Law and Technology

Computer-related patents get a little tricky

March 6, 2015
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A Supreme Court case decided in June of last year has left some lingering questions among patent attorneys and the U.S. Patent Office in regard to the eligibility of some patent applications.

Last year, the Supreme Court decided the case of Alice v. CLS Bank International, affirming the federal circuit court of appeals’ decision that the patents at stake were ineligible because they were drawn to an abstract idea.

The U.S. Patent Act outlines the categories eligible for patent protection as “any new and useful process, machine, manufacture or composition of matter, or any new and useful improvement.”

There are three exceptions that would determine if something is patent ineligible: laws of nature, natural phenomena and abstract ideas.

“Laws of nature, natural phenomena and abstract ideas are the basic tools of scientific and technological work,” reads the Supreme Court’s opinion provided by Justice Clarence Thomas. “Monopolization of those tools through the grant of a patent might tend to impede innovation more than it would tend to promote it, thereby thwarting the primary object of the patent laws … to promote progress of science and useful arts.”

In the opinion, the Supreme Court provides two important questions that must be asked when determining if something meets the exception.

The first question is whether it is a claim to a law of nature, natural phenomenon or an abstract idea. If the answer is yes, then the Patent Office must ask whether additional elements transform the nature of the claim into a patent-eligible application.

In the Alice v. CLS Bank International case, the Supreme Court found the claims at issue were directed to an abstract idea, and there were no elements that transformed the claim into a patent-eligible application.

“The concept of intermediated settlement is a fundamental economic practice long prevalent in our system of commerce,” the Court concluded.

Attorney Jeffrey Michael, of Barnes and Thornburg, said the Alice case was the latest in a long line of cases in which people have programmed computers using common accounting or financial practices that people have been doing for years on paper, and then applied for a patent with the invention essentially being a standard business practice now programmed on a computer.

The Supreme Court decision was meant to clarify that simply applying a well-known formula or accounting practice to a computer does not make it a patentable invention.

Michael said while the questions asked by the Supreme Court, and now required by the Patent Office in determining patent eligibility for computer-related inventions, might seem straightforward, the results have been anything but.

“We are, as practitioners, struggling, as is the Patent Office, to try to figure out how to apply and make sense of this test that the Supreme Court came up with last June,” he said.

Michael said the Patent Office is now applying these questions in a broad fashion so claims that would not have had any issue receiving a patent before now are being denied.

“In practice, what is happening is everything that is computer related that I’ve seen in my practice gets rejected for the same reasons … and it’s creating an administrative nightmare and runs up costs for clients.”

He added, “I have seen several examples in which the Patent Office has rejected claims through application of the subject-matter eligibility test in a manner that I believe extends well beyond the scope of Alice. I suspect, or at least I hope, that patent applicants will ultimately prevail in such cases, but none that I’m aware of are far enough along in patent prosecution to bear this out.”

Michael said his advice to entrepreneurs is to consider these questions before going too far down the road of applying for a patent to ensure they are not wasting time and money.

“This is an area of law that is really unsettled right now, and we are going to be struggling with this for the next couple of years,” he said. “So to the extent that entrepreneurs have computer-related inventions, they really should think long and hard and have a conversation with their patent attorney as to whether they should avail themselves to the patent system, knowing this unsettled area of law is out there.”

He noted there might be some situations where going the trade secret route might be the better option right now.

“It’s not for everybody,” he cautioned. “A trade secret is something that derives economic advantage from not being known. (With) a trade secret, you have to take steps to keep it secret.

“In the past, people would write these programs and then file for a patent,” he said. “The problem with that is it teaches the whole world how to do it. You have to describe in a patent how it works and then everybody knows how to do it. If it’s something in the long run you can’t end up patenting because of this line of cases, then you just taught the world how to do it and you have no protection.

“That is where the discussion, particularly in the software community, has to happen with the patent attorney: ‘What are my chances at the patent office and what are my chances at protecting it as a trade secret?’

“That discussion will lead to the appropriate decision for that particular piece of software.”

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