If your company has expended valuable capital in obtaining patents involving computer technology, then by now you likely familiar with the U.S. Supreme Court (SCOTUS) decision in Alice v. CLS Bank in 2014 and how it has devastated software patent portfolios in the U.S. You see, under Section 101 of the Patent Act. “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 therefore….” In essence, Section 101 acts as a threshold for whether an invention is patent eligible. Over time, the US courts have grappled with three exclusions to this broad provision for patent eligibility: laws of nature, abstract ideas and natural phenomena. When it comes to abstract ideas, however, the Alice court applied this concept to software in a manner that created, shall we say, disarray. If your company is considering (or currently seeking) patent protection for computer-related inventions, a recent ruling by the Federal Circuit Court of Appeals is paving the way in demystifying Alice and providing hope for obtaining software patents in general.
Under Alice, SCOTUS invalidated some software patents that essentially claimed what amounted to a computerized escrow arrangement to reduce settlement risk, articulating a two-step process for determining patent eligibility when it comes to computer-related inventions: (i) whether the claims at issue are directed to an abstract idea”, and if so, (ii) whether the patent adds an “inventive concept” – an element or combination of elements [that add something] “significantly more than a patent upon the [ineligible concept]” alone – “that transform[s] such abstract idea into a patent eligible invention”. Unfortunately, the Alice court did not define a rule as to what constitutes an “abstract idea” under (i) above. So…even thought the patent statue supports the patent eligibility of software, the Alice court (without even referring to “software” in the entire opinion) questioned the patent eligibility of software…and opened up a rabbit hole of problems for software-related patents in general (not the least of which have been the countless rejections by the USPTO of software claims in patent applications based upon such software).
Recently, the Federal Circuit Court of Appeals offered hope for computer-related inventions in Enfish, LLC v. Microsoft Corp. (Fed. Cir. 2016) by addressing the patent eligibility of software. In reversing a grant of summary judgment in favor of Microsoft, the Federal Circuit found no “reason to conclude that all claims directed to improvements in computer-related technology, including those directed to software, are abstract . . . ,” holding that since the claims at issue were directed towards improving computer functionality involving a logical model for a computer database, they were not directed to an abstract idea. Further, the Federal Circuit specifically stated that “[s]oftware can make non-abstract improvements to computer technology just as hardware improvements can, and sometimes the improvements can be accomplished through either route.”
In light of the Enfish ruling, there is hope for companies seeking to protect novel software inventions and methods that involve computers:
- Software inventions are not inherently abstract and may be patent eligible. The Enfish court specifically stated that “[m]uch of the advancement made in computer technology consists of improvements to software that, by their very nature, may not be defined by particular physical features but rather by logical structures and processes.” Thankfully, there is no per se rule for patent eligibility under Alice…so do not discount potential patent protection simply because your invention is computer-related!
- Claims “directed to an improvement to computer functionality” are key. Your patent preparation strategy must avoid the mere application of computers in the invention – it needs to demonstrate how it improves the functioning of a computer or an existing technological process(es). As stated in Enfish, the relevant inquiry in this case is “whether the claims are directed to an improvement to computer functionality versus being directed to an abstract idea” for which “computers are invoked merely as a tool.”
- Non-abstract improvements to existing technological processes may not be limited to computer-related technology. SCOTUS in Alice left open the possibility that there may be other non-abstract ways of improving existing technological processes or computer functionality…and by extension, did not foreclose the possibility that such non-abstract improvements could extend beyond computer applications. Be proactive – do not be afraid to reach out to qualified patent counsel to discuss such inventions, as the law is evolving in the right direction.
The USPTO has issued guidance to its examiners in light of Enfish that will likely reduce Section 101 rejections based upon patent eligibility and hopefully result in an increase in the patent allowance rate for such inventions. Don’t be lulled into believing that patent eligibility post-Alice is a mad tea party – if anything, the Enfish ruling provides some hope for computer-related inventions (if not more) and such patent strategies in general.