Emerging companies often ask: “Is my idea patentable?” Many of these ideas relate to software. The patent eligibility of software remains a hot topic in the United States.
In 2014, the US Patent and Trademark Office (USPTO) as well as courts in the US started using a two-part test to analyze subject matter eligibility of software patent claims:
- Are the claims at issue directed to an abstract idea; and
- Do the claims contain “an ‘inventive concept’ sufficient to ‘transform’ the claimed abstract idea into a patent-eligible application.”
In applying this test, the Supreme Court has stated that, without more, an abstract idea implemented on a generic computer is not eligible to be patented. Since 2014, we have received additional guidance from the courts in the US and the USPTO.
Whether software is patentable often hinges on the first factor in this test, i.e., whether the software is directed to an abstract idea. We have a few examples of what may constitute abstract ideas: fundamental economic practices, certain methods of organizing human activities, an idea of itself, mental processes and mathematical relationships/formulas. Mere recitation of an abstract idea, however, does not mean that the invention is “directed to” that abstract idea. The USPTO’s Manual of Patent Examining Procedure explains at Section 2106.04(d) that, if the invention is claimed such that the claim integrates an abstract idea “into a practical application [that] will apply, rely on, or use the [abstract idea] in a manner that imposes a meaningful limit on the [abstract idea],” the claim will be found to be patent-eligible. Examples of inventions that have been found to integrate an abstract idea into such a practical application include an improvement in the functioning of a computer, implementing the abstract idea with a particular machine that is integral to the claim, and effecting a transformation or reduction of a particular article to a different state or thing. Merely using a computer as a tool to perform an abstract idea will not be seen as integrating the abstract idea into such a practical application.
As a practical matter, the USPTO has generally determined that inventions implementing technical improvements are patent-eligible. For example, one area of software that safely remains patent-eligible is software that affects the operation of a computer itself. As such, the USPTO has not been routinely rejecting patent applications for software that increases the speed of the computer, reduces memory requirements, reduces network traffic, increases the capabilities of the computer or increases the security of the computer. Thus, certain types of new data storage techniques, encryption techniques, machine learning models, network security techniques and processing techniques may remain patent-eligible. For another example, a claim that recites steps to perform a task that were developed specifically for a computer to perform that task (and are not merely implementing what a human would do to perform the same task), are often seen as patent-eligible. For yet another example, software that effects a change in specifically developed hardware (rather than just a general purpose computer) is often considered patent-eligible. Further examples can be found on the USPTO’s Subject Matter Eligibility website.
Moving forward, companies will want to ensure that their patent applications include sufficient detail to show that any abstract idea is integrated into a practical application. This may require disclosing and claiming more technical and implementation details than may have been needed in the past. This also means that the claims may become more narrow and specific to the company’s implementation of the invention. Accordingly, the company may want to consider whether certain inventions that may have been able to be patented at a high-level in the past are better kept as a trade secret, which may be appropriate if others are unable to discern the invention by use of the product. Moreover, companies will want to ensure their patent applications specifically tie any technical benefits derived from the software to the portions of the software claimed in the patent application.
Initially filing a provisional patent application may be a good first step for many companies with business method inventions implemented in software. A successful provisional application can provide the company with a cost-effective way to keep their options open for one year. The provisional application will never become public if a non-provisional patent application is not filed within one year. If the company decides to allow the provisional application to expire, they can attempt to protect their business method algorithm as a trade secret. The company will want to ensure that the provisional application discloses all technical aspects of the invention in detail to satisfy the USPTO’s enablement requirement and to provide the best chance possible for the invention to be considered patent-eligible. Read more about these applications in our article, Provisional Patent Applications: Frequently Asked Questions.