Post Bilski Commentary For Software Startups

By now you’ve probably read about the “Bilski” decision recently released by the Supreme Court. Most of the coverage has been more focused on the policy aspects of the decision. This post focuses on where a software startup stands from a patent prosecution perspective in light of the decision.

Stepping back for a moment, I’d like to clarify the terms business method and software. In the coverage of the decision, the terms business method patent and software patent have sometimes been used interchangeably. The software startup should have a deeper understanding, as the Supreme Court states a holding for business method patentability but not directly for software patentability. The term business method usually refers to processes for doing business where the process does not require any tangible elements. An example might be a process for administering and accounting for mutual funds. Software, as popularly understood, is generally a set of instructions to be executed by a computer. In the case where the software of a patent application implements a business method, that software might be claimed in the same manner as a business method ie without any tangible elements. In other cases, the subject matter of the software patent application may lead to claiming the software in a different manner. For example, in software that processes radio waves reflected from a surface and generates images, the tangible components, such as a processor, may be claimed. Thus some “software” may fall directly within the scope of the recent decision and some may not.

In the Bilski decision, the Supreme Court rejected the exclusive use of the more restrictive “machine or transformation” test for business method patent applications, which essentially required tangible elements in the claims. It stated that machine or transformation test may be useful, but other tests may also determine whether the patent application contains eligible subject matter. Unfortunately, the Court did not provide any other specific tests, leaving it to future courts to do so.

It should be stated that the Court expressly refused to rule on the patentability of software, stating “[it] is important to emphasize that the Court today is not commenting on the patentability¬† of any particular invention, let alone holding that any of the above-mentioned technologies from the Information Age should or should not receive patent protection.” However, the Court also quoted an older court decision saying to “freeze process patents to old technologies, leaving no room for the revelations of the new, onrushing technology[,] … is not our purpose.” I believe a fair inference from this and prior decisions is that software will remain largely patentable. Thus the software startup seeking patent protection should view the decision favorably.

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