Patenting Software and Beyond: A Guide to Understanding Alice and its Impact

One of the biggest challenges for tech companies today is adapting their patent strategy to recent changes in the law. The question that many companies are dealing with is, how can we protect our intellectual property related to software and computer systems?

The standard for what is considered patent-eligible in the US has become one of the most confusing and unpredictable areas in the law, and the confusion is particularly relevant for technologies that utilize software.

Importantly, the issue goes way beyond patenting software itself. Because innovative software solutions arise in almost every technology sector, recent changes in patent law have impacted patentability of a diverse array of inventions, ranging from artificial intelligence all the way to medical devices and automotive equipment.

In this blog post, I’ll provide background on where this confusion comes from and how the law has evolved in recent years. This will provide context for a follow-up post, where I’ll provide some practical guidance to help tech companies navigate the questions that arise when developing a patent strategy around technologies that involve software.

Subject Matter Eligibility – Remind Me What That Is

The confusion began in 2014, when the US Supreme Court issued a unanimous decision in a case that’s now known simply as “Alice.”

To understand the impact of the Alice case, you need to know where it fits within the overall patent system. There are four main requirements for getting a US patent: eligibility, novelty, non-obviousness and description. The Alice case relates to only one of those four requirements: eligibility.

Patent lawyers often refer to the four requirements by the section number where they’re found in the federal patent statute:

• Eligibility (Section 101): The invention must be patent-eligible subject matter.
• Novelty (Section 102): The invention must be novel compared to “prior art”.
• Non-Obviousness (Section 103): The invention must not be obvious in view of prior art.
• Description (Section 112): The invention must be described adequately in a patent application.

The Alice decision is about determining whether an invention is patent-eligible subject matter (under Section 101).

As the name suggests, the law of subject matter eligibility dictates the types of things that are “eligible” to be patented. For example, mathematical equations by themselves are not patent-eligible subject matter, so an equation can’t be patented even if it meets all the other requirements for patentability.

Because the Alice case deals only with subject matter eligibility (Section 101 of the patent statute), the Alice case is not about whether an invention is sufficiently innovative or technologically significant to merit patent protection. Those questions (“novelty” and “non-obviousness”) are dealt with under Sections 102 and 103.

The Alice case made it much more difficult to prove that an invention is patent-eligible subject matter, which effectively shrinks the universe of what can be patented in the US. For software and computer-implemented technologies, a much broader range of inventions are now considered “abstract ideas” that are not patent-eligible, regardless of how innovative they may be.

What Is an Abstract Idea?

To be clear, abstract ideas had not been patent-eligible subject matter for decades before the Alice case.

In earlier Supreme Court cases, the quintessential abstract idea was a mathematical formula. For example, a case in the 1970s (Parker v. Flook) dealt with a patent claim that recited a mathematical formula for calculating certain values in a chemical process. In that case, since the patent claims recited the mathematical formula with only conventional “post-solution” activities, the claims were found to be ineligible subject matter.

In addition to mathematical formulas, other types of things like risk hedging and mental processes have been considered abstract ideas over the years leading up to the Alice case.

However, many patent-eligible inventions have often been derived from, or explained using, mathematical formulas and other types of abstract ideas. As the Supreme Court stated multiple times, “While a scientific truth, or the mathematical expression of it, is not patentable invention, a novel and useful structure created with the aid of knowledge of scientific truth may be.”

In other words, even if an invention used or evolved from an abstract idea (like a mathematical formula), it was easy to show that the invention itself was not an abstract idea. Alice changed that.

Before the Alice decision, even though there wasn’t an accepted definition of “abstract idea,” most patent lawyers had a pretty good handle on what types of claims would be rejected as abstract ideas. Roughly speaking, as long as your patent application didn’t claim something equivalent to a mental thought process, a business concept or mathematical formula, it would not be considered an abstract idea.

Because the law was relatively easy to navigate and fairly predictable, issued US patents were rarely found to be invalid for claiming an abstract idea. But that all changed with the Alice decision in 2014. The Alice case led to an astonishing increase in the number of issued patents invalidated by federal courts, and a similar increase in patent office rejections under Section 101.  

Deadly Framework

The Alice decision didn’t explicitly change the definition of “abstract idea.” Instead, it setup a framework for determining whether a patent claim that includes an abstract idea meets the criteria of Section 101. The US patent office has summarized the Alice framework in a flowchart that’s often referred to by patent professionals. Under that framework, the range of inventions that are considered patent-ineligible abstract ideas has dramatically expanded.

For one thing, the “abstract idea” exception to patent eligibility used to be confined primarily to process claims (also called method claims) — claims that describe the invention as a series of steps or operations. For example, before Alice, in a patent application that claimed an invention as both a system and method, it was not uncommon for the patent office to reject only method claims under Section 101. But after Alice, that distinction is far less relevant; any type of claim can be rejected or invalidated as an “abstract idea.”

In addition to expanding the types of claims that might be considered an “abstract idea,” the Alice framework also skews the results toward finding an “abstract idea” in every case. If any part of a claim can even be characterized as an abstract idea, then the entire claim is much more likely to be found ineligible under Section 101. This is important because, given the proper motivation (like, if you’re a defendant who might have to pay millions of dollars for patent infringement), you can find an abstract idea lurking in pretty much every patent claim ever written.

And well-funded litigants have used this fact to invalidate hundreds of patents under the Alice framework. Most patent attorneys would agree that the vast majority of these patents would not have been invalidated before the Alice case. In other words, Alice really did change the law.

My favorite example to illustrate this point is the garage door opener patent in the Chamberlain Group case. There, the Federal Circuit (the appeals court for all patent cases) invalidated claims to a novel garage door opener, finding that the claims were not patent eligible because they were directed to an abstract idea. Many patent attorneys (myself included) found this absurd, since garage door openers have been considered patent-eligible for over 100 years.

But more importantly, the Chamberlain Group case shows how counter-intuitive and non-sensical the law has become. A garage door opener is a physical, tangible, mechanical thing that you can touch and feel. In any other context, no one would consider a garage door opener to be an “abstract idea”, but US patent law does.

Another more recent example is the case of American Axle. Here, the Federal Circuit invalidated claims to a novel process for making a driveshaft (of an automobile), finding that the claims were patent ineligible because they were directed to a law of nature (which is treated similar to an abstract idea).

Again, outside of the Alice framework, an ordinary person would never consider a process for making an automobile draft shaft to be a “law of nature”. It sounds like nonsense. Since there have been hundreds of US patents previously granted for other drive shaft technologies, it’s clear that this type of invention has been considered patent-eligible subject matter for well over a century.

The most widespread impact of Alice case has been in software cases. Even though the Alice decision doesn’t explicitly refer to “software” at all, the Alice case dealt with a software-implemented invention, and the majority of patents that have been invalidated under Alice have related to software and software-controlled systems.  

A commentator recently summarized the software cases that were decided by the Federal Circuit in 2020, and found that out of 27 software-related patents on appeal for subject matter eligibility, only four of them were found partially or fully eligible under Section 101.

In short, the Alice framework has been deadly for many software and computer-related patents.

Confusion and Criticism

The federal courts, the patent office and patent attorneys have all spent considerable effort trying to figure out how to apply the Alice framework to software-implemented inventions. And it’s impossible to find any high-level consistency in these cases.

For example, in one case, a novel method of navigating a spreadsheet was considered patent eligible (i.e., not an abstract idea); but in another case, a novel indexing software that organizes information in a certain way was not patent eligible. And it’s not just difficult to reconcile different cases; different judges in the same case often reach opposite conclusions.

The problem is that Federal Circuit does not have a clear, consistent standard for applying the Alice framework. The individual judges on the court have their own divergent and evolving approaches to patent eligibility, which means it’s nearly impossible to predict what the Federal Circuit will consider patent eligible in any given case. Even in a retrospective review of software cases that the Federal Circuit decided in 2020, clear standards could not be identified. 

Because of all the confusing and inconsistent outcomes, the Alice decision has been highly criticized as one of the most problematic issues in the US patent system, and many prominent voices (including current and former Federal Circuit judges) have called for the Supreme Court and Congress to fix it.

Among others, David Kappos, the respected former director of the USPTO, has been highly critical of the current US legal framework for subject matter eligibility. And David Crouch, one of the leading commentators in the patent world and author of the Patently-O blog, has called it a “patent emergency.”

In 2019, a bipartisan pair of US Senators pushed for a statutory solution to the problems created by Alice. But their efforts were ultimately unsuccessful, and so the problem remains.

Patent Office Guidance

A major improvement for patent applicants came a couple of years ago. In 2019, about five years after the Alice case was decided, the US patent office released new patent examination guidelines to create a more coherent process for patent examiners to follow when analyzing patent eligibility.

And the new patent office guidelines have had a significant, positive impact for patent applicants. The overall number of rejections under Section 101 (so-called “Alice rejections”) dropped markedly in 2019, and there was also an increased number of software-related patents issued under the new guidance.

In another post, I’ve summarized the US patent office’s current approach to patent eligibility, along with some practical guidance on how to navigate patent eligibility in US patent applications related to software inventions.

Summary

To protect intellectual property related to software and computer systems, it’s important to understand the history and context of the Alice decision within the overall patent system. If you’re a tech company and you have questions about how the Alice decision impacts the patentability of your technology, please get in touch!