Patentability of Computer-Implemented Inventions

On June 19, 2014, the U.S. Supreme Court issued another in a line of cases dealing with the issue of the patentability of software inventions. Based on this opinion, one thing remains clear: The issue is far from definitively decided. Over the years, as software-based technology has become more ubiquitous in everyday life, the question of how inventors can protect their software-based inventions has evolved. This debate in the Patent Office and the courts has proceeded as part of a larger debate among individuals and companies; including those who believe that no patents on software should ever be allowed; and those who believe that software patents should not be regulated by '101, but instead solely by ”102, 103 and 112 (e.g., if an invention is new and not obvious it should be allowed like any other new and not obvious invention).

Constitutional and Structural Underpinning of Patentability

Article I, Section 8, of the U.S. Constitution provides, in part, that Congress has the power to “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” Congress has exercised this power by establishing the Patent Code, which sets forth the scope of what can be patented at 35 U.S.C. '101:

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 therefor, subject to the conditions and requirements of this title.

This provision became law in 1952, and has not been amended since. At that time ENIAC, the first electronic general purpose computer, had been in operation for five years. And the first UNIVAC, the earliest line of electronic computers designed for business or administrative uses, had only been delivered to its first customer, the U.S. Census Bureau, the previous year. The question of the patentability of software inventions (just as the question of patentability of biotechnology inventions) was probably far from most people's minds.

Over the years, the question of how the patent law should treat software-related technology has been addressed by the Supreme Court several times.

• Gottschalk v. Benson, 409 U.S. 63 (1972): Supreme Court rules that a process claim directed to a numerical algorithm alone was not patentable as it would “pre-empt the mathematical formula.”
• Parker v. Flook, 437 U.S. 584 (1978): Supreme Court rules that only “inventive applications” of a phenomenon of nature or a mathematical formula could be patented. A novel phenomenon or formula cannot be patented “unless there is some other inventive concept in its application.”
• Diamond v. Diehr, 450 U.S. 175 (1981): Supreme Court allows a claim to a computer program that applies the Arrhenius equation with respect to the curing of rubber. Section 101 patentability met where a program involves “transforming or reducing an article to a different state or thing.”
• Bilski v. Kappos, 561 U.S. 593 (2010): Supreme Court holds that the Federal Circuit's machine-or-transformation test not the “sole” test for determining patent eligibility. Business methods are not per se unpatentable. However, the method in Bilski was considered an unpatentable abstract idea. While the Supreme Court was unanimous in its holding that the claims were invalid, no opinion received a majority of the Court's support regarding why the claims were invalid.

However, the issue of '101 patentability had also been being raised in the biological arts. In 2012, the Supreme Court issued a ruling in Mayo Collaborative Services v. Prometheus Labs., Inc., 566 U.S. ___ (2012), regarding the patentability of a “method of optimizing therapeutic efficacy” for a drug and measuring the level of the drug in the body, and then adjusting the dosing based on those levels. In this case, the Supreme Court rejected the claims as unpatentable. The Court stated that a law of nature is not patentable, and that a process reciting that law is likewise not patentable unless it “has additional features that provide practical assurance that the process is more than a drafting effort designed to monopolize the law of nature itself.” Subsequently, in Association for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. __ (2013), the Supreme Court issued a ruling narrowing the scope of patentability with respect to patent claims related to DNA.

Following this series of cases, the issue of whether “computer-implemented” inventions, such as software programs, were patentable remained. On Dec. 6, 2013, the Supreme Court granted certiorari on the following question concerning 35 U.S.C. '101:

Whether claims to computer-implemented inventions ' including claims to systems and machines, processes, and items of manufacture ' are directed to patent-eligible subject matter within the meaning of 35 U.S.C. '101 as interpreted by this Court?

This question, it was hoped, would finally settle the issue of whether software-related inventions could be patentable, and if so, what limits would be placed on them.

Supreme Court Decision In Alice

Unfortunately, the Supreme Court's Alice decision did not fully answer this question. In an opinion by Justice Thomas, the Supreme Court opinion merely held that:

[T]he claims at issue are drawn to the abstract idea of intermediated settlement, and that merely requiring generic computer implementation fails to transform that abstract idea into a patent-eligible invention.

Slip Op. at 1.

The decision was limited to the claim in that case, and did not provide an overarching ruling with respect to the question upon which certiorari was granted.

In reaching its decision, the Supreme Court applied the framework it set forth in Mayo. As described by Justice Thomas, the two steps of the Mayo framework for separating patent ineligible laws of nature, natural phenomena, and abstract ideas from “patent eligible applications of those concepts” are:

• Determining whether the claims at issue are directed to one of those patent-ineligible concepts; and
• Asking “[w]hat else is there in the claims before us?”

Slip Op. at 7.

The second step is described by Justice Thomas as “a search for an 'inventive concept' ' i.e., an element or combination of elements that is 'sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself'.” Slip Op. at 7. The Supreme Court determined that all of the claims at issue were patent ineligible. The method claims were directed to the abstract idea of “intermediated settlement,” and simply requiring “generic computer implementation” did nothing to “transform the abstract idea into a patent eligible invention.” Slip Op at 10. The computer-readable media claims and systems claims additionally were held to be patent ineligible as they “added nothing of substance to the underlying abstract idea.” Slip Op at 17.

In a separate concurring opinion, Justice Sotomayor (joined by Justices Ginsburg and Breyer) reiterated the position of Justice Stevens' concurrence in Bilski v. Kappos that any “claim that merely describes a method of doing business does not qualify as a 'process' under '101.” This minority view is clearly more hostile to at least one class of computer-implemented inventions, namely the “business method patent.” This class of patents has developed such a negative view from some quarters of the country that it has developed its own prior use defenses (since expanded to cover non-business method patents as well), as well as its own review process (the Covered Business Method review under the America Invents Act) which is broader than provided for other patents.

The Supreme Court's Alice decision affirms the Federal Circuit's earlier en banc, per curiam decision, in which it unanimously held that the method and “computer-readable media” claims at issue were not patent eligible. Half of the Federal Circuit judges voting also ruled that the system claims at issue were not patent eligible, resulting in the affirmance of the district court's decision invalidating those claims as well. That result was also affirmed by the Supreme Court. Accordingly, it is not sufficient merely to add some physical component to a claim, such as through a system claim, to provide patent eligibility. Something more is required.

Patents on Computer-Implemented Inventions After Alice

In an attempt to provide guidance to examiners following the Alice decision, the PTO issued “preliminary examination instructions” to the patent examining corps on June 25, 2014. These instructions include a new two-part test for analyzing claims containing “abstract ideas.” Step one is to “determine whether a claim is directed to an abstract idea.” According to the PTO, certain things are abstract ideas, such as “fundamental economic practices,” ideas themselves, “mathematical relationships/formulas” and “certain methods of organizing human activities.” The PTO instructions do not provide much guidance on which “methods of organizing human activity” are “abstract ideas” and which are not, nor do they explain what economic practices are “fundamental” and which are not. Accordingly, it is unclear how patent applicants can make sure that their inventions will fall on one side or the other of the “abstract idea” test.

Step two, as set forth in the preliminary instructions, is even more complex. If a claim covers an abstract idea, the examiner must now determine whether the claims include “significantly more” than the abstract idea. According to the PTO instructions, claims that do no more than “apply” an abstract idea, or require “no more than a generic computer to perform generic computer functions that are well-understood, routine, and conventional” are not patentable. Claims that may be patentable include claims that improve another “technology or technical field,” improve the “functioning of the computer itself,” or include “meaningful limitations beyond generally linking the use of an abstract idea to a particular technological environment.” Unfortunately, little information is provided to help the public determine how this step of the test will be put into practice by the PTO.

It is unclear how the PTO and the courts will apply the patentability analysis for computer-implemented inventions as set forth in Alice . The Alice ruling does not appear to have provided the clarity and bright line rules that many in the legal and software community desired. However, given how much technology has changed since the last modification of the patent eligibility statute (35 U.S.C. '101) in 1952, perhaps it is unreasonable to ask for a high level of clarity and a broad final resolution on the issue of the boundaries of software patentability from the Supreme Court. It may take an act of Congress amending 35 U.S.C. '101 to resolve the application of the patent laws in new technology areas such as computer-implemented inventions and biotechnology.

Conclusion

Based on the Alice decision, inventors and their patent attorneys will now adapt to provide as much protection for their computer-implemented inventions as is permissible. The PTO and the courts will likewise have to adapt and implement the Supreme Court's evolving instructions on how to determine the issue of patent-eligibility and respond to new claiming strategies from patent applicants. While the framework for the analysis that the PTO and courts will have to start from has been provided (i.e., application of the Mayo test), the full details of how it will be implemented in practice remain to be seen.

A. Antony Pfeffer is a partner in the New York Office of Kenyon & Kenyon LLP specializing in patent litigation.

On June 19, 2014, the U.S. Supreme Court issued another in a line of cases dealing with the issue of the patentability of software inventions. Based on this opinion, one thing remains clear: The issue is far from definitively decided. Over the years, as software-based technology has become more ubiquitous in everyday life, the question of how inventors can protect their software-based inventions has evolved. This debate in the Patent Office and the courts has proceeded as part of a larger debate among individuals and companies; including those who believe that no patents on software should ever be allowed; and those who believe that software patents should not be regulated by '101, but instead solely by ”102, 103 and 112 (e.g., if an invention is new and not obvious it should be allowed like any other new and not obvious invention).

Constitutional and Structural Underpinning of Patentability

Article I, Section 8, of the U.S. Constitution provides, in part, that Congress has the power to “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” Congress has exercised this power by establishing the Patent Code, which sets forth the scope of what can be patented at 35 U.S.C. '101:

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 therefor, subject to the conditions and requirements of this title.

This provision became law in 1952, and has not been amended since. At that time ENIAC, the first electronic general purpose computer, had been in operation for five years. And the first UNIVAC, the earliest line of electronic computers designed for business or administrative uses, had only been delivered to its first customer, the U.S. Census Bureau, the previous year. The question of the patentability of software inventions (just as the question of patentability of biotechnology inventions) was probably far from most people's minds.

Over the years, the question of how the patent law should treat software-related technology has been addressed by the Supreme Court several times.

• Gottschalk v. Benson, 409 U.S. 63 (1972): Supreme Court rules that a process claim directed to a numerical algorithm alone was not patentable as it would “pre-empt the mathematical formula.”
• Parker v. Flook, 437 U.S. 584 (1978): Supreme Court rules that only “inventive applications” of a phenomenon of nature or a mathematical formula could be patented. A novel phenomenon or formula cannot be patented “unless there is some other inventive concept in its application.”
• Diamond v. Diehr, 450 U.S. 175 (1981): Supreme Court allows a claim to a computer program that applies the Arrhenius equation with respect to the curing of rubber. Section 101 patentability met where a program involves “transforming or reducing an article to a different state or thing.”
• Bilski v. Kappos, 561 U.S. 593 (2010): Supreme Court holds that the Federal Circuit's machine-or-transformation test not the “sole” test for determining patent eligibility. Business methods are not per se unpatentable. However, the method in Bilski was considered an unpatentable abstract idea. While the Supreme Court was unanimous in its holding that the claims were invalid, no opinion received a majority of the Court's support regarding why the claims were invalid.

However, the issue of '101 patentability had also been being raised in the biological arts. In 2012, the Supreme Court issued a ruling in Mayo Collaborative Services v. Prometheus Labs., Inc., 566 U.S. ___ (2012), regarding the patentability of a “method of optimizing therapeutic efficacy” for a drug and measuring the level of the drug in the body, and then adjusting the dosing based on those levels. In this case, the Supreme Court rejected the claims as unpatentable. The Court stated that a law of nature is not patentable, and that a process reciting that law is likewise not patentable unless it “has additional features that provide practical assurance that the process is more than a drafting effort designed to monopolize the law of nature itself.” Subsequently, in Association for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. __ (2013), the Supreme Court issued a ruling narrowing the scope of patentability with respect to patent claims related to DNA.

Following this series of cases, the issue of whether “computer-implemented” inventions, such as software programs, were patentable remained. On Dec. 6, 2013, the Supreme Court granted certiorari on the following question concerning 35 U.S.C. '101:

Whether claims to computer-implemented inventions ' including claims to systems and machines, processes, and items of manufacture ' are directed to patent-eligible subject matter within the meaning of 35 U.S.C. '101 as interpreted by this Court?

This question, it was hoped, would finally settle the issue of whether software-related inventions could be patentable, and if so, what limits would be placed on them.

Supreme Court Decision In Alice

Unfortunately, the Supreme Court's Alice decision did not fully answer this question. In an opinion by Justice Thomas, the Supreme Court opinion merely held that:

[T]he claims at issue are drawn to the abstract idea of intermediated settlement, and that merely requiring generic computer implementation fails to transform that abstract idea into a patent-eligible invention.

Slip Op. at 1.

The decision was limited to the claim in that case, and did not provide an overarching ruling with respect to the question upon which certiorari was granted.

In reaching its decision, the Supreme Court applied the framework it set forth in Mayo. As described by Justice Thomas, the two steps of the Mayo framework for separating patent ineligible laws of nature, natural phenomena, and abstract ideas from “patent eligible applications of those concepts” are:

• Determining whether the claims at issue are directed to one of those patent-ineligible concepts; and
• Asking “[w]hat else is there in the claims before us?”

Slip Op. at 7.

The second step is described by Justice Thomas as “a search for an 'inventive concept' ' i.e., an element or combination of elements that is 'sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself'.” Slip Op. at 7. The Supreme Court determined that all of the claims at issue were patent ineligible. The method claims were directed to the abstract idea of “intermediated settlement,” and simply requiring “generic computer implementation” did nothing to “transform the abstract idea into a patent eligible invention.” Slip Op at 10. The computer-readable media claims and systems claims additionally were held to be patent ineligible as they “added nothing of substance to the underlying abstract idea.” Slip Op at 17.

In a separate concurring opinion, Justice Sotomayor (joined by Justices Ginsburg and Breyer) reiterated the position of Justice Stevens' concurrence in Bilski v. Kappos that any “claim that merely describes a method of doing business does not qualify as a 'process' under '101.” This minority view is clearly more hostile to at least one class of computer-implemented inventions, namely the “business method patent.” This class of patents has developed such a negative view from some quarters of the country that it has developed its own prior use defenses (since expanded to cover non-business method patents as well), as well as its own review process (the Covered Business Method review under the America Invents Act) which is broader than provided for other patents.

The Supreme Court's Alice decision affirms the Federal Circuit's earlier en banc, per curiam decision, in which it unanimously held that the method and “computer-readable media” claims at issue were not patent eligible. Half of the Federal Circuit judges voting also ruled that the system claims at issue were not patent eligible, resulting in the affirmance of the district court's decision invalidating those claims as well. That result was also affirmed by the Supreme Court. Accordingly, it is not sufficient merely to add some physical component to a claim, such as through a system claim, to provide patent eligibility. Something more is required.

Patents on Computer-Implemented Inventions After Alice

In an attempt to provide guidance to examiners following the Alice decision, the PTO issued “preliminary examination instructions” to the patent examining corps on June 25, 2014. These instructions include a new two-part test for analyzing claims containing “abstract ideas.” Step one is to “determine whether a claim is directed to an abstract idea.” According to the PTO, certain things are abstract ideas, such as “fundamental economic practices,” ideas themselves, “mathematical relationships/formulas” and “certain methods of organizing human activities.” The PTO instructions do not provide much guidance on which “methods of organizing human activity” are “abstract ideas” and which are not, nor do they explain what economic practices are “fundamental” and which are not. Accordingly, it is unclear how patent applicants can make sure that their inventions will fall on one side or the other of the “abstract idea” test.

Step two, as set forth in the preliminary instructions, is even more complex. If a claim covers an abstract idea, the examiner must now determine whether the claims include “significantly more” than the abstract idea. According to the PTO instructions, claims that do no more than “apply” an abstract idea, or require “no more than a generic computer to perform generic computer functions that are well-understood, routine, and conventional” are not patentable. Claims that may be patentable include claims that improve another “technology or technical field,” improve the “functioning of the computer itself,” or include “meaningful limitations beyond generally linking the use of an abstract idea to a particular technological environment.” Unfortunately, little information is provided to help the public determine how this step of the test will be put into practice by the PTO.

It is unclear how the PTO and the courts will apply the patentability analysis for computer-implemented inventions as set forth in Alice . The Alice ruling does not appear to have provided the clarity and bright line rules that many in the legal and software community desired. However, given how much technology has changed since the last modification of the patent eligibility statute (35 U.S.C. '101) in 1952, perhaps it is unreasonable to ask for a high level of clarity and a broad final resolution on the issue of the boundaries of software patentability from the Supreme Court. It may take an act of Congress amending 35 U.S.C. '101 to resolve the application of the patent laws in new technology areas such as computer-implemented inventions and biotechnology.

Conclusion

Based on the Alice decision, inventors and their patent attorneys will now adapt to provide as much protection for their computer-implemented inventions as is permissible. The PTO and the courts will likewise have to adapt and implement the Supreme Court's evolving instructions on how to determine the issue of patent-eligibility and respond to new claiming strategies from patent applicants. While the framework for the analysis that the PTO and courts will have to start from has been provided (i.e., application of the Mayo test), the full details of how it will be implemented in practice remain to be seen.

A. Antony Pfeffer is a partner in the New York Office of Kenyon & Kenyon LLP specializing in patent litigation.