Software Patentability and Implications of Alice Corp vs. CLS Bank
Copyright and related words on target

Software Patentability and Implications of Alice Corp vs. CLS Bank

Software Patentability:  Use of Copyrights and Patents to Protect Software Innovations

Michael Van Loy, a Member in the Intellectual Property Section of the law firm of Mintz Levin, discusses copyrights versus patents to protect software innovations. He also discusses the implications of the US Supreme Court Ruling in Alice Corp vs. CLS Bank to software patentability.  Mike has his bachelors in chemistry and his PhD in environmental engineering from the University of California, Berkley.  He also has his law degree from Santa Clara University.

Mike was named a San Diego Super Lawyers Rising Star for Intellectual Property in 2016.

Let’s listen to his take!

Copyrights versus Patents to Protect Software Innovations

According to Mike Van Loy:

“A copyright immediately jumps into being the minute that you create a new work of anything. If I write a story, then it’s copyrighted the moment that I write it.

You can register the copyright with the copyright office for some fee. That basically allows you to recover statutory damages. It means that you don’t have to show loss. You can just say, ‘I have this original work that’s mine. I’ve copyrighted it. If someone copies it, then they owe me some fixed royalty for every instance of copying.’

That being said, let’s say that I have some software and write code out. If someone looks at what my software does and says “That’s pretty cool. I’m going to give it to my coders. Don’t look at the code. Just write up something that does this.” Their code is not infringing the copyright. The code is actually on the specific way the words are written.

In order to show copyright infringement, you have to show that it’s a copy or some issues that it’s a very close derivation. They took that and maybe added a little bit to it. By and large, you’re looking at a copying issue.

There is another option. There are plenty of software patents that get filed. They have become hard to get. There was a whole area of patent law for the last 15 or so years, probably longer than that, that were sort of business process patents.

A lot of them boil down to here’s some sort of economic something or other that we’ve now automated. Instead of having a pad of sales orders and writing them out, I go online and do it. There are lots of patents that cover that kind of stuff. A new portal for taking that data and putting it in and making an automated sales process.”

Implications of Supreme Court Ruling in Alice Corp. vs. CLS Bank

According to Mike:

“Those patents have become harder to get. Many of the ones that were issued in the last 10 or 15 years are probably invalid. There was a Supreme Court decision about two years ago in June of 2014 calledAlice vs. CLS Bank.

Honestly the claims at issue in Alice vs. CLS Bank were not terribly well written. Most patent law court decisions come down to a terrible patent. The things that are very vague and have a lot of money involved are the ones that get fought all the way up to the Supreme Court.

The Supreme Court is not patent lawyers. They’re smart people. Basically the decision was that these claims in the patent at issue were too abstract. They effectively just claimed an idea without having something significantly more involved with the idea.

There was another one called Bilski. One of them had to do with escrow payments. It was effectively automating the escrow process. It was a high speed trading escrow process. Take the stuff and hold it here.

There was another one. I forget what it was off the top of my head. Again, it was what was considered to be a fundamental economic practice that was just being automated.

That decision was in 2014. The lower courts, the court of appeals for the federal circuit which is the federal appeals court for all patent decisions, has heard something like a dozen cases since then that have involved this sort of question. Of those dozen or so cases, there’s been one case that they have held that the patent was valid. That trickles back down to the lower courts and software patents are in doubt.

Some people believe software can longer patented. The Alice decision was not a terribly lengthy decision. Justice Thomas is a fairly economical writer. He wrote the decision. Even then it was still a 10 or 15 page decision.  (Side Note:  Check-out A Software Patent Setback).

If he’d wanted and the court had agreed to say that software was not patentable, then he could have been really economical. He could have said, ‘This is an invalid patent because it patents software, and software isn’t patentable.'”

What’s Happening in Patenting of Software Now?

According to Mike:

“I have clients in the database space. Some software is patentable if you can show that your claims are tied to some technical underpinning. If you read the claim and you say, ‘This sounds like I could do this, albeit a lot slower, with pen and paper or by just thinking about it.’

Even if you just say, ‘I could take a pen and paper, 10 million legal pads and 20 years. I could still get to the answer.’ Chances are that your patent is not valid.

Then there’s a lot of stuff in the computer implemented invention space like database technologies and certainly a lot of networking. If you have the hooks that require that it be on a mobile device, if there’s a user interface or those kind of things, then under U.S. law they currently tend to get you over that first hump.

What Alice did was add a more substantial first hurdle before you got to the argument about the prior art. The question was, ‘Is this something that should be eligible for patenting?” In the past the question had been, “Is it useful?’ That first hurdle was not there. Now that is a substantive question. Is it something that is eligible for patenting?

That being said, the law is very much in flux. I think that the patent office has issued four alerts now. They actually will be issuing another alert for clients here in the next couple of days.

They keep trying to tell their examiners how to examine patents because, frankly, the test is a mess. There’s really no bright line rule. This is directed to an abstract idea.

Here’s further analysis, which is not really smart. Judges are smart. There are a lot of really smart lawyers. I think that if you got 100 of those people in a room and said, ‘Here’s a patent. Is it eligible or not?’ depending on the patent, you might get 60/40 or 50/50.

It’s very fact dependent and very examiner dependent when you’re dealing with that. I’ve seen analysis about two patents that are technologically very similar, but they just got classified into different groups. Maybe one sounded a little bit more like economic practices and it got sent to this group that examines that stuff.

The other might have been sent over to the database group. The economic practices group tends to be very unfriendly. Everything gets an Alice-based rejection. Very similar sounding claims that went over here to the database guys tend to go right through with no problem. They assume and think, ‘Of course you have to have a computer involved or else how are you doing this?’

There are going to be a lot more to come. It’s certainly not settled. That being said, I still get things a lot all the time that you could characterize as entirely software. It’s just a matter of making sure that it’s very clear on the specific details of what problem you’re solving.

I saw a court case which said that inventions that you could characterize as entrepreneurial in nature are going to be harder to patent versus something that is technological in nature.

Inventions that are entrepreneurial in nature are ones where you say, ‘Wouldn’t it be cool if we did this sort of business model?” Inventions that are technological in nature are ones where you can clearly say, ‘Yes. There are computers talking to each other. They’re integral to the whole process. It required some clever something or other in the architecture to make it work.'”

We hope you found these insights thoughtful and informative.  See the full interview with Mike here.

This is Patrick Henry, CEO of QuestFusion, with The Real Deal…What Matters.


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