Alert: Supreme Court Rules On Computer Software Patent Claims

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August 15, 2014

A recent decision of the United States Supreme Court may make it more difficult for inventors to obtain patents on computer software. Patent attorneys have historically had success obtaining computer software patents by crafting various types of claims, including method claims, system claims and computer readable media claims. In the recent Alice Corp. v. CLS Bank Intl (573 U.S. ___ (2014)) decision, the Court invalidated all the subject computer software claims (method claims, computer readable media claims and system claims) as patent ineligible abstract ideas.

The patent statute, 35 U.S.C. §101, defines the type of inventions that are patentable as “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” Earlier Supreme Court and Federal Circuit cases, while agreeing that computer software is a patentable invention, put limits on this patentability. In particular, these cases developed the principle that an “abstract idea” is not patentable (even though 35 U.S.C. §101 does not expressly say this). In turn, the U.S. Patent Office drafted instructions to its Examiners on how to examine software patents for “subject matter eligibility”, i.e., patentability under 35 U.S.C. §101. Before the Supreme Court’s decision in Alice Corp., the criteria for subject matter eligibility for “process” and “machine” inventions were somewhat different. Oversimplifying a bit, a “machine” claim that specified a particular machine (e.g., a special-purpose computer) was usually subject-matter eligible, but even a general-purpose machine was often subject-matter eligible as long as the patent claim specified hardware components such as central processing unit, memory, input/output unit, etc.

On the other hand, a “process” claim or method claim had to satisfy different criteria, such as whether the method was executed by a particular machine or apparatus, or whether the execution of the method resulted in the transformation of the state of a thing, i.e., a physical object and not an abstract entity. In other words, method claims were examined under different (usually more strict) criteria than system claims. “Business method” claims were often not subject-matter eligible under this “machine or transformation” test. However, software method claims that satisfied the criteria were often patentable. Furthermore, patent Examiners had to use different criteria for machine claims and method claims, and the machine (or system) claims were often patentable even if the method claims were not. Claims to computer-readable media with stored executable software were also patentable.

In Alice Corp., however, the Supreme Court did not distinguish among the eligibility under 35 U.S.C. 101 of the method, media, and system claims, but rather rejected them all as abstract ideas. The Court stated that “This Court has long ‘warned…against’ interpreting §101 ‘in ways that make patent eligibility depend simply on the draftsman’s art.’” The Court appears to accept Judge Lourie’s opinion in the  Federal Circuit case that “the asserted method and system claims require performance of the same basic process” and therefore simply adding a computer to the system claims does not save them from ineligibility. The Court’s opinion is that system claims, even though drawn to a computer with hardware, are no more eligible than the method claims because the reviewing court suspects the patent draftsman of “artfully” attempting to avoid the ineligibility of the method claims. As Federal Circuit Judges Moore, Linn, and O'Malley said in their dissenting opinion, the Court’s holding “may open to ineligibility challenges hundreds of thousands of patents, including all business method, financial system, and software patents as well as many computer implemented and telecommunications systems.” 106 U.S.P.Q.2d ___ (Moore, J; Linn, J; and O’Malley, J. dissenting-in-part).

The Supreme Court has not attempted to “delimit the precise contours of the ‘abstract ideas’ category.” In other words, the Court is essentially saying “we will know it when we see it.” This presents a significant problem to inventors and patent attorneys working in the software industry.

In effect, the Supreme Court is proposing a syllogism such as the following:

  1. Patents shall not be granted on abstract ideas.
  2. X is an abstract idea.
  3. Therefore, a patent shall not be granted on X.

The problem is that the Court has not defined “abstract idea.” Furthermore, “abstract idea” is not self-defining and is not a term that is agreed to by everyone. In fact, an endless chain of assumptions must be followed in arriving at a definition. For example, a court might say: “A general purpose computer executing this software is an abstract idea.” A patent applicant then challenges this statement by saying, e.g., “how is this computer with a claimed memory, processor, input/output unit, and a specific software program “general purpose?” The Court then points to the holding in Alice that the particular claimed computer (system claim) is merely carrying out a method that is an abstract idea and the patent attorney is just re-writing the same general purpose method as a system claim and that including hardware elements does not transform the system claim from an abstract idea. This is circular reasoning.

Until the Supreme Court or Congress defines more clearly what an “abstract idea” is, inventors of software patents should focus their efforts either on a special-purpose computer executing the claimed software or on a general purpose computer executing software that transforms a particular physical object from one state to another. Another possible strategy would be to file two patent applications: one with system claims and another with method claims. This might avoid the U.S. Patent Office concluding that the inventor/draftsman has merely artfully attempted to avoid the subject matter ineligibility of the method claims in the same patent application.

In a recent interview, the Acting Deputy Director of the U.S. Patent Office stated that the Office will be examining patent applications that may be affected by Alice and may withdraw notices of allowance for those patent applications “due to the presence of at least one claim having an abstract idea and no more than a generic computer to perform generic computer functions.” Therefore, even if an inventor has received a notice of allowance and paid the issue fee, the patent may not issue.

For further details on the Alice case at the Federal Circuit (CLS Bank Intl v. Alice Corp., 717 F.3d 1269, 106 U.S.P.Q.2d 1696 (C.A. Fed. 2013)), click here.