In June 2014, the Supreme Court ruled in Alice Corp. v. CLS Bank Int’l (“Alice”) that the claims in the four disputed software-based patents owned by Alice Corp. were directed to an “abstract idea,” and thus were patent-ineligible under 35 U.S.C. 101. The Supreme Court’s decision was based on the reasoning that the claims were said not to be more than instructions for implementating an abstract idea, the idea of intermediated settlement using a generic computer. This decision soon led to much confusion about software invention patentability and impacted how this patentability is evaluated by patent practitioners and U.S. Patent and Trademark Office (USPTO) examiners alike.

The USPTO then issued “2014 Interim Guidance on Subject Matter Eligibility” after Alice, which details the subject matter eligibility analysis for claims, providing a baseline guidance for examiners. The USPTO then supplemented that guidance with eight sets of example claims directed to computer-implemented inventions or software inventions. Four example are directed to patent-eligible subject matter while the other four sets recite patent-ineligible matter. Practice revealed that some examiners are not familiar with these relatively recent examples. When this is the case, it falls upon the patent practitioners to make their cases by bringing these guidelines and examples to the examiners’ attention.

Example 3 of the USPTO’s set of eight examples uses a two-step test, commonly referred to as the Mayo test. This test was used in Example 3 to analyze the patentability of a claim reciting digital image processing by generating a noise mask. Step 1 checks whether the invention (here, a process) belongs to a statutory category of invention and, if so, whether it is a “judicial exception” such as an abstract idea. Generating a mask was found to be an abstract idea. However, when examined as a whole in Step 2, the claim represents more than that abstract idea. Step 2 of the two-step test is to search for elements that show an inventive concept. Here, the process of comparing and converting data were found to add meaningful limitations, “improve the functioning of the claimed computer” and result in an “improved digital image.” The claim is thus patentable, and Example 3 can be used as support that for the idea that software claims can still be patentable.

Still, examiners may issue automatic 101 rejections for any software-based or computer-implemented inventions. These rejections can and do happen. When this is the case, patent practitioners must appropriately respond, and they can point out that examiners cannot issue automatic rejections without a fact-based reasoning behind the rejection. The Patent Trial and Appeal Board held in Ex Parte Poisson (February 26, 2015) that examiners must provide an evidence-based prima facie case of patent ineligibility, and the Poisson case provides a clear example of this.

DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014) was a significant decision from the Federal Circuit as being the first to uphold the subject matter eligibility of computer-implemented claims after Alice. This decision is a strong example showing that software-related inventions can still be patentable. Here, it was shown that claims directed to making an improvement to a computer system or solving a problem within the system may be patentable. More specifically, the Federal Circuit saw that “the claimed solution is necessarily rooted in computer technology to overcome a problem specifically arising in the realm of computer networks” (DDR Holdings) leading to their conclusion that these claims “specify how interactions with the Internet are manipulated to yield a desired result” and “recite an invention that is not merely the routine or conventional use of the Internet.” 

Although some confusion still remains regrading software patent eligibility, it is important to adopt a thorough approach not only to drafting these software patent applications, but also to working with and even educating the USPTO examiners. Particularly after Alice, broad subject matter eligibility in the claims can and should be advocated for by patent practitioners, who must also advocate for their clients’ cases to be handled properly.

Alice Corp. v. CLS Bank: http://www.supremecourt.gov/opinions/13pdf/13-298_7lh8.pdf

DDR Holdings v. Hotels.com: http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/13-1505.Opinion.12-3-2014.1.PDF