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12 May 2016PatentsTerry Clark and Gregory Parker

Best practices for patenting software post-Alice

Nearly two years have passed since the US Supreme Court’s landmark decision in Alice Corp v CLS Bank. To say the Alice decision hashad a dramatic effect on the US patent system is an understatement. Obtaining and enforcing computer-implemented software patents has become far more difficult.

The US Court of Appeals for the Federal Circuit, the Patent Trial and Appeal Board (PTAB) at the US Patent and Trademark Office and district courts nationwide have relied on Alice to overwhelmingly invalidate software patents. The invalidation rate for software patents faced with 35 USC §101 challenges is approximately 75% in district courts and more than 90% at the Federal Circuit. These numbers are daunting.

The Alice decision has infused a great deal of uncertainty into the law of patent eligibility. Patent owners and practitioners remain confounded by what needs to be done to reliably and predictably obtain and defend the vast array of innovations that incorporate software. Given how few software patents have survived patent eligibility challenges since Alice, patent owners and practitioners have little guidance on what types of software innovations are patent-eligible. On the flipside, there is plenty of guidance on what types of software innovations are not patent-eligible.

The good news is that software can still be patented and enforced. Using the many examples of what is not patent-eligible and the lone Federal Circuit example of what is patent-eligible, patent owners and practitioners can implement practical strategies to identify vulnerabilities in existing portfolios and to strengthen new patent applications to withstand scrutiny under 35 USC §101.

Current state of the law

Patent-eligible subject matter in the US includes four statutory categories defined in title 35 section 101 (§101) of the US code as “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” Laws of nature, natural phenomena, and abstract ideas have been held by the US Supreme Court to be implicit exceptions to patent-eligible subject matter under §101. The rationalisation for these judicial exceptions is to prevent the monopolisation of basic scientific and technological tools required for future innovation.

In Alice, the Supreme Court determined that a computer-based implementation of a method of mitigating settlement risk using a third party intermediary was a patent-ineligible abstract idea. In so doing, the Supreme Court articulated and applied a two-step test to determine patent eligibility. Upon determining that a claimed invention is directed to one of the four statutory categories of patent-eligible subject matter—a process, machine, manufacture or composition of matter (if your claims are not directed to a statutory category, then you have far bigger problems than Alice)—the Supreme Court in Alice then asked two questions:

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