Software Patents are Not Dead

by J.D. Houvener on May. 27, 2016

Intellectual Property Patent 


35 U.S.C. § 101 states that:

“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, subject to the conditions and requirements of this title.”.
In 2014, the U.S. Supreme Court in Alice Corp. v. CLS Bank Int’l, 573 U.S. __ (2014) struck down a software patent claiming a computer-implemented method for mitigating risk in a financial transaction through a third-party intermediary. The software patent was turned away because the claims involved an abstract idea that merely required generic computer implementation, which, according to the Supreme Court, fails to “transform the abstract idea into a patent-eligible claim.”  573 U.S.___ (2014).  Some members of the IP community have been speculating that Alice will bring doom to all Software Patents because the USPTO is now revoking Notice of Allowances based on an ill-interpreted Alice argument.  However, this is simply not true.  Not only did the Court not specifically mention anything about Software Patents being henceforth ineligible, the Court laid out a two-prong test, which, at its worst, provides a more narrow guideline to determine whether or not software patents are patent-eligible.  Id.  This means that a practitioner can use the analysis in Alice to combat Alice based rejections in order to give Software Patents a solid, fighting chance.
The Supreme Court used the same two-prong test in Alice as they did in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. ___ (2012).  573 U.S.___ (2014).  In the first prong, the Court must “determine whether the claims at issue are directed to one of those patent-ineligible concepts.”  Id.  In the second prong, the Court searches for an “inventive concept” that is sufficient to “transform the nature of the claim” into a patent-eligible application.  Id.  The deciding factor for both Alice and Mayo can be found in the second prong of the test, in that both applications failed to include an inventive step and do “more than simply instruct the practitioner to implement the abstract idea of intermediated settlement on a generic computer.”  Id.  The concern with Software Patents is that many software claims are merely computer-implemented.  But within the aftermath of Alice, federal courts have recognized that not all “software-based patents will necessarily be directed to an abstract idea.”  (Ultramerical, Inc. v. Hulu, LLC, 772 F.3d 709 (Fed. Cir. 2014)).  Further, software claims with computer implemented steps have been found to be patent-eligible applications.
DDR Holdings, LLC v., L.P., 773 F.3d 1245 (Fed. Cir. 2014) is one such case.  The DDR patent involved a Software Patent that similarly claimed an abstract idea with a computer-implemented step as in Alice and Mayo.  However, unlike Alice and Mayo, the Federal Circuit asserted that “the claimed solution is necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks” which qualified as an “inventive concept” rather than merely reciting the abstract idea through a generic computer implementation.  773 F.3d 1245.

Here are some examples of cases that were rejected by the examiner, but later, reversed by the court:
  1. The examiner rejected claims 1 and 8 based on section 101 because the specifications suggested that the invention "may be embodied entirely in software," but the court reversed the rejection because the examiner had not considered either claim as a whole.
  2. The court reversed the examiner's section 101 rejection because the claims at issue were drawn to a non-transitory computer medium and thus, directed to more than software per se.
  3. Similar to link two, the court reversed the examiner's section 101 rejection be the claims at issue recite a computer readable medium and thus, are directed to more than software per se.

 Although courts seem to be more anti-patent these days and given the recent retroactive rejections based on Alice by the USPTO, there is no surprise that some people are worried about the fate of abstract idea patents, including Software Patents.  But given that Software Patents are still being granted and surviving appellate review, Software Patents are clearly not dead and most likely not dying.

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