The United States Patent and Trademark Office Board of Patent Appeals and Interferences said in an October 4, 2007 decision, “Nevertheless, there is no authority that we know of which permits software per se to be considered statutory within 35 U.S.C. § 101. (Ex Parte Siew Hong Yang-Huffman, Appeal 2007002130, Application 10141222).
Patentable Software. The U.S. Supreme Court on June 28, 2010 issued its decision in Bilski v. Kappos holding that the machine-or-transformation (MOT) test is not the exclusive test for patent eligibility, and that the three traditional tests for non-patentable subject matter (natural phenomena, abstract ideas, and laws of nature) are the tests that must be applied. While the MOT test is not the exclusive test, it is relied upon almost entirely by the U.S. Patent and Trademark Office examining corps to review patent eligibility of process or method claims to an invention.
To understand the MOT test one must look to the Federal Circuit’s decision in In re Bilski, 545 F.3d 943, 88 U.S.P.Q.2d 1385 (Fed. Cir. 2008) on patentable subject matter. The decision sets out a two-prong “machine-or-transformation” test for patent-eligible subject matter and this test is “the governing test . . . for determining patent eligibility of a process. . .”
“A claimed process is surely patent-eligible subject matter under § 101 if:
“(1) it is tied to a particular machine or apparatus, or
“(2) it transforms a particular article into a different state or thing.” (Slip op. at 10).
Another limitation is that the claims must “not pre-empt all uses of a fundamental principle in any field but rather is limited to a particular use, a specific application.” Slip op. at 16.
The thing transformed must be “representative of physical objects or substances.” (Id., slip op. at 28). Citing the Supreme Court, the Bilski decision reiterates: “[t]ransformation and reduction of an article ‘to a different state or thing’ is the clue to the patentability of a process claim that does not include particular machines.” (Id., slip op. at 13)
And, simply “adding a data-gathering step to an algorithm is insufficient to convert that algorithm into a patent-eligible process.” (Id., slip op. at 26). But, transforming data into a visual depiction is sufficient to meet the test. The Bilski decision affirms a prior decision holding: “the electronic transformation of the data itself into a visual depiction in Abele was sufficient; the claim was not required to involve any transformation of the underlying physical object that the data represented.” (Id., slip op. at 26).
Simply adding a computer may not meet the test because “the use of a specific machine or transformation of an article must impose meaningful limits on the claim’s scope to impart patent-eligibility.” (Id., slip op. at 24). Rather, “the recited machine or transformation must not constitute mere “insignificant postsolution (sic) activity” (Id., slip op. at 16-17).
Particularly vulnerable inventions involve adding a computer for what might otherwise be performed in the mind of an individual. For example, “a claimed process wherein all of the process steps may be performed entirely in the human mind is obviously not tied to any machine and does not transform any article into a different state or thing. As a result, it would not be patent-eligible under § 101.” (Id., slip op. at 23).
This year (2012), the Federal Circuit seems to be finding new reasons for holding that software implemented inventions on financial transactions are unpatentable. In Bancorp Services, L.L.C. v. Sun Life Assur. Co. of Canada (U.S.), decided 26-JUL-2012, 2011-1467, WL 3037176 (Fed. Cir. 2012), the court seemed to want to ignore the specific claim language and look to the inventive concept:
“Bancorp seeks to analogize its case to SiRF [SiRF Tech., Inc. v. Int’l Trade Comm’n, 601 F.3d 1319 (Fed. Cir. 2010)], contending that a computer ‘plays a significant part’ in its claims because they require ‘precise and repetitive calculation.’ Bancorp Br. 52. That misses the point. It is the management of the life insurance policy that is ‘integral to each of [Bancorp’s] claims at issue,’ not the computer machinery that may be used to accomplish it. . . . As we explained above, the computer limitations do not play a ‘significant part’ in the performance of the claimed invention. And unlike in CLS [CLS Bank Intern. v. Alice Corp. Pty. Ltd., 103 U.S.P.Q.2d 1297 (Fed. Cir. 2012) finding computerized stock trading platform claims are patent eligible], the claims here are not directed to a ‘very specific application’ of the inventive concept; as noted, Bancorp seeks to broadly claim the unpatentable abstract concept of managing a stable value protected life insurance policy.” Slip opinion at p. 25.
The message being sent by the courts to inventors is that you will not be able to reliably evaluate whether or not a software implemented invention on a financial transaction will be patentable. The trend is towards finding such claims unpatentable no matter whether or not a computer is used, and no matter whether or not a computer is necessary to perform intricate and repetitive calculations.
SOFTWARE AS A PRODUCT OR A PROCESS
Process Or Product. When a computer program is claimed in a process where the computer is executing the computer program’s instructions, the claim is a process claim. When a computer program is recited in conjunction with a physical structure, such as a computer memory, the claim is a product claim. In 2012, the presentation of claims as method or a product claims seems to have no weight in determining patentability of software implemented inventions.
To sum up, the Federal Circuit held on 26-JUL-2012 that no credit should be given for a computer when it only speeds things up. When a computer performs steps in a method, it will not salvage it from a finding of it being abstract and it being ineligible for patent protection under 35 U.S.C. §101, because the computer functions solely as an obvious mechanism to solve a problem quickly. Bancorp Services, L.L.C. v. Sun Life Assurance Company of Canada (U.S.), Fed. Cir., No. 2011-1467. The court held that “[t]o salvage an otherwise patent-ineligible process, a computer must be integral to the claimed invention, facilitating the process in a way that a person making calculations or computations could not.” The asserted claims in Bankcorp are directed to systems and methods for administering and tracking the value of life insurance policies in separate accounts.
SOME SOFTWARE PROCESSES NOT PATENTABLE
Processes That Are Not Patentable. Not every process involving software is patentable. Claims drawn to a process that manipulates only numbers, abstract concepts or ideas, or signals representing any of the foregoing are not patentable. However, if a practical application is claimed, then the invention may be patentable. The Bilski decision, discussed above, also confirmed that business method claims are “subject to the same legal requirements for patentability as applied to any other process or method.” (Id., slip op. at 22). See the business methods page for related information.
APPLICATION MUST TEACH
Description Requirements. The specification for a software patent must inform a person skilled in each art how to make and use the invention without undue experimentation. Preferably, the invention is shown by making flow charts that illustrate the overall logic of the software in sufficient detail that a person of skill in the art could write the code. Essentially, this means that the inventor must explain the invention as if the inventor were giving a programmer instructions on what must be accomplished by the code the programmer will write.
EUROPE AND CHINA DISTINGUISHED FROM UNITED STATES ON SOFTWARE PATENTS
Technical Character. European law limits patentable subject matter for computer-implemented inventions to those having a “technical” character. The invention must solve a technical problem and be subject to industrial application. “Technical” is not defined by the European Patent Office and its definition may vary by the individual countries in Europe. A July, 2005 attempt to harmonize the definition failed in the European Parliament.
For the European Patent Office, technical inventions involving software typically include those that control a physical, chemical, or biological process found in nature. Inventions that employ data processing to model a physical, chemical, or biological process may also be patentable. When the invention is involved in such modeling, the invention will be often be found to be “technical” in character if it improves computer/user interfaces; improves data transmission or processing by a method of encoding; improves the confidentiality of data by encryption; compresses data to reduce the transmission requirements; error corrects data transmission; and proves authenticity using digital signatures.
This “technical” criteria essentially eliminates patentability of inventions employing computer programs that solve business problems. Unlike the U.S., Europe prohibits patents for computer-implemented inventions involving business methods.
Similarly, the People’s Republic of China will not issue a patent for software unless it is combined with a computer or is part of a process intended to provide a technical solution to a problem in an industrial field. See Rule 18 of China’s patent implementing regulations.