Is Software Patenting Dead?

Posted on December 1, 2014.

It appears computer software patents died last June. If so, there will be rejoicing by the many businesses plagued by patent trolls.

Last June, the U. S. Supreme Court ruled unanimously that you cannot get a valid patent on conducting a business process on a generic computer. In other words, you cannot take a business process, describe how to conduct it on a computer, and get a patent on that process. This means all such patents obtained in the past are invalid.

Up until that time, the federal appeals court that is responsible for hearing appeals of patent-infringement cases from trial courts had issued sharply divided and inconsistent opinions on the issue.

Since the Supreme Court ruling, federal courts have invalidated a legion of software patents. I haven’t seen a software patent survive application of the Supreme Court ruling.

Over the past twenty years, an industry built up over getting patents on old ideas – familiar economic practices, ways of organizing people, and mathematical formulae. Patents were successfully obtained because the patent applicants would weave into their applications the use of computer or Internet technology to carry out these ideas.

It is a scandal that things got that way, because the Supreme Court has held for well over a century that our patent laws prohibit getting patents on laws of nature, natural phenomenon, and abstract ideas. Software coding is really just a language for expressing ideas, such as mathematical formulae or processes.

Most layman would be shocked to see some of the things that got patented. These patents generally were written with fancy wording to sound technological, but the ideas, if expressed in ordinary language, would be familiar to many.

For example, in the Supreme Court case, the business idea was essentially making certain each party to a deal has whatever money or other property it needs to pay in the deal before the deal is closed.

The availability of such patents provided a lot of the fuel for the rise of “patent trolls” – entities that don’t make a product or service but exist for the purpose of suing companies that use the patented technology.

Such entities are often addressed by the pejorative term “troll” because of their practice of using bad-faith litigation tactics to put pressure on their targets to pay settlements rather than fight the patent-infringement claims. Patent trolls exploit the fact that it can cost millions of dollars to litigate a patent-infringement case to try to persuade their targets to pay thousands of dollars or more to make the suit go away early.

The Supreme Court didn’t expressly state that all software-related patents are invalid. In fact, it noted in passing that there are many types of computer-related inventions that legitimately can be patented.

But, based upon other parts of the Supreme Court’s opinion, it appears such patent-worthy inventions have to be ones that improve how the computer itself works. For example, perhaps you could patent a new kind of software coding that makes computing faster. Certainly you could patent a novel improvement to the tangible infrastructure of the computer itself, such as a new chip design.

If the lower federal courts continue to interpret the new Supreme Court decision as a blanket prohibition on patenting software and on the Internet implementation of ideas, that will bring major changes in the intellectual property world.

A big intellectual property business arose around such patenting. It grew large intellectual property law firms, those specializing in software patenting and those specializing in suing on such patents or defending against them. (That’s a lucrative area of law practice.) It has been the basis of the business plans of trolls funded by venture capital firms. It has been a key part of the weaponry used by high-tech Goliaths to fight each other for advantage.

It may take a few years for the smoke to clear from the battlefield so we can see clearly if software patenting is truly dead. Because software patenting became such a big business, lots of money will be poured into fighting in court and elsewhere to salvage that business before it is abandoned.

Yet, absent an about-face by the Supreme Court, it’s hard to see the software-patenting business surviving. The fact that the Supreme Court issued its decision unanimously makes such an about-face unlikely.

Written on November 24, 2014
by John B. Farmer
© 2014 Leading-Edge Law Group, PLC. All rights reserved.