This is part one of a two part series. Part two focuses on current strategies for obtaining software patents. Read part two here.
1952-2010: Software Patents Historically (before Bilski and Alice)
For centuries in United States patent law, the question of patentability of the subject matter of an invention under 35 U.S.C. §101 was fairly cut-and-dry. Assuming the subject matter was new (under 35 U.S.C. §102) and not obvious (under 35 U.S.C. §103), the subject matter of a patent claim was patentable if:
- The claim described a process, machine, manufacture, or composition of matter, AND
- The claim did not describe a law of nature, a natural phenomenon, or an abstract idea.
While software-based inventions can typically be categorized as machines or processes or some combination of the two, the questions that has plagued courts, inventors, and patent practitioners alike for decades is – what qualifies as an "abstract idea" in the world of software, and which software-based inventions are disqualified as unpatentable as a result?
In passing the Patent Act of 1952, Congress attempted to explain the "abstract idea" question by noting that "Einstein could not patent his celebrated law that E=mc2; nor could Newton have patented the law of gravity." Instead, patents were meant to protect "any thing under the sun that is made by man." MPEP 2105, citing S. Rep. No. 1979, 82d Cong., 2d Sess., 5 (1952). This did not yet clarify the patentability of software, which had yet to move out of research laboratories by 1952, and which was both man-made and often reliant on mathematical or abstract principles in its execution.
In 1968, a few years after "minicomputers" the size of modern household kitchen refrigerators began gaining popularity, the US Patent Office (the precursor to the US Patent and Trademark Office) issued guidelines prohibiting the patenting of inventions using computer-made calculations. These were eventually challenged by the US Court of Customs and Patent Appeals, the precursor to the Federal Circuit. In the 1970s, the Supreme Court seemed to side with the Patent Office and expressly rejected two software patent applications for including little other than mathematics. Gottschalk v. Benson, 409 U.S. 63 (1972); Parker v. Flook, 437 U.S. 584 (1978).
Prospects for software patents looked grim until 1981, when the Supreme Court held that a software algorithm that guides a heating process for curing rubber was, in fact, patentable. Diamond v. Diehr, 450 U. S. 175 (1981). The Supreme Court concluded that the software algorithm of Diehr was not merely an abstract idea, throwing the software patentability question back into the forefront once again. The Supreme Court interfered little with the "abstract idea" software subject matter eligibility question for nearly three decades afterward, during which the Federal Circuit became increasingly lenient in allowing software patents before slowly beginning to pull back in the late 2000s.
2010-2014: The Supreme Court adds "Significantly More" to the Analysis with Alice
The Supreme Court finally returned its attention to the "abstract idea" question by affirming its importance in a narrow 2010 ruling rejecting a patent application directed to hedging energy investment risks, Bilski v. Kappos, 561 U.S. 593 (2010). In 2014, the Supreme Court modified the "abstract idea" subject matter eligibility rule by asserting that an abstract idea could, in fact, be patentable, so long as the patent application in question claims "significantly more" than the abstract idea, which the Court decided was not present in several patent applications directed to formulation and trading of risk management contracts. Alice Corp. v. CLS Bank International, 573 U.S. ___ (2014).
Thus, after Alice, the rule is that the subject matter of a patent claim is patentable if:
- The claim describes a process, machine, manufacture, or composition of matter, AND
- The claim:
- does not describe a law of nature, a natural phenomenon, or an abstract idea, UNLESS
- the claim ALSO describes additional elements that amount to "significantly more" than the exception (e.g., more than an abstract idea)
2015: The USPTO Provides Guidance Via Examples
For patent practitioners, the Supreme Court's Alice decision produced more questions than answers, as the Court expressly declined to define "something more" and stated that it "need not labor to delimit the precise contours of the 'abstract ideas' category."
The USPTO stepped in by publishing two sets of "abstract idea" examples based alternately on caselaw and on hypothetical claims. The first set of examples was published in January 27, 2015 ("Abstract Idea Examples", Examples 1-5) and the second on July 30, 2015 ("July 2015 PTO Update Appendix 1: Examples", Examples 21-27).
The table below identifies and categorizes the examples provided by the USPTO in January and July of 2015 based on their patentability or unpatentability, and based on the reasoning provided therefore. Some examples are categorized under multiple columns where the USPTO provided multiple claims with different conclusions.
(not abstract idea)
(abstract idea + more)
|EX. 26: Internal Combustion Engine (U.S. Pat. 5,533,489)||EX. 1: Isolating and Removing Malicious Code from Email Messages (Hypothetical)||EX. 3: Digital Image Processing (Research Corporation v. Microsoft)||EX. 5: Digital Image Processing (Digitech Imaging v. Electronics for Imaging)|
|EX 27: System Software – BIOS (U.S. Pat. 5,230,052)||EX. 2: Composite Web Page (DDR Holdings)||EX. 4: Global Positioning System (SiRF Tech. v. ITC)||EX. 6: Game of Bingo (Planet Bingo v. VKGS)|
|EX. 23: CLAIM 1: Graphical User Interface for Relocating Obscured Textual Information (Hypothetical)||EX. 21: CLAIM 2: Transmission of Stock Quote Data (Offline) (Google v. Simplair)||EX. 7: E-Commerce With Transaction Performance Guaranty (buySafe v. Google)|
|EX. 23: CLAIM 4: Graphical User Interface for Relocating Obscured Textual Information (Hypothetical)||EX. 8: Distribution of Products Over The Internet (Ultramercial)|
|EX. 25: CLAIM 1: Rubber Manufacturing (Diamond v. Diehr)||EX. 21: CLAIM 1: Transmission of Stock Quote Data (Google v. Simplair)|
|EX. 25: CLAIM 2: Rubber Manufacturing (hypo based on Diamond v. Diehr)||EX. 22: Graphical User Interface for Meal Planning (Dietgoal Innovations v. Bravo)|
|EX. 23: CLAIM 2: Graphical User Interface for Relocating Obscured Textual Information (Hypothetical)|
|EX. 23: CLAIM 3: Graphical User Interface for Relocating Obscured Textual Information (Hypothetical)|
|EX. 24: Updating Alarm Limits (Parker v. Flook)|
2015: The USPTO Provides Guidance Via Caselaw
The USPTO also published a listing identifying a number of Supreme Court and Federal Circuit cases in July, which it has been updating periodically throughout 2015 ("July 2015 PTO Update Appendix 3: Subject Matter Eligibility Court Decisions"). The USPTO most recently updated this listing November 4, 2015 as of publication of this article.
The cases identified by the USPTO in July 2015 PTO Update Appendix 3 are Supreme Court and Federal Circuit cases relevant to the subject matter eligibility claim, some of which were decided at least partly based on an "abstract idea" inquiry.
Unfortunately for practitioners and inventors in the software space, the USPTO's listing of cases in the July 2015 PTO Update Appendix 3 is heavily stacked in favor of a finding of unpatentability, particularly with regard to the abstract idea question.
The table below quantifies the total number of cases, of the cases identified in the July 2015 PTO Update Appendix 3, in which the Supreme Court or Federal Circuit found either patentability or unpatentability. It also identifies the total number of patents or patent applications, since some of the identified cases issued rulings concerning multiple patents or patent applications.
(not abstract idea
or abstract idea + more)
|Supreme Court||2 cases
2 patents / applications
7 patents / applications
|Federal Circuit||4 cases
5 patents / applications
46 patents / applications
2015: The USPTO Must Base 35 U.S.C. §101 Rejections on Similarity to Court Decisions
The USPTO, on July 30, 2015, also issued a "July 2015 PTO Update: Subject Matter Eligibility" document in addition to the July 2015 PTO Update Appendix 1 and the July 2015 PTO Update Appendix 3 documents. The "July 2015 PTO Update: Subject Matter Eligibility" document provides additional guidance regarding how USPTO Examiners are meant to use the cases identified in July 2015 PTO Update Appendix 3 and he examples identified in January 2015's Abstract Idea Examples document and July 2015's 2015 PTO Update Appendix 1 document.
In particular, "July 2015 PTO Update: Subject Matter Eligibility" document guides USPTO Examiners, on page 3, to "ensure that a claimed concept is not identified as an abstract idea unless it is similar to at least one concept that the courts have identified as an abstract idea" (emphasis added). Thus, a subject matter rejection under 35 U.S.C. §101 (e.g., alleging that the invention is an "abstract idea" without "something more") must be supported as similar to one of the cases identified in Appendix 3 or, presumably, to one of the USPTO examples (identified is January 2015's Abstract Idea Examples document and July 2015's 2015 PTO Update Appendix 1 document), many of which are based on caselaw.
Based on the various examples and cases provided, the July 2015 PTO Update categorized the existing "abstract idea" rejections into four categories, namely:
- fundamental economic practices – commerce-related activities (e.g., creating contractual relationships, satisfying or avoiding legal obligations, managing risks, investments, banking authorizations, mortgage payment techniques, modifying transaction amounts, self-imposed spending limits, shopping, using advertising as an exchange or currency)
- certain methods of organizing human activity – interpersonal or intrapersonal activities (e.g., marketing, advertising, sales techniques, auctions, managing contractual relationships, translation, processing insurance claims, arbitration, managing a Bingo or poker game, satisfying in-game purchases, satisfying or avoiding legal obligation, managing mental processes, diet planning, prescribing medication)
- mathematical relationships and formulas – mathematical concepts (e.g., conversions, computations, calculations, equations, formulas, arithmetic operations, calculation-focused algorithms)
- an idea "of itself" – generally, any mental process that can be performed by a human mind, or by a human using a pen and paper (e.g., collecting, obtaining, comparing, cataloguing, moving, recognizing, scanning, storing, displaying, or organizing information)
[i] Diamond v. Diehr, 450 U.S. 175 (1981); Mackay Radio, 306 US 86 (1939).
[ii] Alice Corp. v. CLS Bank Intl., 574 US __ (2014);Bilski v. Kappos, 561 US 593 (2010); Parker v. Flook, 437 U.S. 584 (1978);Gottschalk v. Benson, 409 U.S. 63 (1972).
[iii] DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014); Research Corporation Technologies Inc. v. Microsoft Corp., 627 F.3d 859 (Fed. Cir. 2010). [Patent: 5,111,310]; SiRF Tech. Inc. v. Int'l Trade Commission, 601 F.3d 1319 (Fed. Cir. 2010); In re Abele, 684 F.2d 902, 214 U.S.P.Q. 682 (CCPA 1982) [Patent: 4,433,380].
[iv] Morales v. Square, Inc., No. 2015-1319, __ Fed. Appx. __ (Fed. Cir. 2015); Joao Bock Transaction Systems, LLC v. Jack Henry & Associate,No. 2015-1245, __ Fed. Appx. __ (Fed. Cir. 2015); Hemopet v. Hill's Pet Nutrition, Inc., No. 2015-1218, __ Fed. Appx. __ (Fed. Cir. 2015); CMG Financial Services, Inc. v. Pacific Trust Bank, F.S.B., No. 2014-1855, __ Fed. Appx. __ (Fed. Cir. 2015); Retirement Capital Access Management Co., LLC v. U.S. Bancorp, No. 2015-1039, __ Fed. Appx. __ (Fed. Cir. 2015); In re Karpf, No. 2014-1773, __ Fed. Appx. __ (Fed. Cir. 2015); Versata Dev. Group, Inc. v. SAP America, Inc., __ F.3d __ (Fed Cir, 2015); Intellectual Ventures I LLC v. Capital One Bank 792 F.3d 1363 (Fed Cir, 2015); In Re Webb, No. 2014-1652, __ F.Appx __ (Fed Cir, 2015); Internet Patents Corp. v. Active Network, Inc., 790 F.3d 1343 (Fed Cir, 2015); OIP Technologies, Inc. v. Amazon.com, Inc., 788 F.3d 1359 (Fed Cir, 2015); Federal Home Loan Mortgage Corp. aka Freddie Mac v. Graff/Ross Holdings LLP, 604 F.Appx 930 (Fed Cir, 2015); Dietgoal Innovations LLC v. Bravo Media LLC, 599 Fed. Appx. 956 (Fed. Cir. 2015); Gametek LLC v. Zynga Inc., 597 Fed. Appx. 644 (Fed. Cir. 2015); Fuzzysharp Technologies Inc. v. Intel Corp., 595 Fed. Appx. 996 (Fed. Cir. 2015); Content Extraction and Transmission LLC v. Wells Fargo Bank, N.A., 776 F.3d 1343 (Fed. Cir. 2014); Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709 (Fed. Cir. 2014); buySAFE, Inc. v. Google, Inc., 765 F.3d 1350 (Fed. Cir. 2014); Planet Bingo, LLC v VKGS LLC, 576 Fed. Appx. 1005 (Fed. Cir. 2014); Digitech Image Techs., LLC v Electronics for Imaging, Inc., 758 F.3d 1344 (Fed. Cir. 2014); Cyberfone Systems, LLC v. CNN Interactive Group, Inc., 558 Fed. Appx. 988 (Fed. Cir. 2014); SmartGene, Inc. v Advanced Biological Labs., 555 Fed. Appx. 950 (Fed. Cir. 2014). Accenture Global Services, GmbH v. Guidewire Software, 728 F.3d 1336 (Fed. Cir. 2014); PerkinElmer Inc. v Intema Ltd., 496 Fed. Appx. 65 (Fed. Cir. 2012); Bancorp Services v. Sun Life, 687 F.3d 1266, 1278 (Fed. Cir. 2012); Fort Properties, Inc. v. American Master Lease LLC, 671 F.3d 1317 (Fed. Cir. 2012); Dealertrack Inc. v Huber, 674 F.3d 1315 (Fed. Cir. 2012); Cybersource Corp. v. Retail Decisions, Inc., 654 F.3d 1366 (Fed. Cir. 2011); Research Corporation Technologies Inc. v. Microsoft Corp., 627 F.3d 859 (Fed. Cir. 2010) [Patent: 5,341,228]; In re Ferguson, 558 F.3d 1359 (Fed. Cir. 2009); In re Comiskey, 554 F.3d 967 (Fed. Cir. 2009); In re Grams, 888 F.2d 835 (Fed. Cir. 1989); In re Meyer, 688 F.2d 789 (CCPA 1982); In re Abele, 684 F.2d 902, 214 U.S.P.Q. 682 (CCPA 1982) [Patent App: 04/850,892]; In re Maucorps, 609 F.2d 481, 203 U.S.P.Q. 812 (CCPA 1979).
Originally published November 13, 2015
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