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IP Law

Q&A on software patents and abstract ideas

Melissa Sachs  Senior Associate Editor

Melissa Sachs  Senior Associate Editor

The Alice Decision: Software patents and abstract ideas

In their recent Westlaw Journal commentary, Software Patents Survive Supreme Court’s Alice Decision, but Questions Linger, Bracewell & Giuliani partners David J. Ball and Douglas F. Stewart discuss the U.S. Supreme Court’s recent decision regarding software patents and “abstract ideas.”

While they say the decision gives less guidance than most practitioners hoped, it nevertheless provides instruction on analyzing patentability.

We sit down and talk with them a bit more about software patents and why they cause so much trouble.

Westlaw Journals: What makes software patents unique compared to hardware or patents for other inventions?

David J. Ball and Douglas F. Stewart: Patents are often associated with innovative devices, pharmaceutical compounds and other tangible creations that can be seen or readily understood in a three-dimensional sense. Software innovations, by contrast, can be difficult to conceptualize in the absence of extensive background with software code. At the same time, most software patents do not disclose or require a particular code—there may be multiple ways to achieve the same result, often times in a variety of coding languages. Software patents are directed to innovation at a higher level of abstraction — capturing the solution to a problem.  That creates an inherent tension with the patent system’s prohibition on the patenting of abstract ideas.

WJ: When we talk about software patents – what does this mean? Are video games patented?  What about everyday software that we use in our lives, e.g., QuickBooks or Microsoft Office products or even mobile phone games like Candy Crush or Bejeweled?

David Ball of Bracewell & Giuliani
David Ball of Bracewell & Giuliani

DJB and DFS: The term “software patent” encompasses a range of technologies, but at a basic level we’re talking about processes and operations executed on a computer to achieve some desired result. Whereas a patent for a device includes illustrations and schematics that depict the device and its components, the figures in software patents tend to be flow charts and decision trees. Thus, for a particular software program, it is possible that one or more features or aspects are patented, but it would be unusual for an entire program to be the subject of a single software patent, as most programs or games incorporate too many independent features (many of which have been in existence for a long time). From a practical standpoint, it is important to distinguish between the lines of code that may constitute a particular program compared to the solution that the program represents.

WJ: What was the question the U.S. Supreme Court was considering in Alice Corp. Pty. Ltd. v. CLS Bank International? What did practitioners hope to get out of the decision?

DJB and DFS: With software patents, it can be challenging to differentiate between an abstract idea for accomplishing an objective (unpatentable) and the specific steps or computer operations needed to achieve a concrete result (potentially patentable). In Alice, the broad question was whether claims to computer implemented inventions are patent eligible under 35 U.S.C. § 101, which excludes abstract ideas as patent eligible.  But the facts in Alice were such that the Supreme Court was able to avoid the broader question and dispose of the Alice patent without needing to implement a hard and fast rule.  While practitioners had been hoping to obtain practical guidelines — or in the best case, a bright line rule — that could be relied upon to distinguish between unpatentable abstract ideas and patentable software innovations, the decision mostly recycled prior case law without adding any new standards.

WJ: Who will be affected by the Supreme Court decision? Will this hurt or benefit entrepreneurs? What about large companies? Consumers?

DJB and DFS: The long term impact of this decision is difficult to determine right now.  Certainly any company that owns software patents or uses software alleged to infringe another’s patent could potentially be affected by this decision. However, the current state of the law requires a case-by-case analysis so generalizations are not really possible. The determination of patentability is very much a fact-based inquiry and will depend, at least in part, on the manner in which the patent claims are drafted. Generally speaking though, software companies that rely on patents to protect their market share may have the most to lose, to the extent the decision could be construed as a tightening of the standard for software patentability.

WJ: Based on the Supreme Court’s opinion, what is the difference between an “abstract idea” and patentable software? What characteristics do inventors and practitioners need to look for?

DJB and DFS: Unfortunately, the Supreme Court decision does not provide clear guidance on exactly what constitutes an “abstract idea.” The Supreme Court did reiterate that from the standpoint of drafting a patent, simply indicating that a particular process is performed on a computer does not render that process patentable without something more to distinguish it from an abstract idea. But the area of software patentability remains murky and will require analysis on a case-by-case basis, and even then, we expect that reasonable minds will be able to differ about many patent claims.

WJ: Since the Alice ruling, the U.S. Court of Appeals for the Federal Circuit invalidated a software patent for being overly abstract. Digitech Image Techs. LLC v. Elecs. for Imaging Inc. et al., Nos. 2013-1600, 2013-1601, 2013-1602, 2013-1603, 2013-1604, 2013-1605, 2013-1606, 2013-1607, 2013-1608, 2013-1609, 2013-1610, 2013-1611, 2013-1612, 2013-1613, 2013-1614, 2013-1615, 2013-1616, 2013-1617, 2013-1618, 2014 WL 3377201 (Fed. Cir. July 11, 2014). Is this the predicted outcome of the Alicedecision – are software patents in trouble? 

Douglas Stewart of Bracewell & Giuliani
Douglas Stewart of Bracewell & Giuliani

DJB and DFS:  The patent at issue in Digitech had been determined to be invalid by the district court prior to the Supreme Court’s Alice decision, and the Federal Circuit’s affirmance of that decision was not predicated on any new statements of the law by the Supreme Court.  Rather, in that particular case, the claims at issue were found to be directed to a collection of data, which by itself, cannot constitute a patentable invention.

WJ: After the Supreme Court’s decision, the U.S. Patent and Trademark Office handed down a memorandum to patent examiners with instructions on how to analyze “subject matter eligibility of claims involving abstract ideas, particularly computer-implemented abstract ideas.”  Do you think these instructions accurately reflect the high court’s ruling?

DJB and DFS: The USPTO’s memo to examiners did not present any new standards or tests, though it did modify the existing examination framework to rely on a 2012 Supreme Court decision cited in Alice. In that sense, the USPTO guidelines were brought in line with the Supreme Court decision, but the practical effect of the memo will likely not have a dramatic impact on the manner in which software claims are examined by the USPTO.

WJ: What other legal protections are there for inventors who create software?  Can they copyright their code?  Can they get some of the benefits of a patent through non-disclosure agreements or licensing agreements?

DJB and DFS:  Code can be copyrighted, which provides some limited protection in a case where the identical code is being used by a third party.  However, because the same end result may be achievable through a variety of code, copyright may provide limited protections in many cases.  Generally, companies should treat source code as a trade secret and should utilize all available contractual mechanisms, including non-disclosure agreements and confidentiality provisions in licensing agreements, to prevent inadvertent dissemination of the code.  These alternative protection strategies provide for some forms of remedy that can be pursued if patent protection is lacking, though the scope of the remedies are definitely inferior to those available under patent law. 

WJ: Thank you so much for your time!

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