Defending the Federal Circuit, Again, on Software Patents

When it comes to the history of software patents it seems that everyone believes they are an expert. Unfortunately, few in the popular press actually take the time to get the story correct. In fact, there is a popular misconception in media that the Federal Circuit was the court that first authorized software patents. I have dealt with this nonsense in the past, and now have to deal with it once again. None other than the Wall Street Journal has published an article on the topic that is simply fiction.

The clearly erroneous Wall Street Journal article in question was published on December 15, 2013, under the title Jimmy Carter’s Costly Patent Mistake. The article, written by Gordon Crovitz, seems to take the position that patents stifle innovation, although Crovitz thesis is not explicitly stated. It would be erroneous enough to state that patents stifle innovation when all of the evidence is to the contrary, but that isn’t the major Crovitz sin in this article, although it is a whopper of a lie often told by patent critics.

Before proceeding, allow me to state what should otherwise be obvious: if patents stifle innovation you would expect run-away innovation in places where there is no patent system, but that isn’t what you see. You see extraordinary poverty, no economy and zero innovation where there are not patent rights. Likewise, you see economies established, domestic innovation and innovation from overseas flowing into countries that adopt  strong patent rights. Furthermore, the entire point of a patent system is to grant exclusive rights that force creative, inventive and entrepreneurial individuals who are blocked to design around, which is exactly what happens. Designing around patents leads to enormous leaps in innovation. See Forfeiting Our Future Over Irrational Fear of Software PatentsAnd for those who don’t get it and erroneously state that we are seeing historic levels of patent litigation, read your history. There were close to 600 patent litigations associated with the invention of the telephone, and smart phone litigation has been but a small fraction of that number. Furthermore, the smartphone as we know it came out in 2007. In the past six years have the over abundance of patents stopped smartphone innovation? Hardly, and everyone who is at all honest knows that to be 100% true. So why the pretending about patents stopping innovation? Obviously there is real patent hatred and critics, like Crovitz, simply ignore facts and prefer their own brand of fantasy over truth.

As ridiculous as it is to suggest that patents stifle innovation, this ill-defined Crovitz thesis isn’t the major issue with the fiction published by the Wall Street Journal. There is objective and verifiable error in his article that even those with an agenda will have to admit.

Crovitz erroneously states that software was not patentable until the Federal Circuit changed the rules of patent eligibility. That is simply false. There can be no dispute or argument to the contrary. Crovitz is wrong. Had he done any research on the issue he would have easily known what he stated was false. So either Crovitz wrote this article without doing even the most basic of background research or he has an agenda — facts be damned!

Crovitz says: “the Federal Circuit approved patents for software…” He then goes on to say even more directly: “Until the court changed the rules, there hadn’t been patents for algorithms and software.”

I understand it is an inconvenient truth that the Supreme Court authorized the patenting for software, particularly for those who don’t like the Federal Circuit. Nevertheless, it is fact, and since Crovitz didn’t care enough to get it correct allow me to set the record straight and clean up this utterly nonsensical fiction.

Since the United States Supreme Court first addressed the patentability of computer software in Gottschalk v. Benson the law surrounding the patentability of software has changed considerably. Indeed, Gottschalk v. Benson was the case that started it all, and one quite frankly that the Supreme Court clearly got wrong, as evidenced by the fact that the Court retreated from the decision less than a decade later in Diamond v. Diehr.


In Gottschalk, the invention described in the patent in question was related to the “processing of data by program and more particularly to the programmed conversion of numerical information” in general-purpose digital computers. The applicants for the patent claimed a method for converting binary-coded decimal numerals into pure binary numerals. “The claims in the patent application were, however, not limited to: (1) any particular art or technology; (2) any particular apparatus or machinery; or (3) any particular end use.” To the contrary, the claims of the patent application itself purported to cover any use of the claimed method in a general-purpose digital computer of any type. It seems that this fact alone lead to the ultimate decision. This invention was far too important to be patented because it had to be used in every computer; a truly ridiculous way to look at patentability.

The Supreme Court began its analysis in Gottschalk v. Benson by recognizing that “while a scientific truth, or the mathematical expression of it, is not a patentable invention, a novel and useful structure created with the aid of knowledge of scientific truth may be.” The Court also recalled the familiar and often cited language found in its decision in Funk Brothers Seed Co. v. Kalo Inoculant Co., “[h]e who discovers a hitherto unknown phenomenon of nature has no claim to a monopoly of it which the law recognizes. If there is to be invention from such a discovery, it must come from the application of the law of nature to a new and useful end.” Nevertheless, although the patent claims were truly related to a process that employed a mathematical formula to achieve the end goal, the Court held that the mathematical formula involved had no substantial practical application except in connection with a digital computer.

The decision in Gottschalk meant that it was the opinion of the Supreme Court that if the patent was valid it would completely “pre-empt the mathematical formula and in practical effect would be a patent on the algorithm itself.” Of course, this was not at all true. The algorithm could have been used in other situations and circumstances, but that was a nuance lost on the Supreme Court in 1972.

Almost a decade after its decision in Gottschalk, the Supreme Court in Diehr first recognized that a computer program may deserve patent protection. Indeed, the Supreme Court explained that the issue they were deciding in Diehr was whether a process for curing synthetic rubber that incorporated a programmed digital computer is patentable subject matter.”  The Supreme Court set the table as follows:

We granted certiorari to determine whether a process for curing synthetic rubber which includes in several of its steps the use of a mathematical formula and a programmed digital computer is patentable subject matter under 35 U.S.C. 101.

This quote comes directly from the first paragraph of the Supreme Court’s decision, so it is abundantly clear that the decision reached by the Court addressed the question of patentability of a process that utilizes “a programmed digital computer.” In fact, it was uncontroverted that the patent claims in question “defined and sought protection of a computer program for operating a rubber-molding press.”  So when the Supreme Court ultimately determined that the claimed invention in question was patentable that necessarily meant that a process that incorporates a programmed digital computer was patentable.  Thus, the Supreme Court of the United States ruled in 1981 that a computer implemented processes (i.e., software) can be patented.

In finding this software patentable, the Supreme Court explained:

[A] claim drawn to subject matter otherwise statutory does not become nonstatutory simply because it uses a mathematical formula, computer program or digital computer. . . . [A] process is not unpatentable simply because it contains a law of nature or a mathematical algorithm. It is now commonplace that an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection. As Justice Stone explained four decades ago: “While a scientific truth, or the mathematical expression of it, is not a patentable invention, a novel and useful structure created with the aid of knowledge of scientific truth may be.

. . .

[The equation used in the claimed method] is not patentable in isolation, but when a process for curing rubber is devised which incorporates in it a more efficient solution of the equation, that process is at the very least not barred at the threshold by Section 101.

So Crovitz and all the others who over the years have written that the Federal Circuit is responsible for allowing software to be patented are simply wrong.  The Federal Circuit was not created until October 1, 1982. The Supreme Court’s decision in Diehr, from 1981, predates the creation of the Federal Circuit! To all objective observers it is painfully clear that the Supreme Court authorized the patenting of software, and used Diehr as the means for explaining that not all computer implemented processes are unpatentable.

Diehr aside, Crovitz is incorrect for yet another reason.  In 2010, the United States Supreme Court AGAIN determined that software could be patented. This time in Bilski v. Kappos.

Justice Kennedy wrote the majority opinion in Bilski.  Unfortunately, the part that dealt with software was not joined by Justice Scalia, so only 4 Justices signed on to this part of the opinion, which requires a two-step analysis. In the “software section” of the opinion Kennedy characterized the holding in the Diehr case as follows: “a procedure for molding rubber that included a computer program is within patentable subject matter.”  Kennedy also specifically stated that computer programs are not always unpatentable, which logically and necessarily means that some software is patentable.  Therefore, Justices Kennedy, Thomas, Alito and Roberts all agree that software can be patented.

But what about the other Justices?  This brings us to footnote 40 of the Stevens dissent.  Justice Stevens was joined by Justices Breyer, Ginsberg and Sotomayor in his dissent.  The Stevens footnote 40 recognized two important things.  First, the State Street bank case dealt with the patentability of computer software.  Second, the ultimate outcome in State Street was correct.  Footnote 40 explains:

Judge Rich authored the State Street opinion that some have understood to make business methods patentable. But State Street dealt with whether a piece of software could be patented and addressed only claims directed at machines, not processes. His opinion may therefore be better understood merely as holding that an otherwise patentable process is not unpatentable simply because it is directed toward the conduct of doing business—an issue the Court has no occasion to address today.

Thus, the State Street patent claims,which unequivocally and directly related to a computer implemented process (i.e., software), were patentable in the views of Justices Stevens, Breyer, Ginsberg and Sotomayor despite being directed to a method of doing business.  Thus, these four Supreme Court Justices likewise agree that at least some software is patentable.

As a result of the Supreme Court’s decision in Bilski, 8 out of 9 Justices of the United States Supreme Court agree that at least some software is patentable.

Finally, even the United States Congress has recently taken action that unequivocally shows that at least some software is patentable. For example, effective on September 16, 2011, thanks to the America Invents Act, tax strategies are in and of themselves cannot be patented. Congress, however, took a bizarre path to achieve this patent exclusion rule. Tax strategy patents are still patent eligible subject matter pursuant to 35 U.S.C. 101, but for purposes of evaluating an invention under section 102 or 103 of title 35, any strategy for reducing, avoiding, or deferring tax liability, whether known or unknown at the time of the invention or application for patent, is deemed insufficient to differentiate a claimed invention from the prior art.

The deeming of tax strategies, known or unknown, as being within the prior art does not does not apply to that part of an invention that (1) is a method, apparatus, technology, computer program product, or system, that is used solely for preparing a tax or information return or other tax filing, including one that records, transmits, transfers, or organizes data related to such filing; or (2) is a method, apparatus, technology, computer program product, or system used solely for financial management, to the extent that it is severable from any tax strategy or does not limit the use of any tax strategy by any taxpayer or tax advisor.

Despite the tax strategy exclusion you can still patent technologies, including software related innovations, that relate to the preparation of tax filings and the like. Thus, Congress must also necessarily have understood that at least some software is patent eligible.

So why is it that patent critics so enjoy blasting the Federal Circuit? That is a good question. However, the better question really ought to be this: If they lie about something so simple and verifiable how can you believe anything patent critics say?


Warning & Disclaimer: The pages, articles and comments on do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of Read more.

Join the Discussion

19 comments so far.

  • [Avatar for jodi]
    December 23, 2013 04:18 pm

    any strategy for reducing, avoiding, or deferring tax liability, whether known or unknown at the time of the invention or application for patent, is deemed insufficient to differentiate a claimed invention from the prior art.

    By reducing incentives to innovate in the area of taxes – more specifically in reducing, avoiding, or deferring – doesn’t the above show us that Congress fully understands the role that patents play in innovation?

    In other words, innovate everywhere EXCEPT in reducing taxes.

  • [Avatar for step back]
    step back
    December 20, 2013 06:49 pm


    Maybe you need a new post called “Defending the PTO on software-related claims”

    I just ran across a PTAB opinion that says this about a 101 issue:

    “The Examiner finds that claims 16 and … are ineligible for patent protection as being directed to software per se.
    … we agree with the Examiner … “Abstract software code is an idea without physical
    embodiment . . . .” Microsoft Corp. v. AT&T Corp., 550 U.S. 437, 449 (2007). A claim that recites no more than software, logic, or a data structure (i.e., an abstraction) does not fall within any statutory category. See In re Warmerdam, 33 F.3d 1354, 1361 (Fed. Cir. 1994). A reasonable interpretation of claims 16 and 36 consistent with Appellants’ Specification is that the claims recite no more than software per se which does not fall within one of the four categories of subject matter that are eligible for patent protection under § 101: (1) processes; (2) machines; (3) manufactures; and
    (4) compositions of matter. 35 U.S.C. § 101. Rather, claims 16 and 36 are directed to an abstract idea. See Bilski v. Kappos, 130 S.Ct. 3218, 3230 (2010); see also Bancorp Services, L.L.C. v. Sun Life Assur. Co. of Canada, 687 F.3d 1266, 1281 (Fed. Cir. 2012). Accordingly, we find no error in the Examiner’s rejection of claims 16 and .. as being direct to non-statutory subject matter.”

    And the offending claim 16, what does it say?

    “16. An apparatus for processing data at a node in a data network, wherein … the apparatus comprising:
    a data store that stores, in a database, a plurality of entries …
    one or more processors …

    logic that indicates that the apparatus has been designated as the rendezvous node in the multicast group, wherein … ”

    In other words, “apparatus” is software “per se”.
    Wow. Just wow.


  • [Avatar for step back]
    step back
    December 20, 2013 12:59 pm


    You seem to forget that in our “democratic” system of government, the Supremes are above all laws. They are Supreme. 😉

    (Also, IIRC, Sacalia did not say that all patents are gobbledygook. Rather he said that the rules of “obviousness” are gobbledygook and then he voted to make them more so gobbledygook. Who am I to judge as a non-Supreme, but I guess being “gobbledygook” or doing “gobbledygook” must be a good thing?)

  • [Avatar for Gene Quinn]
    Gene Quinn
    December 20, 2013 10:07 am


    What judicial ethics? Isn’t Scalia the one who sits on cases argued by his son’s law firm? Maybe not a conflict, but ethics for us mere attorneys is supposed to be about the appearance of impropriety.

    Let’s also not forget that Scalia admitted he didn’t know anything about patent law in the oral argument in KSR where he called patents gobbledegook.

    Even more alarming, unfortunately, is that Justice Kagan told Politico some time ago that the Justices do not even use e-mail AND they rely on their clerks on issues of technology.

    If they don’t understand patent law (which they don’t) and they aren’t willing to inform themselves (which they aren’t) then they are ethically bound to recuse themselves. Of course, that is what they would expect us mere attorneys to do.


  • [Avatar for John Darling]
    John Darling
    December 20, 2013 09:01 am

    “At least Scalia had the honesty to admit he did not understand.”

    But that didn’t stop him from joining in the decision. Tells you a lot about the blowhard’s “judicial ethics.”

  • [Avatar for Mark Nowotarski]
    Mark Nowotarski
    December 19, 2013 02:14 pm

    Speaking of tax strategy patents, have any made it through the office since the AIA was implemented? Has anyone used a tax strategy defense to invalidate a claim in court?

  • [Avatar for Anon]
    December 19, 2013 12:37 pm


    message caught in filter, please release.

  • [Avatar for Anon]
    December 19, 2013 12:36 pm


    I concur. John Smith constantly spouted bald mantra and did not appear to want to take the legal dimension of patent law seriously. He evidenced no desire to understand any conversation that might show a reason why software is patent eligible.

  • [Avatar for Gene Quinn]
    Gene Quinn
    December 19, 2013 12:01 pm


    I’m sorry, but I cannot tolerate your ignorance any longer. I have grown tired of your refusal to read and inform yourself on the topics you comment on here. Despite your lack of knowledge you still push your erroneous views out as if they are fact. You can now go elsewhere to spew your nonsense. You are banned.

    To substantively answer John for those who care…

    John suggests that I am incorrect in what I say the Supreme Court cases mean. That is false. If John had taken the time to read the cases before he commented he would know that.

    John says: “the general population did not take those decisions to mean what you believe they mean now…”

    Again, this is false. Everyone in the patent, software and innovation community that took the time to read the cases and inform themselves knows what they say and mean.

    John also erroneously claims that after the Supreme Court ruling in Diehr there was barely a trickle of software patents. That is again false. First, he always states these egregiously erroneous statements without any citation or support. Second, software was first patented in the late 1960s and software patents have been increasingly issued over time as software has become a more and more critical part of our economy.

    John is also simply wrong when he says that State Street opened the flood gates to software being patented. State Street was a business method decision. Software had long been patent eligible and was routinely patented well before the State Street decision in 1998.

    Of course, there is no hope for the ignorance of John and others like him. They choose to ignore truth, refuse to do research, make outrageously erroneous claims without citation or any facts to back them up. In short, the truth is elusive for folks like John. I pity him and everyone like him who prefers to live in a fantasy world. Thankfully, I don’t have to deal with him or tolerate his nonsense here any more.

  • [Avatar for Gene Quinn]
    Gene Quinn
    December 19, 2013 11:51 am


    You ask: “What are some exemplary uses in other situations and circumstances of the algorithm in Benson?”

    Really? Once again you raise questions that are so easy to defeat. Perhaps try doing the calculations with a pen and paper. That would not have been infringing the claims in Benson and therefore there was no preemption of the idea.


  • [Avatar for Anon]
    December 19, 2013 09:05 am


    When do you run for Congress?

  • [Avatar for Bob Hodges]
    Bob Hodges
    December 19, 2013 08:30 am

    My proposed amendment to 35 USC 101 to Stop the Patent Eligible Subject Matter Madness:

    Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

    Patentability and patent eligibility of an invention shall be considered only for each claim taken as a whole, without disregarding any element of the claim based on the element’s presence or prominence in the prior art, the routineness or conventionality of application of the element at the time of filing, or the element being or embodying written matter, mental steps or processes, algorithms, abstract ideas, laws of nature, or natural phenomena. The inventive concept of a claim is the claim taken as a whole.

    Subject to the conditions and requirements of other sections of this title, patentability and patent eligibility of an invention shall not be negated by (a) preemption of any subject matter by the invention, including algorithms, abstract ideas, laws of nature, and natural phenomena; (b) a lack of a spark of genius or inventiveness embodied by the invention, beyond the conditions and requirements of other sections of this title; (c) the invention embodying a combination of elements known in the prior art or found separately in nature, so long as the invention satisfies the conditions for patentability of sections 102 and 103; (d) implementation of the invention in a computer, computer readable media, or a system including a computer; (e) an inventive concept embodied by less than a whole claim in its entirety; (f) consideration of any limit the patented invention would place on use of the invention; or (g) the invention comprising intangible or transient effects so long as a useful result is produced.

  • [Avatar for John Smith]
    John Smith
    December 18, 2013 11:05 pm

    “So why is it that patent critics so enjoy blasting the Federal Circuit?”

    Because it’s clear to everyone where the real entity behind this expansion of patent law was. It may very well be that the Supreme Court ruled as you would have us believe they did in both Benson and Diehr, though that is easily contested and seems rather dubious in light of recent decisions. But the general population did not take those decisions to mean what you believe they mean now that at the time when they came out. Else the court likely would have quickly corrected their misunderstanding if there was one. Instead, after a decade of nothing much happening in 101, and barely a trickle of anything even approximating a software patent being filed, the federal circuit picked up State Street and flung wide the doors in no uncertain terms. And then the flood began, soon to be bolstered by other developments, most of which relied heavily on state street for their claim to legitimacy.

    That is why folks, seemingly legitimately, lay the blame at the footsteps of the Federal Circuit. And regardless of whether you believe that is legitimate or not, that is why they subjectively hold that belief.

  • [Avatar for John Smith]
    John Smith
    December 18, 2013 10:55 pm

    Gene I don’t think that the people with an agenda will need to concede anything as a result of your article, though they could point out a few factual errors you made. I won’t go into them as they’re just run of the mill errors you make all the time and will never relent on regardless of whether a supreme court justice themself told you to your face that you were mistaken.

    I will ask one question though.

    “The algorithm could have been used in other situations and circumstances, but that was a nuance lost on the Supreme Court in 1972.”

    What are some exemplary uses in other situations and circumstances of the algorithm in Benson? I had thought that the applicant himself helpfully admitted that there were none.

    “In finding this software patentable, the Supreme Court explained”

    One other question: Didn’t you just tell us that it was a process for curing rubber as opposed to “software” that they were finding patent eligible?

  • [Avatar for step back]
    step back
    December 18, 2013 07:30 pm

    Perhaps I’ve gone a little too deep into the psyche of our English majored judiciaries.
    But for you Engineering majors out there, you need to understand how the English Literature majors got schooled. Maybe that will help close the ghostly chasm between them and us:

  • [Avatar for step back]
    step back
    December 18, 2013 07:21 pm

    Looks like there might have been something weird in the source code for that post, Helping SCOTUS to Deal with Alice v. CLS cause I posted simple stuff like, “Please let me out of spam jail” and even that got quarantined.

    But what I posted here as comment #1 applies to both the Fed. Cir. and SCOTUS.
    It seems that neither group of judges fully grasps what “software” is in the context of the presented claims. Someone has convinced these poor, science-depleted judges that “software” comes from the spirit underworld as a ghostly wind that blows in and out of the windows like the apparitions in the book, The Great Gatsby. They somehow can’t grok that electrical transistors are physical devices that do not respond to doppelgangers but do respond to electrical signals; even “transient” electrical signals that blow in through one portal and then pass out through another.

  • [Avatar for Gene Quinn]
    Gene Quinn
    December 18, 2013 06:07 pm


    Funny guy! I didn’t do anything to the spam filter one way or another. I have no idea why you regulars were getting sent to spam. In one case I think it might have been multiple links. Thanks for persisting, and in the future let me know if that happens before midnight. Spam is purged from the server at midnight every night.


  • [Avatar for step back]
    step back
    December 18, 2013 05:15 pm

    Wow! I didn’t get instantly sent to spam jail here. It may be safe to comment on IPWatch again. 🙂

  • [Avatar for step back]
    step back
    December 18, 2013 05:14 pm

    On the other hand, Gene, many judges up and own the ladder from the lowly de novo district judges to the high and almighty Supremes deserve criticism for being technically ignorant in many areas of complex science and hubristically arrogant about their ability to grasp in a few hours what it takes PhD students many years to learn and understand.

    Consider for example the Supreme’s pondering in Myriad over whether a “gene” is more like a leaf plucked off a tree or a baseball bat carved out of the trunk of the tree. At least Scalia had the honesty to admit he did not understand. Most do not have that level of forthcoming admission.