In 2014, the United States Supreme Court issued a landmark decision in the intellectual property case Alice Corp. v. CLS Bank International. Melbourne-based Alice Corp. attempted to patent a computerised system for limiting the risk of one party in a financial transaction defaulting on its obligations. In a unanimous decision, the Supreme Court maintained that the patents granted to Alice Corp. by the United States Patent and Trademark Office (USPTO) were invalid because the software-related inventions were abstract ideas and therefore not patentable. Despite the decision, the Supreme Court failed to clearly define “abstract”, and ever since, lower courts and the USPTO have regulated IP with an iron fist when it comes to patents based on computer implemented abstract ideas.
Before the Alice decision, software patents could be written and awarded without considering whether a subject matter was patentable. Many patent lawyers claim the Alice decision has fundamentally changed the future of software patents, particularly those already issued and applications filed.
Feeling the Alice effect
The Alice case set a precedent in intellectual property and software-related inventions. According to data from law firm Fenwick & West , district and appellate courts have invalidated more than 370 software patents under the new, more rigid standard and dismissed two out of three patent applications brought before them since the Alice decision.
The USPTO has issued Alice rejections where no previous 101 patent eligibility rejection stood, and has even withdrawn notices of allowance after the issue fee has been paid.
The Alice decision makes it clear that the USPTO needs proof of an inventive concept beyond an abstract idea before a patent will be granted. There must be evidence of new hardware integration, not conventional hardware or generic computer technology. If this cannot be proven, method and manufacture claims will be classified as invalid and the patent will be denied.
Managing IP after Alice
Following the landmark Alice decision, software innovators have to consider which form of IP protection is best for them: patents, copyright or trade secrets.
Historically, the patent system provided legal protection for software innovations. Patent holders could prevent competitor infringement without needing to disclose the software being patented and ensure protection for the software’s entire lifecycle.
However, the shift in patent standards since the Alice decision has altered the landscape. Innovators are considering modifying IP strategy to maximise investment in both patents and trade secrets. Software has little difficulty meeting the standard for trade secret protection. In light of the difficulty in securing patent approval, software innovators may find trade secret law to be the best method of IP protection.
How we can help you in post-Alice IP management
We deliver a customised monitoring service to a prolific Fortune Top Ten software giant, aggregating its cases with Alice rejections during the early stages of prosecution. By providing this information in a dashboard format, software companies are empowered to make the right decisions when abandoning or renewing claims. We also provide unique insight on parameters including examiner rejection trends, claim type and tech centre, and among many others further enabling software customers to adopt a prosecution strategy that maximises success.
The Fortune Top Ten software giant implementing our service has experienced savings of $4 million in the last two years, abandoning low value cases and successfully prosecuting Alice rejections in 500 cases to date.
Our Patent Search service can meet any need throughout the lifecycle of a patent, including the patentability of software. All patent searches are customised to meet the exact legal and technical requirements of individual customers. For customers in the software industry, we have the ability to assess the patentability of software before it faces strict Alice testing.