, biotech faces challenges in patent administration as it must meet the same patent criteria as other industries.
Another major impediment to biotech research and development is uncertainty. This uncertainty can be in the form of competitive, economic, or legal risk. Moreover, biotech companies must contend with the inherent risk of patent trolls and USPTO practices. The USPTO has not yet provided any clear guidance on whether biotech inventions are patentable. But there are some promising changes on the horizon.
A recent US Supreme Court decision addresses the issue of patentability. The court held that a genetically modified pseudomonas bacterium can degrade oil spills. This bacterium is able to maintain four different plasmids and oil components. While the USPTO initially rejected the application, it was ultimately approved by the Court. So, there is hope that biotech companies can start using gene patents to develop new drugs and treatments for diseases.
However, the decision will affect innovation and science in a variety of ways. It could affect the flow of capital into the biotech sector as venture capital may shift its research focus away from genetic connections to other diseases. Further, the ruling may affect gene sequence patents. In the future, biotech companies will have to decide whether or not to pursue the patent application process.
Patent Eligibility Requirements
Patentability of an invention requires that it does not fall under any judicially-created “exception” to patentable subject material. Courts have variously stated and restated judicial exceptions to patentable subject material.
For example in 1980, the Supreme Court in the case of Diamond v. Chakrabarty, 447 U.S. 303, 309 (1980) reiterated the rule that;
“Laws of nature, physical phenomena, and abstract ideas have been held not patentable.”
It means that in seeking patent protection, an invention must not be a law of nature, physical phenomena and an abstract idea. If the said invention falls under any of these categorizations, it fails the requirements of eligibility and will not be patented.
Abstract ideas, laws of nature, and natural phenomenon “are the basic tools of scientific and technological work”, and therefore the Supreme Court has expressed concern that monopolizing these tools through patent rights will discourage and stifle innovation.
Laws of Nature
Patentability is not possible for laws of nature, natural phenomena and naturally-occurring goods. Einstein’s E=MC and Newton’s gravity patents could not have been granted. This is because neither of them were the “inventors” of the law and product of nature. Even though the Patent Act states that “invents and discovers” is the correct phrase, many court decisions have ruled that patents cannot be granted to naturally occurring products even if they are discovered by someone else. This patent would allow the inventor to control the production of the product even though it occurs naturally. This would make the product inaccessible to the public, which is against the principles of patent law.
Patents cannot issue for the discovery of the phenomena of nature. It means that a work of nature that exists by itself is not subject to patentability and is therefore ineligible for patent protection.
In the case of Funk Brothers Seed Co. v. Kalo Inoculant Co., 333 U.S. 127 (1948) the Supreme Court stated as follows;
“The qualities of these bacteria, like the heat of the sun, electricity, or the qualities of metals, are part of the storehouse of knowledge of all men. They are manifestations of laws of nature, free to all men and reserved exclusively to none. He who discovers a hitherto unknown phenomenon of nature has no claim to a monopoly of it which the law recognizes. If there is to be invention from such a discovery, it must come from the application of the law of nature to a new and useful end.”
Patentability is not possible for abstract ideas such as mathematical formulas. They do not cover a process, machine or manufacture nor a composition of matter. They are not useful because they have no specific use. This is similar to a composition of material whose uses are unknown. However, an abstract idea can be applied to solve a problem, resulting in something that is not an abstract idea.
It must be noted that 35 U.S.C. 101 is not the only tool to determine patentability. Other provisions of law offer additional tools to ensure that the claim meets all conditions for patentability. The Supreme Court made this clear in the case of Bilski v. Kappos, 561 U.S. 593 by stating that:
“The § 101 patent-eligibility inquiry is only a threshold test. Even if an invention qualifies as a process, machine, manufacture, or composition of matter, in order to receive the Patent Act’s protection the claimed invention must also satisfy ‘‘the conditions and requirements of this title. Those requirements include that the invention be novel, nonobvious, and fully and particularly described.”
Thus in addition to patent eligibility, novelty, obviousness, and written description requirements must be met for one to obtain a patent.
In applying for patent protection for their inventions, it is important for inventors to understand the extents of patent protection. An early determination of whether their invention is patentable or not helps in making the decision to apply for patent protection and might save costs in the long run. Ultimately when granted, patents help companies and society, while also protecting privacy and human dignity.