Today, one of the most difficult challenges tech companies faces is adapting their patent strategy for recent law changes. Many companies have to answer the question, “How can we protect our intellectual properties on software and computer system?”
The US standard for patent eligibility has become one the most confusing and unpredicted areas of law. This confusion is especially relevant to technologies that use software.
This issue is important because it goes beyond patenting software. Innovative software solutions are found in nearly every technology sector. Recent changes to patent law have affected patentability of a wide range of inventions, from artificial intelligence to medical devices and automobile equipment.
This blog post will provide background information on the origins of this raging controversy and I will some practical guidance for tech companies as they navigate the many questions that can arise when creating a patent strategy that involves software technologies.
Subject Matter Eligibility
This confusion started in 2014 when the US Supreme Court decided a case named Alice Corp. v CLS Bank International, 573 U.S. 208 (2014) (“Alice”). This case revolved around software patents that claim (1) a method for exchanging financial obligations, (2) a computer system configured to carry out the method for exchanging obligations, and (3) a computer-readable medium containing program code for performing the method of exchanging obligations.
For a US patent to be granted, there are four requirements as referenced by their section numbers in the federal statute:
- Eligibility ( section 101): The invention should be patent-eligible.
- Section 101: The invention must be new and different from the prior art.
- Non-Obviousness ( Section103): The invention cannot be obvious from prior art.
- Description ( Section 112): A patent application must describe the invention in detail.
The Alice decision aims to determine whether an invention is patentable subject matter under Section 101. Alice does not address whether an invention is sufficiently novel or technologically significant for patent protection. These questions (novelty and non-obviousness) are addressed under Sections 101 and 103.
The law of subject matter eligibility, as the name implies, determines what types of things are eligible to be patented. Mathematical equations, for example, are not patent-eligible subject material. Therefore, an equation cannot be patented, even if it meets all other requirements. While the practical effect of the Alice decision is to reduce the number of patentable subject matter in the US, properly prepared software and computer-implemented technology inventions can still avoid the umbrella of “abstract ideas.”
What is An Abstract Idea
Abstract ideas have been deemed patent-eligible subject material for many decades prior to the Alice case. For example, in a 1970 case, Parker v Flook, dealt with a patent that claimed a mathematical formula to calculate certain chemical process values. The patent claims in that case referred to the mathematical formula using only “post-solution” conventional activities. Accordingly, the claims were not eligible subject matter. Other than mathematical formulas, other types such as Bilsky v Kappos on risk-hedging or mental processes were considered abstract ideas in the years that preceded the Alice case.
Many patent-eligible inventions are often derived from or explained using mathematical formulas or other types of abstract ideas. The Supreme Court has repeated stated in Parker that “while a scientific truth or its mathematical expression is not patentable invention,” a novel and useable structure created with the aid scientific truth might be.
This means that even though an invention was based on or was derived from an abstract idea (like a mathematical equation), it was easy for the inventor to prove that the invention was not an abstract idea. It is generally understood that a patent application would not be considered abstract if it didn’t claim an equivalent of a mental thought process, business concept, or mathematical formula. For example, if the abstract idea is tied to a working machine to achieve a useful job, such claims would not face abstract rejection.
The law was simple to understand and predictable so US patents issued were seldom invalid for claims of abstract ideas. However, Alice has changed that and has driven a remarkable increase of patent invalidations in the courts and in rejections by the USPTO under Section 101. The “abstract ideas” exemption to patent eligibility was confined to process claims (also known as method claims), which describe the invention in a sequence of steps or operations. In a patent application that claimed both a method and a system, it was common for the patent office not to reject method claims under Section 101. After Alice this distinction has become less important. Any type of claim can be invalidated or rejected as an “abstract Idea” unless properly documented in the patent application.
Impact of Alice
The Alice decision did not change the definition of abstract idea. It established a framework to determine whether a patent claim that contains an abstract concept meets the criteria of Section 101.
The Alice framework expands the range of claims that could be considered “abstract ideas”. It also skews the results towards finding “abstract ideas” in all cases. If any claim part can be described as an “abstract idea”, then the whole claim will be more likely to be ineligible for Section 101. This provides motivation for someone who wants to use your invention for free to argue that an abstract idea can lurk in almost every patent claim ever created. Well-funded litigants have made use of this fact to invalidate hundreds upon hundreds of patents that were issued under the Alice framework.
The Alice framework has been summarized by the US patent office in a flowchart that, with its numerous tests, has reduced the range of of patent-eligible abstract ideas that can be patented under this framework.
Federal courts, patent offices and patent attorneys all have spent considerable effort trying out the Alice framework for software-implemented inventions. It’s difficult to find high-level consistency among these cases.
In one, for example, a novel way to navigate a spreadsheet was patentable (i.e. not an abstract idea); however, in another case, a novel indexing program that organizes information in a particular manner was not patentable. It’s not easy to reconcile different cases. Different judges often come up with different conclusions. Clear standards were not possible to identify even in a retro review software case that the Federal Circuit ruled in 2020.
Framework for software patent protection
Software cases have had the greatest impact of Alice. Although the Alice decision does not explicitly refer to “software”, the Alice case involved a software-implemented invention. The majority of patents invalidated under Alice relate to software or software-controlled systems.
Recently, a commentator summarized the software patent cases decided by the Federal Circuit in 2020. He found that only four of the 27 software-related patents that were appealed for subject matter eligibility were found to be eligible under Section 101.
The new guidelines by the patent office have had a significant and positive effect on patent applicants. In 2019, the overall number of Section 101 rejections (or ” Alice rejects”) fell significantly. Additionally, there was an increase in software-related patents issued according to the new guidance.
The PTO flowchart in its MPEP 2106 to determine Section 101 eligibility is as follows:
The current US patent office approach to patent eligibility is the 2019 Guidance. This guidance was based on the Alice decision as well as other Supreme Court and Federal Circuit opinions regarding patent eligibility. The Office’s current eligibility guidance is found in the Ninth Edition, Revision 10.2019 (revised June 2020) of the Manual of Patent Examination Procedure (MPEP), and particularly Sections 2103 through 2106.07(c).
The PTO describes its flowchart as a “two-step” process. However, this is a mistake. A quick glance at the flowchart reveals that Step 2 actually consists of two steps (“Step 2A”) and “Step 2B”. Further, Step 2A actually consists of two steps (Prong One and Prong Two). Thus, the “two-step” process is actually four steps.
A brief explanation of the PTO flowchart is as follows:
Step 1 – Statutory Categories: Is the claim for a process, machine or manufacture?
If it fails, the claim is not patentable under Section 101. Otherwise, proceed to Step 2A.
Step 2A – Judicial Exceptions: Does the claim relate to a law or nature, a natural phenomenon or an abstract idea? This “step” is actually a two-prong inquiry.
Step 2A of the Alice framework asks whether the claim is directed at an abstract idea. Although the Alice decision does not define an abstract idea, the US patent office’s 2019 guidance provided some insight. The US patent office’s 2019 guidance identified three categories of abstract ideas (which they call “enumerated groups”) from case law:
Mathematical concepts: – mathematical relationships and formulas or equations.
Some methods of organizing human activities – economic principles or practices, including hedging, insurance and mitigating risk; commercial or legal interactions (including contracts; legal obligations); advertising, marketing, sales activities or behavior; business relations; managing personal behavior or relationships between people (including teaching and following rules or instructions);
Mental processes Concepts performed in the human brain (including observation, evaluation, judgement, and opinion).
Step 2 includes two “prong” inquiries
Prong One – Does the claim relate to an abstract idea?
Prong Two – Does the claim in its entirety integrate the abstract idea into an application?
Thus, even if the claim has an abstract idea, you can still answer no in Step 2A if the claim integrates the idea into an application and the claim is patent eligible. These are some of the useful examples provided by the MPEP. These are some examples of claim limitations that, when used in conjunction with a computer invention or software, can integrate an abstract idea into practical applications:
Achieving an improvement in the operation of a computer, or any other technology.
Combining the abstract idea with a specific machine or manufacturer that is integral to the claim.
A transformation or reduction of an article to another state or thing.
Hence, even if the claim is related to an abstract idea, it can be moved to the left side of the flowchart (patent eligible) if it describes a system, process or method that has any of these attributes. If your claim is about an invention that improves the functionality of a computer or another technology, then it meets the criteria for Step 2A (under Prong 2) so the claim shouldn’t be rejected as an ineligible abstract idea.
If Step 2A is no, the claim is valid and patent-eligible, and otherwise, proceed to Step 2B.
Step 2B: Is the claim to include additional elements than the judicial exemption?
If not, the claim is invalid and not patent eligible (it’s valid claim under Section 101).
Otherwise, the claim is patentable (it qualifies as a valid claim under Section 101).
What amounts to significantly more than an abstract idea in step 2B?
This question is answered by analyzing the “additional components” of the claim. These elements are elements that are not abstract ideas. But, patent eligibility under Section 101 does not consider whether the claim is sufficiently novel or technologically significant to warrant patent protection. These questions (novelty and non-obviousness) are addressed under Sections 101 and 103 of patent statute.
Instead, it seems that the “inventive idea” analysis at Step 2B (for determining if the additional elements in the claim amount significantly more) looks much like the analysis at step 2A (for finding out if the claim integrates an abstract idea into a practical app), which is summarized below.
Both the Federal Circuit and patent office acknowledged that Steps 2A & 2B overlap strongly. The MPEP, for example, states that “Determining whether a claim qualifies at Step 2B requires all relevant considerations to be evaluated, most these considerations were evaluated in Step 2A Prong Two.”
The steps 2A and 2B may not be identical. Step 2B is different. For example, an examiner might decide that additional elements in your claim are not “well-understood routine, conventional activity.” This is not what Step 2A considers. The patent office has established a high standard for inquiry and there are good ways to overcome a rejection based on an examiner’s assertion of claim elements being well-understood routine, conventional activity.
Practically, claims that are patent-eligible under Step 2A’s Prong 2 (reported above) can be used to obtain patent eligibility in Step 2B. Step 2B offers another way to escape the Alice framework by using similar strategies to Step 2A. These are the back doors to Prong 2’s escape hatches.
If the claim contains additional elements that are significantly more than the abstract ideas, the claim passes Step 2B and should be accepted as an eligible abstract idea.
Summary
It is important to know the context and history of the Alice decision in the overall patent system to protect intellectual property related software and computer systems. If you are a tech company with questions about the Alice decision and how it affects the patentability your technology.
If you have any questions on software patent protection, please contact us!