After the Alice decision last summer by the Supreme Court, a large number of business method and software patents have been invalidated or found unpatentable by federal courts and the Patent Office as being drawn to abstract ideas. Innovators and attorneys practicing in these areas have been left uncertain as to what constitutes an abstract idea versus what is patentable. To help clarify, on January 27, 2015, the Patent Office released abstract idea claim examples to accompany the 2014 Interim Guidance on Subject Matter Eligibility released on December 16, 2014. The claim examples are related to computer-implemented business method and software patent claims, and include claims that would be patent eligible and claims that would be patent ineligible when analyzed under the 2014 Interim Eligibility Guidance.
Additionally, on January 21, 2015, the USPTO held a public forum in Alexandria, VA to receive feedback from the public regarding the 2014 Interim Guidance on Subject Matter Eligibility. Many practitioners provided accounts of their experiences regarding recent interactions with the USPTO related to subject matter eligibility rejections and recommendations for the future. A recap of the public forum can be found here.
June 2014: SCOTUS Decides Alice
On June 19, 2014, the U.S. Supreme Court issued its decision Alice v. CLS Bank regarding subject matter eligibility of computer related inventions and business methods. In Alice, the Court found that the claims at issue amount to nothing significantly more than an instruction to apply the abstract idea of intermediated settlement using some unspecified, generic computer. The Court applied a two part test from its 2012 decision in Mayo v. Prometheus and found that the claims at issue were directed toward an abstract idea and that the claims do not contain an inventive concept sufficient to transform the abstract idea into a patent eligible invention. Notably, the Alice decision failed to explicitly define an "abstract idea" and did not indicate what would be considered an "inventive concept."
Claims Confusion and Subsequent Clarification
Since the Alice decision, the USPTO, the Federal Circuit, and other lower federal district courts have had to attempt to determine when computer-related claims are directed toward an abstract idea and when the claims would include significantly more than the abstract idea to amount to patent eligible subject matter. Post-Alice, the number of subject matter eligibility rejections in computer related inventions has skyrocketed and the allowance rate has fallen rapidly.
However, in December 2014, the Federal Circuit affirmed the patent eligibility of U.S. Patent No. 7,818,399 in DDR Holdings v. Hotels.com. The court found that the claims did not recite the performance of some business practice known from the pre-Internet world along with the requirement to perform it on the Internet. The DDR Holdings decision was the first major decision that affirmed the patent eligibility of a computer related invention since Alice.
Expectations for a Post-Alice World
While the Guidelines and these cases do not resolve the issues completely, the continuous and voluminous guidance and decisions are helping to provide more clarity as to what constitutes patentable subject matter in the areas of business methods and software generally. While the pendulum initially swung away from patentability, recent information and decisions seem to be slowing the swing and we believe will likely lead to a new normal.
Polsinelli has analyzed the Alice decision and the impact that Alice will have on software and computer related inventions, and is continuing to stay abreast of this rapidly changing area of the law. The claims in DDR Holdings and the claims in the abstract idea examples provided by the USPTO represent some of the first concrete examples of computer-implemented patent claims that would be patent eligible.
It is important to understand that the subject matter eligibility of computer related inventions is evolving rapidly. Polsinelli is constantly evaluating any new developments from courts and the USPTO in an effort to protect our clients' intellectual property interests in software and business methods.