Authored by Rajeev Gupta and J. Preston Long
In a previous article, we discussed how semiconductor device manufacturers might be able to take advantage of this trend to maximize the value of their own patents and to minimize their infringement liability. In this article, we look at factors affecting the value of software inventions.
Ever since the U.S. Supreme Court announced its decision in Alice Corp. v. CLS Bank Int’l last year, the value of software inventions in the U.S. has been—let’s just say, challenging to assess. In Alice, the Supreme Court established a two-part framework for determining patent eligibility that applies to all categories of invention, including software:
The Court went on to explain that this framework is intended primarily to address “preemption”—the notion that patenting concepts that are too fundamental may inhibit further innovation by preventing others from using them.
Despite the Supreme Court’s admonition that, “[a]t some level, ‘all inventions . . . embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas,”1 many of the district courts tasked with implementing Alice have not been shy about invalidating patents for claiming abstract ideas. For example, courts have invalidated inventions directed to “Automatically Animating Lip Synchronization and Facial Expression of Animated Characters”2 and “Telephony Network Optimization Method and System.”3 And the Court of Appeals for the Federal Circuit, the court that reviews district court patent decisions, has upheld the patentability of software patents in just one post-Alice decision—DDR Holdings, LLC v. Hotels.com, L.P.4
But DDR does confirm that some software patents remain viable after Alice, and it provides insight into which ones. In DDR, the court explained that the two software patents at issue were “necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.”5 Using DDR as a roadmap, some district courts have begun finding more software inventions patent-eligible.6
Admittedly, the state of affairs described above does not provide a model of clarity for determining which software patents a court will uphold or which patents the Patent Office will allow. On the other hand, we can make several basic observations.
First, software inventions that are necessarily rooted in computer technology to overcome a problem specifically arising in the realm of a related technology are the strongest candidates for patent eligibility. Of course, this is not a black-and-white inquiry by any means. Almost all software-related inventions can be cast in this light at some level. But software inventions that lack a brick-and-mortar, or “real-world,” analog often make compelling cases for patentability.7 On the other hand, those that simply take a well-known concept and say “do it on a computer” are likely invalid. Such inventions often implicate fundamental economic practices, ideas “of themselves” that can be done by the human mind, certain methods of organizing human activity, or fundamental mathematical relationships/formulas.8 But even software inventions that computerize well-known activities may remain patent eligible when the algorithms for performing them on a computer fundamentally differ from how they are performed in the real world and solve problems that arise from the computerization itself.
Second, many of the software patents that courts have invalidated for claiming abstract ideas have been broadly drafted.9 Although some courts have warned that “[s]imply limiting the use of an abstract formula to a particular field is insufficient to avoid the prohibition on patenting abstract ideas,”10 the sheer breadth of certain claims may make a court more willing to find that a claimed idea is impermissibly abstract to avoid any preemption concerns.
Third, a patent is more likely to be eligible if it carefully explains the novel aspects of the invention and ties them to the technology at issue, including any hardware or useful technological applications. For example, some courts seem to apply Alice by filtering out the “conventional” elements of a claim and analyzing what remains to see whether the remnants themselves constitute patentable subject matter. Because nearly every invention is, to some degree, a combination of conventional elements and laws of nature, natural phenomena, or abstract ideas, this type of analysis, unsurprisingly, often results in findings of invalidity.11 But patents that tie their novel aspects to useful technological applications may be less vulnerable to a filtration-type analysis. For instance, when the novel elements of a patent are closely tied to its otherwise “conventional” technological elements, a court may be less willing to filter out those otherwise “conventional” elements, finding instead that they are part of the invention’s novelty.
In short, based on the limited guidance that the courts have offered, a software patent is likely to be perceived as more valuable if it can be viewed as necessarily rooted in computer technology and overcomes a technological problem, explains how its novel aspects relate to any previously-known technological aspects, and avoids overly broad claims.
1 Alice Corp. v. CLS bank Int’l, 134 S. Ct. 2347, 2354 (2014) (quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1293 (2012)).
2 McRO, Inc. v. Sega of Am., Inc., No. cv 12-10327-GW (FFMx), 2014 WL 4749601 (C.D. Cal. Sept 22, 2014).
3Comcast IP Holdings I, LLC v. Sprint Commc’ns Co., 55 F. Supp. 3d 544 (D. Del. 2014).
4 A large number of district court decisions have yet to be reviewed by the Federal Circuit, however.
5 DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245, 1257 (Fed. Cir. 2014).
6 See, e.g., Intellectual Ventures I LLC v. Symantec Corp., Nos. 10-1067-LPS, 12-1581-LPS, 2015 WL 1843528 (D. Del. Apr. 22, 2015); Intellectual Ventures I LLC v. Motorola Mobility LLC, Nos. 11-908-SLR, 2015 WL 846532 (D. Del. Feb. 24, 2015); Trading Techs. Int’l, Inc. v. CQG, Inc., No. 05-cv-4811, 2015 WL 774655 (N.D. Ill. Feb. 24, 2015); Smartflash LLC v. Apple Inc., No. 6:13cv447-JRG-KNM, 6:13cv448-JRG-KNM, 2015 WL 661174 (E.D. Tex. Feb. 13, 2015).
7 Virus scanning software is one example. See, e.g., Intellectual Ventures I, LLC v. Symantec Corp., No. 10-1067-LPS, 12-1581-LPS, 2015 WL 1843528, at *9 (D. Del. Apr. 22, 2015).
8 See July 2015 Update: Subject Matter Eligibility, United States Patent & Trademark Office, http://www.uspto.gov/sites/default/files/documents/ieg-july-2015-update.pdf (last visited Aug. 2, 2015).
9 See, e.g., McRO, Inc. v. Sega of Am., Inc., No. cv 12-10327-GW (FFMx), 2014 WL 4749601, at *13 (C.D. Cal. Sept 22, 2014) (“This case illustrates the danger that exists when the novel portions of an invention are claimed too broadly.”).
10 Fuzzysharp Techs. Inc. v. Intel Corp., 12-cv-04413 YGR, 2013 WL 5955668, at *11 (N.D. Cal. Nov. 7, 2013) (citing Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1301 (2012); Bilski v. Kappos, 130 S. Ct. 3218, 3230 (2010)).
11 McRO, Inc. v. Bandai Namco Games of Am. Inc., currently on appeal to the Federal Circuit could be an important case testing the viability of this type of analysis and possibly limiting its application.
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