Patent Turmoil: Navigating the Software Patent Quagmire
|Written by Gene Quinn
President & Founder of IPWatchdog, Inc.
Patent Attorney, Reg. No. 44,294
Zies, Widerman & Malek
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Posted: July 15, 2013 @ 8:00 am
The law as it relates to software has been in flux over the last 10 years. Many older patent applications simply do not have enough detail to satisfy the current requirements to obtain a patent, although when drafted they would have been sufficient to satisfy the requirements then in place. Describing software as a pure method claim has not worked for a long time despite the fact that in reality software is really a method. Much more than a cursory description of software as a series of steps is required in order to have hope of obtaining patent protection for software.
Indeed, ever since the Federal Circuit en banc decision in Bilski, claims have been required to be tethered to tangible components, such as data storage devices, processors, databases, controllers, servers and the like. Unfortunately, however, the Patent Trial and Appeals Board at the United States Patent and Trademark Office now has taken the position that they will ignore the tangible components within a computer implemented method claim and then look to see what remains before determining whether the claim is patent eligible. See PTAB Kills Software.
Of course, after you remove or ignore the tangible components what remains is a naked process, which is patent ineligible. Thus, deciding to ignore tangible components leads to the inescapable conclusion that no software is patent eligible. Such disingenuous reasoning has the effect of punishing applicants for writing claims as the Patent Office has mandated ever since the machine-or-transformation test was first announced by the Federal Circuit in Bilski. The test announced in SAP/Versata, which was the first covered business method review decision announced by the PTAB, cannot be the correct test, and ultimately the decision (or at least the rationale) will be reversed. Any test that has the net effect of rendering all software patent ineligible, like the SAP/Versata test, is simply not correct as I will explain more clearly below.
But if some Administrative Patent Judges on the PTAB are hostile to software patents, the state of affairs at the Federal Circuit is not much better. The Federal Circuit has been unable to agree on a test for the patentability of software. This culminated on May 10, 2013, in CLS Bank v. Alice Corporation. In that case the Federal Circuit determined that method claims and computer readable medium claims are not patent eligible, but split evenly 5 to 5 on whether system claims are patent eligible. See Federal Circuit Nightmare in CLS Bank. Having a tie relative to system software claims is not acceptable and everyone believes the Supreme Court will step in and decide the case. The 5 Judges who voted no largely did so because software merely allows processes to occur faster than a human could process. That reasoning is deeply flawed and not likely to prevail in the long run. Processes have been patentable for several hundred years and it has always been understood to be a patentable improvement for a process to accomplish a task faster and/or more accurately. The reasoning also ignores the reality that computers can now perform trillions of calculations per second, as is the case with the all-knowing computer known as Watson created by IBM. See Is Watson Still Patent Eligible?.
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But the USPTO has yet to provide guidance to patent examiners based on the SAP/Versata PTAB decision despite the fact that the USPTO is legally supposed to be bound by decisions of the Board. Versata is reportedly seeking reconsideration and an appeal is virtually guaranteed if reconsideration fails. But still the USPTO leadership is in no hurry to provide guidance to patent examiners, although I’ve been told that patent examiners are already taking matters into their own hands and ruling such things as board games patent ineligible based on the belief that the Federal Circuit and PTAB are significantly cutting back on what is patent eligible.
Still, on May 13, 2013, in a one-page memorandum the Deputy Commissioner of Patents for Patent Examination Policy instructed patent examiners to ignore the aforementioned Federal Circuit decision in CLS Bank v. Alice Corporation because it contains no precedential value. See No Change to Software Patent Eligibility. Patent examiners have been instructed to continue applying the Office understanding as it existed prior to May 10, 2013, and reiterated that software is patent eligible in the view of the USPTO. Thus, the Patent Office has instructed patent examiners to continue to issue software patents on properly drafted claims that incorporate enough tangible components. But can the USPTO really police patent examiners who already were predisposed to not want to issue patents to computer implemented methods?
Complicating matters further, on June 21, 2013, Chief Judge Randall Rader of the Federal Circuit, along with Judges O’Malley and Linn, issued a strong pro-software patent opinion in Ultramercial, Inc. v. Hulu, LLC. So now at least some on the PTAB are exceptionally hostile to software patents, at least 5 judges on the Federal Circuit are extremely hostile to software patents, and cases continue to be decided at the Federal Circuit without the Court having a unified position. More than ever the panel assigned to the case will make all the difference when your computer implemented method claim is reviewed by the Federal Circuit.
What this means is that over the last several months the law as it applies to the patent eligibility of computer implemented invention (i.e., software) has been in tremendous flux. Everyone in the industry believes that the Supreme Court will ultimately have to set the record straight. I believe that may happen within the next 12 months, but there is no guarantee that the Supreme Court will get this right or that they will even answer the critical questions. The Supreme Court is notorious for not answering the critical question presented, choosing rather to allow the lower courts figure it out in the first instance. Why have a Supreme Court if they can’t issue a definitive decision that picks a lane on something as fundamental as patentability? Even when they try and pick a lane they convey the decision in such confusing ways that it is hard to decipher the meaning. In Mayo v. Prometheus, for example, did the Court really mean to overrule generations of patent law and their own precedent when they decided to consider matters of novelty when determining patent eligibility? See Supreme Court Blows Mayo v. Prometheus. And then in Association of Molecular Patholody v. Myriad Genetics did the Court really mean to say that isolated DNA is nonnaturally occurring but still nevertheless patent ineligible? Such a ruling would be inconsistent with Diamond v. Chakrabarty, effectively overruling the main point of that case which stood for the proposition that if what is claimed is nonnaturally occurring it is patent eligible. See SCOTUS Myriad Ruling Overrules Chakrabarty.
Still, it is unthinkable that the Supreme Court would issue a ruling saying software is not patentable. Just two years ago the Supreme Court issued a decision in which 8 of the 9 Justices said that at least some business methods and at least some software are patent eligible. See Doubling Down on Erroneous Federal Circuit Attacks. Furthermore, the Patent Act (i.e., laws enacted by Congress) specifically envision that some software must be patent eligible. For example, the law prohibits tax strategies from being patent eligible, but specifically says that this tax strategy prohibition does not apply to software that embodies a particular strategy. Thus, Congress had to be of the opinion that tax strategy software could be patent eligible. Furthermore, in the America Invents Act (AIA) Congress created the aforementioned covered business method review as a new form of post grant procedure to challenge at least some issued software patents. Had Congress believed that software were not patent eligible it wouldn’t have needed to create the proceeding, nor would it have to seek to expand the covered business method review to apply to all software patents, which is currently a legislative proposal pending.
The fact that software is specifically mentioned in the Patent Act and never listed as something prohibited from being patented is highly significant. A similar rational was used by the Supreme Court in Bilski v. Kappos to find that business methods are patent eligible (i.e., the Supreme Court noticed that Congress had enacted certain provisions of the Patent Act specifically mentioning business method patents, therefore, they had to be patent eligible the Court reasoned).
Despite the turmoil surround software patent eligibility I believe with great certainty that software will remain patent eligible in the United States. The extreme decisions of the PTAB and viewpoints of those on the Federal Circuit opposed to computer implemented methods will not prevail because they are inconsistent with the Patent Act and long-standing patent law jurisprudence. After all, the Supreme Court itself explicitly found software patent eligible in Diamond v. Diehr.
In the meantime, while we wait for the dust to settle, we need to engage in a variety of claiming techniques (i.e., methods, computer readable medium, systems claims, means-plus-function claims and straight device claims). Thus, if you are interested in moving forward with a patent application it will be advisable to file the application with more claims than would have been suggested even a few months ago. Patent attorneys also must spend increased time describing the invention from various viewpoints, which means specifications should increase in size. This all means that there is no such thing as a quick, cheap and easy software patent application – at least if you want to have any hope of obtaining a patent in this climate.
If you need help with a software patent matter please contact me.
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Posted in: Bilski, Board of Patent Appeals & Interferences, Computers, Federal Circuit, Gene Quinn, IP News, IPWatchdog.com Articles, Patent Fools™, Patent Prosecution, Software, Software Patent Basics, US Supreme Court, USPTO
About the Author
Gene Quinn is a US Patent Attorney, law professor and the founder of IPWatchdog.com. He is also a principal lecturer in the top patent bar review course in the nation, which helps aspiring patent attorneys and patent agents prepare themselves to pass the patent bar exam. Gene started the widely popular intellectual property website IPWatchdog.com in 1999, and since that time the site has had many millions of unique visitors. Gene has been quoted in the Wall Street Journal, the New York Times, the LA Times, USA Today, CNN Money, NPR and various other newspapers and magazines worldwide. He represents individuals, small businesses and start-up corporations. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.