Software Patents

Bill NaifehPatents

While there is no reason to go into the entire history of software patents, it is fair to say that filings of software patents increased exponentially during the 1990s.  In 1998, in a case called State Street Bank & Trust Co. v. Signature Financial Group, Inc., the Federal Circuit held business methods were eligible for patent protection if they involved some practical application and, in the words of the State Street opinion, “it produces a useful, concrete and tangible result.”  This decision opened the door for an avalanche of Internet, software, and business method patents.

In 2008, the Federal Circuit in In re Bilski seemingly reversed itself in a sweeping ruling by imposing a “machine or transformation” test to patentable methods.  This ruling could destroy many existing software and business method patents.  At the risk of oversimplification, the Federal Circuit held that software method patents are not “patentable subject matter” unless the method runs on a special purpose machine or computer, or the method transforms or changes physical matter.  The decision in Bilski was appealed to the Supreme Court.  They accepted cert – which means that they will probably change the machine or transformation test.  Until the Supreme Court rules, the future of software patents is in doubt.

Regardless of the outcome of Bilski, the Federal Circuit seems to be remain skeptical of software patents.  Over the past few years, we have seen more holdings of invalidity due to reasons such as lack of enablement.   If the Supreme Court overturns Bilski, it is also likely that the Federal Circuit will continue to invalidate software patents for other reasons, such as  failure to meet the best mode requirement.

Patents are essentially a quid pro quo with the government.  The inventor discloses the invention (which increases the general public knowledge) in exchange for a 20 year monopoly on the idea.  However, in order for this trade to be fair, there must be a true increase in the public knowledge.  There are many requirements designed to determine if there has been a true increase in public knowledge.  One requirement in the U.S. is the “best mode” requirement.  In other words, in order to receive the monopoly, the inventor must disclose the best way (or mode) he knows of to enable others to make and use the invention ON THE DAY  he files the patent application.  The inventor does not, however, have to update the application after the patent application is filed.

If a software patent application is filed early (e.g., during “design requirements” stage), the description in the patent can be limited to the basic processes of the application and/or the design requirements document.  In fact, a description of the flow charts describing the functionality of the computer program will usually suffice.

However, if the inventor waits until the software is ready for market or beta testing, the description in the patent may have to be more detailed because the “best mode” requirement now requires a description of the completed product and not just a flow chart.  Consequently, screen shots and other functionality may have to be put into the description of the patent in addition to the flow charts.  This additional detail will significantly increase the cost of a patent application.

In conclusion, file software patent applications early – at the design requirements or flow chart stage.

Bill Naifeh