On June 19, 2014, the Supreme Court ruled on the patentability of software. Well, sort of.
Traditionally, patent protection is awarded for systems and processes that are: 1) eligible for patent; 2) novel; and 3) satisfy disclosure requirements so that society can learn and the progress of science evolves. Novelty, while highly technical in application, is the easiest test to comprehend, coming down to the question of whether this system or process is new to the world.
Patent eligibility, up until a few years ago, was even easier. Basically, anything new under the sun made by man (or woman) was patentable. That has now changed. Eligibility excludes from patent protection some obvious exceptions such as laws of nature and mathematical ideas. For example, you can't get a patent on Maxwell's equations. How would you enforce such a patent? But you can get a patent on a new application of Maxwell's equations. A less-developed exception to patent eligibility is the concept of an "abstract idea." Such abstract ideas are not patentable. Here's the problem, what is "abstract"? What test do we use to determine whether an invention is an abstract idea? And what level of abstraction do we look at?
In Alice Corporation v. CLS Bank International, the patent at issue related to an escrow system where a third party handled the risk that a first party would not pay a second party. At that level of abstraction, the patent sounds ancient. However, the details of the specific claimed invention were much more complex. There were computers and servers and networks and databases used to implement that system. Is such a system too abstract to be patentable? If the level of abstraction is "escrow system," perhaps the answer is different than if the level of abstraction is "network-based escrow system."
According to the Supreme Court, the test for patentability with respect to an abstract idea: 1) Is there an abstract idea identified? 2) Is something more added to the abstract idea (an "inventive concept")? For query 1, the Court performed a perfunctory review of the pertinent patent and concluded that the abstract concept of an "intermediated settlement" was identified. The Court looked to concepts of novelty and indicated that since use of a third-party intermediary has been known for years, the claims must relate to an abstract concept. Note that, in this analysis, the historically used second test of novelty crept into eligibility reasoning.
For query 2 (is something new added), the Court said that only a generic computer was added to the abstract concept, and a generic computer is not an innovative concept. Again, the Court looked at novelty concepts and said that each step was conventional and the computer implementation was similarly conventional. Therefore a patent that related to a system used to handle trillions of transactions was invalid.
In protecting intellectual property, in particular software-related inventions, you likely now want to make sure more hardware is disclosed. Otherwise, a general-purpose computer may potentially not provide the sufficient inventive concept to a purportedly abstract computer program. Ideally, you may want to show new hardware or how the software causes changes in the hardware. Software patenting and enforcement may be harder without some connected hardware, and it will be exceedingly difficult to obtain and maintain patents on business methods.
In litigation, be careful how you characterize the invention in court filings and even in the media. Such a characterization (e.g., "this is a memory management patent") could be a kernel used to define the "abstract idea," and then you may be forced to show there is an innovative concept added to the abstract idea for the invention to be patent eligible. Conversely, your characterization may be an admission that a patent asserted against your company is patent eligible -- removing that potential defense.
I envision "Abstract" or "CLS" hearings to further determine what abstract concept is identified in a patent claim. As all claims can be abstracted in some way, and the abstraction will define both patent eligibility and novelty inquiries, these hearings will ultimately prove to be even more important than the Markman (claim interpretation) hearings.
— Steven Rubin is a partner with the law firm Moritt Hock & Hamroff, where he chairs its Patent Practice Group and co-chairs its Cybersecurity Practice Group.