Why Alice Should be the End of Software Patents

-- By ElizabethBrandt - 12 Jan 2017

Introduction

The Federal Circuit (CAFC) and Supreme Court have created tension-filled jurisprudence in regards to patent eligible subject matter under 35 U.S. Code §101. This post argues that the Court should simplify the jurisprudence by removing the allowance for software patents that improve a generic computer created under Alice Corp. v. CLS Bank International.

Background and Holding of Alice

After a complicated and tension-filled §101 jurisprudence between the CAFC and the Supreme Court (see Benson, Chakrabarty, Diehr, Bilski, and Mayo), the Supreme Court again took up software patents and the exception for abstract ideas in Alice Corp. v. CLS Bank International. At issue in the case was a computer program that independently monitored transactions of both parties in order to mitigate settlement risk.

In Alice, the court determined that intermediate settlement was an abstract idea similar to the hedging program in Bilski. Under Mayo's threshold §101 test, a patent applicant can overcome such a finding only with a showing that they sufficiently transform the excepted subject matter into a patent-eligible invention. In Alice, the Court held that if a patent does nothing more than use a "generic computer to perform generic computer functions," the invention fails this test and is ineligible for patenting.

Had the Court stopped there, the resulting §101 jurisprudence, at least with respect to software patents would be relatively straightforward. However, the Court left open the possibility for software patents in the event that the software “improves the functioning of the computer itself.” Now, hopeful patent applicants seek to extricate themselves from Alice by claiming that their software improves some aspect of a generic computer.

This result is pure semantics in claim drafting. By definition, software is the application of an abstract idea to a computer, usually to more efficiently carry out that abstract idea. This is evident in both Bilski and Alice, cases in which the patent holders applied the concepts of hedging and intermediate settlement, respectively, to the novel environment of computers. It is difficult to imagine software that does not involve such an abstract idea given the court’s broad net set forth in the cases discussed above, which is precisely where the Court should have landed under Alice.

Software Patents are Unnecessary

The Court should have left out their dictum regarding software that improves a generic computer because software patents are unnecessary to the industry. Likewise, the Court should not abandon this dictum for several reasons.

Poor Match of Product and Process

The patent prosecution process developed when most inventions were physical objects. The process worked relatively well for these types of inventions because they can be built, seen, and typically understood relatively easily through descriptive language. Software, on the other hand, is a poor match for the patent prosecution process developed for machines. Software is language itself, and is inherently abstract.

Similarly, software industries are so fast-paced that the administrative burdens of applying and securing a patent through the PTO are a poor match for the economic reality of the field. Software is merely code, and code is changed at regular intervals, usually as part of a regularly scheduled "code deployment." As Judge Mayer recently concluded in Intellectual Ventures, software patents are often filed before the inventors have even attempted the project, which can lead to the problem of the patent applicants claiming more than their contribution to the field - in essence, an abstract idea. If a software patent applicant claims only their contribution, the patent is worthless as it's easily invented around. These make-shift adjustments to the patent process for software are a poor fit for the process.

Finally, the patent prosecution process is complex and expensive. Software is relatively cheap to produce and produced at a brisk pace. The current patent procedures simply do not match the economic or practical realities of the software industries and, therefore, offer poor protection for software inventors.

The Availability of Software Patents Promotes Waste

Given that there is no competitive advantage to securing a patent in the software field, all efforts to obtain such a patent are wasteful. Particularly for fledgling software companies, the time of a founder or senior software developer is the company's most valuable asset. The more time is wasted discussing, explaining, and making a decision of whether or not to apply for a patent, the less time is available for creating and deploying a product.

Not only does the current confused state of software jurisprudence create waste by necessitating someone spend time understanding and deciding whether a patent is the right protection for a given piece of software, it also creates waste through frivolous litigation and administrative hurdles. Once a patent is secured, a company must expend resources in maintaining and defending their property right. Finally, from an alleged infringer's perspective, a potential lawsuit wastes an incredible amount of resources through research and risk analysis.

There is Better Protection Available for Software

As Judge Mayer also acknowledged in Intellectual Ventures, assuming we determine that software deserves protection, copyright is likely a better fit given its close similarities with written endeavors. Much like a screenplay, software is merely a digitized description of actions performed by another entity. When a software developer codes a particular line or action, they typically do not contribute in some fundamental way to the field of software development, but have utilized their existing skills to perform some task or create some desired result. The software developer should be entitled to security against others taking their idea and merely copying it for use elsewhere, if they wish, but they should not be granted a state-sponsored monopoly over the abstract idea of creating their project.

Conclusion

Given the aforementioned poor fit of patents in software, the waste that the current process encourages, and the fact that copyright is a more logical fit for software development than the patent process, the Court should clarify that Alice's dicta allowing for some software patents in limited circumstances was both unnecessary to Alice's overall holding and incorrectly suggested that not all software is made up of abstract ideas applied to a generic computer.