Software-as-a-Service(SaaS) is a cloud computing service model in which access to software is often provided through a web application on a subscription basis. In this manner, the software, itself, is located on external or remote servers, rather than on servers located in-house. SaaS has become a dominant business model for major companies, enabling them to deliver their software products on a subscription basis rather than a one-time flat fee. This creates several advantages for the SaaS provider, by allowing the service provider to reach a broader range of clients as the entry cost is reduced. In addition, under a SaaS model, the long-term profit gains on a single piece of software has a higher ceiling, and the provider can send updates to the client and provide better control and support over their product without requiring an on-site technician or for the client to make a new purchase. As the SaaS market continues to grow, so too does the need for intellectual property protection. Patents can play a crucial role in safeguarding SaaS innovations and providing a competitive advantage.
Software Following the Wake of Alice
There is a common misconception that software and patents are incompatible with one another, or that obtaining a patent on a software-based invention is impossible following the landmark case of Alice Corp.v. CLS Bank Int'l, in which the Supreme Court decided "that the claims at issue are drawn to the abstract idea... and that merely requiring generic computer implementation fails to transform that abstract idea into a patent-eligible invention."
The impact immediately following this case "led patent examiners to increase rejections based on patent-ineligible subject matter relative to all first office action decisions in affected technologies." Consequently, this caused a shift away from inventors seeking to patent inventions that involve computers and software. In an effort to provide some consistency in evaluating software-based invention, the United States Patent and Trademark Office (USPTO) has since issued the "2019 Revised Patent Subject Matter Eligibility Guidance (2019 PEG), [which], had a much larger, statistically significant effect on examination uncertainty, particularly in Alice-affected technologies.... Showing that after one year, the 2019 PEG decreased uncertainty about patent subject matter eligibility determinations in the first action stage of patent examination by 44% for Alice-affected technologies." This is good news for those in the software industry, particularly the SaaS space.
Understanding SaaS Patents
Obtaining a patent on a SaaS-based invention can be challenging due to the complex nature and distributed architecture commonly involved in these inventions. In this manner, SaaS patents are often directed to the underlying technology or processes that enable the delivery of the software service to the end consumer. For example, a SaaS patent application can focus on the core processes or unique or novel steps which are performed, either in the cloud or on the client's machine, to advance the technology and drive the SaaS application. In some cases, if the SaaS product provides a unique user interface or graphical model, a design patent may be applicable to cover any unique aesthetic features that the SaaS program provides, either to the consumer or other users.
Regardless of what portion of the SaaS model or aspect of the business that is trying to be protected, there is likely something that can be considered and analyzed for patentability. A good rule of thumb when deciding whether an invention is patentable, and particularly a SaaS invention, is to ask whether the service is merely taking a known idea and performing it on a computer, or whether the invention is entirely novel or adds some new advancement to the technology or field. Of course, it is best practice to check with a patent attorney who can walk you through the difficulties and nuances of patent law in order to ensure the invention is protected and granted the broadest possible protection.
While a patent may be right for many situations involving SaaS inventions, there may be certain specific instances where treating some portions of the model as a trade secret may be an alternative form of protection. Trade secret protection requires that specific steps are taken to maintain the secrecy and status of the invention as a trade secret. If this is something that seems to better suit the particular invention, check with an intellectual property attorney to ensure the required mitigating steps have been taken to maintain secrecy and legal protection.
Conclusion
Patents can provide significant protection for SaaS inventions, helping to secure market share, deter competition, and attract investors. By understanding the key considerations for SaaS patents and developing a strategic approach, you can maximize the value of your intellectual property and drive your business forward.
Lloyd & Mousilli boasts a team of experts in patent and intellectual property law. Let us employ our extensive experience helping early-stage innovators to receive the fullest patent protection over the novel idea at the earliest date to ensure priority. We have overseen patent strategies for consumer products at some of the largest technology companies and want to share this experience with you. The different teams at our firm, led by seasoned attorneys, work in synergy to help businesses seamlessly weave their patents throughout their broader business strategy. We will ensure that any equity agreements, assignment rights, employment agreements, non-disclosures and all other relevant documents accurately reflect the scope and rights regarding your innovations. Our goal at Lloyd & Mousilli is to help clients accomplish their long-term goals by working closely with them a teach stage and tailoring our advice in accordance with the client's aspirations and needs.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.