Tag: business method patents

United States Supreme Court Ruling in Alice v. CLS Bank – Software is Still Patentable

Recently, the United States Supreme Court decision in Alice v. CLS Bank ruling impacted the scope of software patents. Some opined that software was no longer patentable. The United States Patent & Trademark Office even withdrew notices of allowance for some of patent applications due to the presence of at least one claim having an “abstract idea.” Software and computer implemented inventions are impacted but the change in scope of impact will probably remain unclear for some time to come. The Supreme Court did not abolish software patents but it has increased the standard for eligibility of software patents.

Specifically, the United States Supreme Court unequivocally stated that if you have an idea so abstract that it cannot be patented, simply tying it to a “generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention.” It also stated that tying an abstract idea to “purely functional and generic” hardware similarly would not make the idea patentable.

The United States Patent & Trademark Office (USPTO) issued preliminary guidelines in response to the decision. The guidelines provides a two step analysis which will apply to process and system claims.

For the first step, determining whether the claim is directed to an abstract idea, the memorandum provides four examples of abstract ideas referenced in Alice:

  • Fundamental economic practices;
  • Certain methods of organizing human activities;
  • An idea of itself; and
  • Mathematical relationships/formulas

If an abstract idea is present in the claim, the examiner should proceed to the next step, If an abstract idea is present in the claim, determine whether any element, or combination of elements, in the claim is sufficient to ensure that the claim amounts to significantly more than the abstract idea itself. Examples of limitations that may be sufficient to qualify as “significantly more” include:

  • Improvements to another technology or technical fields;
  • Improvements to the functioning of the computer itself;
  • Meaningful limitations beyond generally linking the use of an abstract idea to a particular technological environment.

Examples of limitations that are not enough to qualify as “significantly more” include:

  • Adding the words “apply it” (or an equivalent) with an abstract idea, or mere instructions to implement an abstract idea on a computer;
  • Requiring no more than a generic computer to perform generic computer functions that are well-understood, routine and conventional activities previously known to the industry.

The question of where the line of an abstract idea is drawn is still not clearly defined. I’ll wait for the updated USPTO guidelines, Patent Trial and Appeal Board (PTAB), and court decisions to provide additional clarity.

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.