United States: Getting A Handle On The Software Patent Explosion

Companies in many different fields – not just Information Technology – are concerned about how to best protect their software technology. Changes in the legal landscape for the protection of computer software have resulted in an avalanche of patents geared toward software-related inventions. Here are answers to some basic questions about protecting software in this new environment.

Yes. Naturally, there must be an invention associated with the software – one cannot just submit software code to the U.S. Patent Office and get a patent on it. Basically, the invention is what the software does, not the software code itself.

The term "software patent" generally refers to a patent on a new process, system or device that involves manipulation of data, but these patents are treated no differently than any other utility patents in the United States. Any invention must be useful, new and non-obvious to be patentable.

The United States and Japan have led the way for the patentability of softwarerelated inventions. One of the turning points in the United States was Diamond v. Diehr, a case decided by the U.S. Supreme Court in 1981, in which a claim to a computer-controlled rubber molding process was found to be patentable even though it contained a mathematical equation. Now, even business methods are permissible subject matter for patent protection in the United States.

Copyright and trade secret law generally offer weaker protection than patent law. Also, it may be harder to establish a cause of action under copyright or trade secret law than to prove patent infringement.

Copyright only protects the expression of an idea, not the idea itself. Because software blurs the boundary between "idea" and "expression," courts are reluctant to interpret copyright protection broadly for computer software.

Under trade secret law, one must show that specific actions have been taken to maintain the secrecy of the technology in question. Also, like copyright law, trade secret law may vary from jurisdiction to jurisdiction.

Most importantly, copyright and trade secret law do not protect a software owner against independently developed software. So, if someone comes up with your software technology on his own, you are out of luck unless you have patent protection.

According to estimates derived from patent classification data published in August 2005 by the U.S. Patent Office,1 the number of software patents issuing per year in the United States has increased almost every year since 1990. In fact, the number of software patents issued in 2004 was about five times the number issued in 1990 (about 11,600 vs. 2,400 patents). Also, the percentage of utility patents issuing in a given year that are software patents has increased dramatically – from about 2.6% in 1990 to about 7.1% in 2004.

Yes. Rules regarding the patentability of software-related inventions are still being worked out in many countries, but an international consensus has been reached, asserting that an invention is no less an invention just because it is implemented by computer.

The patent offices of most countries follow the lead of the United States, Europe or Japan. In terms of the acceptability of software-related subject matter, the U.S. patent system is the most favorable, followed by Japan, then Europe.

On July 6, 2005, the European Parliament rejected a Directive that attempted to harmonize national standards in Europe regarding the patentability of computerimplemented inventions. This means there will continue to be some uncertainty in Europe regarding the patentability of certain kinds of software-related inventions. In light of the increasing number and legitimacy of software patents issuing in the United States and Japan, many believe Europe will eventually clarify, and possibly relax, its patentability standards for computer-implemented inventions.

It certainly makes sense to patent within your technology space to stake out your territory and keep others out. In addition, many companies have patents in fields not of direct interest to them but which are of interest to competitors. These "defensive" patents provide a disincentive for would-be patent infringement plaintiffs who fear being accused, themselves, of patent infringement. Such patents may also be used as bargaining chips or to gain leverage in business dealings with other parties.

Like any patent, a software patent is only as strong as its claims. A good patent contains claims with different levels of abstraction – some very broad claims that stake out a wide swath of intellectual property, as well as other more narrow claims. In an infringement case, the patent owner wins if he proves that any of his claims are infringed, while an accused infringer prevails if he shows either that the patent claims are invalid or that he doesn’t infringe. So, a patent with claims of varying breadth provides its owner with the best chance of success in litigation, because it is more likely the owner can prove infringement of at least one claim that withstands an invalidity challenge.

There have been concerns that too many software patents contain invalid claims. Issued patents are the primary source of prior art for patent examiners, so early applications in this field had lower hurdles on their way to allowance simply because there was less prior art around to support claim rejections. Now, there are more software patents to serve as prior art for examiners. There are also projects such as the Software Patent Institute (sponsored in part by IBM, Microsoft and Apple Computer) that have made more software prior art available to patent examiners in an effort to protect the quality and legitimacy of issued software patents.

The U.S. Patent Office is now addressing this issue. As announced in a press release on January 10, 2006, the Patent Office has created a partnership with the open source community in an effort to facilitate examiners’ access to software prior art. New initiatives will be discussed in a public meeting on February 16, 2006, at Patent Office headquarters in Alexandria, Virginia.

No, there should be no change.

Goodwin Procter LLP is one of the nation's leading law firms, with a team of 700 attorneys and offices in Boston, Los Angeles, New York, San Diego, San Francisco and Washington, D.C. The firm combines in-depth legal knowledge with practical business experience to deliver innovative solutions to complex legal problems. We provide litigation, corporate law and real estate services to clients ranging from start-up companies to Fortune 500 multinationals, with a focus on matters involving private equity, technology companies, real estate capital markets, financial services, intellectual property and products liability.