What’s Next for Software Patents?

MARK CANTOR

MARK CANTOR

By Mark Cantor

United States patent application filings have doubled since 1998, to approximately 600,000 annually. Many of these applications represent software innovation, seeking to protect inventions for computer-implemented processes. Until recently, the U.S. Patent and Trademark Office (USPTO) took a relatively pro-patent stance toward software inventions. Recently, however, the pendulum has swung toward an apparent tendency to automatically reject broad software claims.

In a June 2014 ruling, Alice Corp., Pty. v. CLS Bank Int’l, the Supreme Court ruled that a patent covering the use of a computer to perform intermediated settlement of financial transactions was invalid, because the claimed invention was merely an ineligible “abstract idea.” Other courts recently have applied Alice to invalidate computer-based patents on guaranteed online transactions, database structures, software for managing bingo games and Internet media content distribution provided to customers who first watched advertisements.

This trend has created sharp concern that patent protection is no longer available for software-related inventions. But do Alice and the other recent decisions portend the end of software patents? The answer, almost certainly, is no. The USPTO is likely to continue to allow patents on computer-implemented processes, and those patents likely will be enforced by the courts. Software and computer technology companies should not give up on patents. On the other hand, Alice should cause companies to reassess their strategies for protecting software technology. Here are some points to consider:

1. Software patent rules are in flux, so file now to preserve rights. In Alice, the Supreme Court side-stepped defining an unpatentable “abstract idea,” leaving it to the courts to work out the fine details of software eligibility. It will be several years before the limits of software patentability are clarified. In addition, it is possible that the next Congress will again amend the Patent Act, and lobbying by the software industry may result in new software eligibility rules. So one good strategy is to continue to file patent applications, with an eye to providing a foundation to claim software technologies flexibly during examination as patentability standards evolve.

2. File patents on specific applications, not broad concepts. Applications for software patents should be clearly directed to specific technical applications, not broad abstract concepts. For example, Alice listed abstract principles, fundamental economic practices, long-standing commercial practices and methods of organizing human activity as examples of potentially ineligible “abstract ideas.” To avoid these, claims in software patents should recite the specific, non-routine steps used to carry out the invention.

3. Stress physical transformations or specific equipment. If the invention is based upon an abstract idea, the claims should highlight specific requirements restricting protection to a particular application of the invention. For example, patents could be directed to the manipulation of specific tangible things, or to the use of specialized equipment.

4. Highlight technical improvements. Many software technologies achieve tangible improvements to pre-existing approaches to solving problems. In those cases, patent applications should focus on the aspects of the invention responsible for the improvements. The more the patent application is directed to a specific technology or technological impact, the better.

5.  Don’t forget about other forms of IP. Companies should consider adding alternative modes of IP protection to their strategy. In some cases, innovations may be protected as trade secrets, or through trademark or design protections.

Alice is not the death-knell for software patents, as post-Alice software patents are still being issued by the Patent Office. Alice will, however, challenge innovators to think carefully about their software inventions and adopt protection strategies that allow them to realize the benefits of their ingenuity.

Mark Cantor is the president of Brooks Kushman and the co-chair of the firm’s litigation practice. He has extensive experience in dealing with complex litigation matters in all technology areas and has tried cases relating to patents, trademarks, trade secrets and copyrights in state and federal courts throughout the country and in a number of international forums.