As 2014 came to a close, and the patent community weighed in on the year’s most momentous patent events, there was one clear winner: the Supreme Court’s summertime decision regarding software patentability in Alice Corp. v. CLS Bank Int’l (“Alice”). Immediately following the decision, we predicted the death of many software patents (see our TechCrunch article here). And now, following a glut of court decisions appearing to confirm the prediction, we are often asked the same question by those with a stake in software patents: “What does it all mean and what do I do now?” To this, we offer our thoughts:
In Alice, the Supreme Court gave us a checklist of sorts by which to analyze whether a software invention is patent eligible under 35 U.S.C § 101 (or still valid if the patent has already been granted). First, you must determine whether the underlying, claimed software invention is an abstract idea. If it’s not, you’re generally home free. If it is, however, then your software invention can’t be patented unless you can show that you did something more than use the Internet or a computer to make your invention come to life. Such a showing could be that the software invention achieves some new result not previously attainable, requires novel computer operations to operate or improves the functioning of the hardware itself.
But the Supreme Court’s test begs one big question: what is an abstract idea and when is a software invention considered one? As luck would have it, the Supreme Court didn’t provide much help on that issue. However, in struggling to understand what the Supreme Court meant, courts have given us some guidance. And if you had the chance to slog through those cases, here’s what you’d find.
First, if your invention is the software version of an already existing human practice, it is very likely an unpatentable abstract idea (or in the case of an already granted patent to this subject matter, invalid). Examples would include using the Internet or software to manage contracts or mitigate risk in a financial transaction, cloud software for doing your taxes, software for conducting auctions, software for playing video poker, or software for generating insurance policies. After all, these concepts already existed in human practice outside of the software realm. And no, it does not matter if you invented something the human brain could not do outside of a computer implementation.
Second, if your software patent’s claims do not relate to a ubiquitous human practice, but are nonetheless directing towards pure data processing and not tied to a physical machine, the patent may also be found invalid. In other words, manipulating data and processing numbers, if not tied to some other hardware or useful output, may be considered abstract and therefore not patentable.
Third, if your software invention has no analog in prior human practice and solves Internet or computer specific problems, there is a much better chance that it will qualify for patent protection under Alice. Examples could include software for controlling field programmable gate arrays, software for overcoming limitations in web browsers or software built to manage novel hardware. Again, because these technologies exist only in the computer realm and do not have non-software analogs in human behavior/practices, they have a much better chance of being found patent eligible.
But remember, far from black and white, most software patents straddle the gray area between validity and invalidity we describe above. In these situations, validity very much lies in the eye in the beholder. Consider Apple’s famous slide-to-unlock patents. Is the underlying invention a mechanism to prevent a touch screen from unintentionally activating an input function (no parallel in human practice and not very abstract)? Or is the invention basically just a lock (long history in human experience and quite abstact)? As you can see, the end result is very much dictated by one’s perception of the invention and/or how the claims are characterized.
So What Now?
Given this present uncertainty, what is a technology company to do? Should software patent protection be abandoned in favor of other financial considerations? Should software patenting be cut back? These are also common questions, to which we offer some thoughts.
If You Can Afford It, Don’t Give Up On Software Patents
Perhaps counterintuitive, but despite the current uncertainty with software patents, the companies holding many of these now “questionable” patents have not stopped their patent filings. Everyone from Google to the banks continue to file the patents directed to very similar type of subject matter now under attack. Why? Because there are a number of strategic reasons to hold such patents. Not only do software patents protect one’s own technologies, they can also drive cross-licensing deals or dissuade suits from potential competitors. After all, before a competitor files a patent infringement suit against you, they often examine your patents. If you are holding patents that they infringe, the inevitable result is often an undesirable patent war making their suit hard to justify.
Let’s also remember that the patent world is highly cyclical. Patents have 20 years of life and what’s of questionable validity today very well qualify for strong patent protection in 10 years when courts or Congress see things differently. This is particularly so given the tendency for overcorrection in the patent world. As of late, in direct response to the perceived “patent troll” problem, the pendulum has been swinging in the anti-patent direction. But things are primed to change, particularly as courts and Congress begin to observe the undesirable effects of a weakened patent system. And the best way to ensure a valuable portfolio when that correction comes full circle is to continue filing patent applications now.
But File The Right Kind of Software Patents
Hopefully, you’ve decided to continue filing software patents. Now — and particularly if your company is active in the Internet, SaaS, social networking, advertising, financial or cloud spaces — it is crucial to be smart with the types of software inventions for which you seek patent protection.
For one, it would be wise to focus your patent claims less on aspects of your technologies that have analogs in everyday human practice or business, and more on the network, computer or Internet specific problems you’ve overcome in implementing those technologies. For social media companies, this could mean fewer patents directed to liking a post and more patents directed to security and authentication of users, technology for enhanced mobile integration, fixes to webpage specific problems that arise in the context of social media and/or converting and storing data.
And also don’t forget to focus less on the pure data processing/software elements of your invention and more on the hardware oriented aspects. The more your patent claims are directed toward hardware or other physical embodiments that interact with software, the better.
And Don’t Forget to Preserve Your Ability to Evolve With the Patent Ecosystem
Again, the noose may loosen on software patents in the future, and assuming your company possesses the necessary finances, the right strategy now will be an ideal insurance policy down the line. A key element of that strategy should be the filing of rich specifications that describe everything that your product or service is about, how it is built and used, and all the alternative ways to practice it. And by keeping your patent applications alive at the patent office through the filing of continuation applications, you’ll have the opportunity to make sure that your patents evolve with the times.
In the case of software patents, a rich disclosure should include not only what’s being implemented, but all possible variations of the implementation, including whether it is implemented in dedicated standalone computers or on the cloud, how that partitioning may be done, what type of user interfaces are part of the program, how it works on a large screen desktop computer versus on a smaller screen of a mobile phone, what are the protocols and steps involved in user authentication, signup, and such things as how you collect user data for analytics purposes and how it is integrated into your product. It would also be wise to include all the special things that you needed to do to make more efficient use of memory and storage, as well as interfaces to other programs and peripheral devices. After all, these details may give you the ability to draft claims in conjunction with the core function of your product, and take it outside the abstract idea definition.
In the end, technology companies with the means to do so should not give up on software patents! But as we bid adieu to 2014 and usher in a New Year, it is time to approach software patents in a new light by being much more strategic with not only the kinds of inventions we seek to patent, but how we characterize those inventions in our patents. Because those that can put the strategies of the past to bed and approach today’s software patent challenge through an entirely new lens will be the one’s succeeding well beyond 2015.