When it comes to protecting “apps” or computer software with patents, the current state of patent law could be considered akin to the Wild West. This article provides a very recent history of courts’ perceptions on the patentability of computer-implemented inventions, as well as offers guidance on the characteristics that are more likely to render an invention not only eligible for patent protection, but also more likely to provide an ability to successfully enforce patent protected rights in the long-run.
Several decisions by the Supreme Court of the United States (the “Supreme Court”) and the Court of Appeals for the Federal Circuit (the “Federal Circuit”)—the appeals court having jurisdiction over patent law issues and which can only be overturned by the Supreme Court—are continually reshaping the way practitioners approach advising companies and individuals with respect to their intellectual property needs. Whoever invents a new and useful process, machine, manufacture, or composition of matter may obtain a patent. 35 U.S.C. § 101. Laws of nature, natural phenomena, and abstract ideas, however, cannot be patented due to a judicially-created exception. In June of 2014, the Supreme Court decided Alice Corp. v. CLS Bank and held that the judicially-created exception encompasses the mere implementation of an abstract idea (i.e., intermediated settlement) on a generic computer, and that system and media claims adding nothing of substance to the underlying abstract idea are patent ineligible. Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014). A fundamental economic practice long prevalent in our system of commerce, such as the use of a third party to mitigate settlement risk, is an abstract idea that alone is not patent eligible―there must be an “inventive concept” that amounts to “significantly more” than the abstract idea itself. See Alice, 134 S. Ct. at 2355. If the concept involves nothing more than implementing a long-prevalent, previously known practice on a generic computer, the combination will not be patent eligible under 35 U.S.C. § 101.
Specifically, the Supreme Court—hearing what was effectively a stalemate at the Federal Circuit about what standard should be applied to determine whether a computer-implemented invention is a patent-ineligible abstract idea—reiterated the two-step subject matter eligibility test originally formulated in its decision Mayo Collaborative Serv. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012). First, a court must determine whether the claim of the patent is directed to a patent-ineligible judicial exception, such as a law of nature, natural phenomena, or abstract idea. If the answer to the first question is no, the claims are patent eligible. Second, if the answer to the first question is yes, a court must determine whether the balance of the claim adds “significantly more” to the ineligible concept and may therefore still be patentable. See Alice, 134 S. Ct. at 2354. Applying this two-part test, the Supreme Court decided:
We hold that the claims at issue are drawn to the abstract idea of intermediated settlement, and that merely requiring generic computer implementation fails to transform that abstract idea into a patent-eligible invention . . . Accordingly, in applying the [35 U.S.C.] § 101 exception, we must distinguish between patents that claim the “buildin[g] block[s]” of human ingenuity and those that integrate the building blocks into something more . . . thereby “transform[ing]” them into a patent-eligible invention. The former “would risk disproportionately tying up the use of the underlying” ideas, and are therefore ineligible for patent protection. The latter pose no comparable risk of pre-emption, and therefore remain eligible for the monopoly granted under our patent laws.
Id. at 2352, 2354-55 (citations to Mayo, 132 S. Ct. at 1294, 1303 omitted). The pre-emption concern is that the granting of a patent that claims the building blocks of human ingenuity improperly ties up future use of the human ingenuity, when instead these building blocks should be available for all to use. In essence, the Supreme Court highlighted the need for a patent to claim an “inventive concept,” which it described as “an element or combination of elements that is ‘sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.’” Id. at 2355 (quoting Mayo, 132 S. Ct. at 1294).
Since the Alice decision, other cases have shed light on how the courts will apply the Supreme Court’s reasoning in Alice when deciding issues of software-related patentability. In November of last year, in light of Alice, the Federal Circuit struck down a patent claiming a method of distribution of products over the Internet—a patent which the Federal Circuit had upheld twice before—because “[i]n sum, each of [the] eleven steps [e.g., limiting implementation of the idea to the Internet, and consulting and updating an activity log, and restricting public access] merely instructs the practitioner to implement the abstract idea with routine, conventional activities, which is insufficient to transform the patent-ineligible subject matter into patent-eligible subject matter. That some of the eleven steps were not previously employed in this art is not enough—standing alone—to confer patent eligibility upon the claims at issue.” Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 716 (Fed. Cir. 2014) (“Ultramercial III”) (internal quotations and citations omitted). That seems like bad news for somebody trying to obtain or enforce a patent claiming a computer-implemented process patent, right?
Well, hold your proverbial horses, because less than a month later, in December of 2014, the Federal Circuit in DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014), held that a software-related patent was patent-eligible because, in part, it “do[es] not merely recite the performance of some business practice known from the pre-Internet world along with the requirement to perform it on the Internet. Instead, the claimed solution [i.e., a specific way to automate the creation of a composite Web page] is necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.” Id. at 1257. Unlike Ultramercial III, even though the claims addressed a business challenge particular to the Internet (i.e., retaining website visitors), the patent claims in DDR Holdings did not recite a long-prevalent, previously known practice implemented on the Internet.
So, what will it take to obtain a valid patent to effectively exclude others from using your invention? What follows are practical principles to consider when thinking about and describing your invention in ways that will pass muster under scrutiny by the U.S. Patent and Trademark Office (“USPTO”) and the judicial system, so that your idea will be deemed patent eligible:
- Simply implementing a long-prevalent, previously known practice on a general purpose computer or on the Internet will not be a patent-eligible application. Do not rely on features such as a “data processing system,” “data storage unit,” “communications controller,” or the Internet alone to render the claim patent eligible. Claim more than simply retrieving and combining data using a computer;
- Highlight specific algorithms with step-by-step processes (most of the time presented to the USPTO in diagrams and formulas), which are more likely to warrant serious consideration by the USPTO and the courts. In other words, avoid “routine and conventional sequence of events ordinarily triggered” by clicking on a hyperlink or implemented by a computer. Instead, focus on “ordered combination[s]” that add significantly to what is already in the public domain and claim the steps in a way that shows the steps are an improvement in the functioning of the computer and/or an improvement in the technology itself;
- Include multiple devices in system and method claims to show the technology enables devices other than a generic computer to interact in a manner not previously available or in a manner that is an improvement in that technological field;
- Avoid generic method claim language like “selecting,” “providing,” “allowing,” etc. Instead, “converting” an object in a physical way (unlike converting numbers) is a method step that seems to be granted patent-eligible weight. In contrast, “gathering” and “combining” data or “organizing” information in a non-physical manner are method steps not generally considered to impart patent-eligible weight;
- Avoid what the USPTO has urged its examiners are patent-ineligible abstract ideas, including but not limited to: mitigating settlement risk, hedging, creating a contractual relationship, using advertising as an exchange or currency, processing information through a clearinghouse, comparing new and stored information and using rules to identify options, using categories to organize, store and transmit information, and/or organizing information through mathematical correlations; and
- Focus on what technical problems are solved by your invention, comparing it to inferior solutions already patented or in the public domain. For example, according to the USPTO, your invention may be considered to offer “significantly more” if it improves another technology or technical field, improves the functioning of the computer itself, applies the judicial exception with, or by use of, a particular machine, effects a transformation or reduction of a particular article to a different state or thing, adds a specific limitation other than what is well-understood, routine and conventional in the field, and/or adds unconventional steps that confine the claim to a particular useful application.
Of course, the hard part is fashioning a patent claim broad enough to cover slight alterations in the software by others hoping to “design around” your idea, but not so broad as to encompass only known concepts or abstract ideas. On the other hand, if the claim is too specific, it might be relatively simple for a competitor to adjust your idea in such a manner that it evades the patent’s coverage but accomplishes the same goal. Overall, these issues will continue to be hotly debated, and inventors will struggle with these dilemmas as the USPTO and courts attempt to clarify a standardized test of what constitutes patentable subject matter in the field of computerized processes. Unfortunately, the patent landscape will be a “gray area” for the foreseeable future until additional situations are examined by the courts. However, with careful preparation and advance knowledge, you will understand the difficulties confronting you and avoid roadblocks preemptively before you find yourself too deep into the sometimes confusing, time-consuming, and potentially expensive patent process, thereby saving you two important commodities—time and money.
1 For more information about the so-called “machine-or-transformation” test, see Bilski v. Kappos, 130 S. Ct. 3218 (2010).
Nathan A. Evans, Esquire
Woods Rogers, PLC
Nathan works for the law firm Woods Rogers, PLC, protecting and enforcing intellectual property rights, including patents, trademarks, copyrights, and trade secrets, in an array of technical fields. Before joining the Woods Rogers Charlottesville office, he practiced law in Washington, D.C. at the international intellectual property firm Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. Nathan serves as a member of the Virginia Bar Association Intellectual Property and Information Technology Council, and he has co-chaired committees at the American Bar Association related to domestic and international patent law issues.
Michele L. Mayberry, Esquire
New River Valley IP Law, PC
Michele is the founder of New River Valley IP Law, PC, in Blacksburg, VA. She is a USPTO registered patent attorney with more than 15 years of experience in patent litigation and domestic and foreign patent prosecution. Michele works with corporations, universities, start-ups and independent inventors in securing and enforcing patent rights across a wide range of technologies relating to software and electrical applications, life sciences and medical devices, and the mechanical, chemical, pharmaceutical, and biotech arts.
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