Patents for Software-Related Inventions

This paper was written in March of 1995 by Jeffrey R. Kuester and Ann K. Moceyunas for the
purpose of Jeff teaching a college class on software patents. Jeff is a partner with Thomas,
Kayden, Horstemeyer & Risley, L.L.P., a patent, copyright, and trademark law firm in Atlanta,
Georgia, and his practice focuses on software, electrical, and telecommunication patent law.
The opinions expressed herein should not neccessarily be understood to represent the views of
these attorneys, their firms, or their clients.

The topic of patents for software-related inventions is a very technical and complicated area.
Furthermore, there have recently been many discussions and heated debates regarding the
wisdom of using the patent system to protect software. This is especially true in light of recent
developments in copyright law which suggest that computer software will not find very much
protection under the copyright law.[1] However, before examining the peculiarities and issues
involved with patents for particular areas of technology, certain basic information regarding
patent protection should be understood.

I. Basic Patent Information

The founders of the United States provided in the Constitution that "Congress shall have the
power...to promote the progress of science and useful arts, by securing for limited times to
authors and inventors the exclusive right to their respective writings and discoveries."[2] A
patent is the grant from the United States government to the owner of an invention to exclude all
others from making, using or selling the invention for a limited time. In exchange for the patent
rights, the inventor is required to disclose the invention in enough detail to allow other people to
use the invention after the monopoly expires and to learn from the invention to build on its ideas.
[3] Thus, the patent system was founded to promote technological development by providing
incentive to developers of new products through enabling them to prevent others from "stealing
their ideas" through profiting without spending the necessary research time and money.

The Patent Act is broad and general in its language describing the proper subject matter for a
patent:

Whoever invents or discovers any new and useful process, machine, manufacture, or
composition of matter, or any new and useful improvement thereof, may obtain a patent therefor,
subject to the conditions and requirements of this title. [4]

However, not all "inventions" are patentable; "excluded from such patent protection are laws of
nature, natural phenomena, and abstract ideas."[5] "An idea in and of itself is not patentable."[6]
There are different types of patents. A utility patent is granted for the functional aspect of a
machine, an article of manufacture, a composition of matter or a process. A utility patent
currently lasts for 17 years from the date of the grant (provided that maintenance fees are paid at
certain intervals after the patent issue date: 3 and 1/2 years, 7 and 1/2 years, and 11 and 1/2
years).[7] A design patent is granted for the ornamental appearance of an article, but protects
only the non-functional aspects of the design. A plant patent is granted for the discovery and a-
sexual reproduction of a new variety of plant.[8]

Someone who infringes the patent by making, selling, or using[9] the invention without a license
may be liable to the patent owner for damages (no less than a reasonable royalty), pre-judgment
interest, treble damages (for willful infringement), and attorneys fees and costs in egregious
cases.[10] The infringer's infringing actions can also be stopped by court order.[11]

The Criteria for Granting a Patent

In the United States, a person is entitled to a patent if:

1. the person is the inventor;[12]

2. the invention is the proper subject matter for a patent: machines, articles of manufacture,
compositions of matter, and processes;[13] and
3. the invention is "useful", "new"[14], and "unobvious"[15].

For most types of inventions, the first two requirements for patentability normally present very
little difficulty.[16] Generally speaking, an invention is "useful" if the invention has a utilitarian
or commercial value; an invention is "new" if the invention is the first[17] embodiment of the
idea in a useful thing or process; and an invention is "unobvious" if the invention would not have
been obvious to a person reasonably skilled in the pertinent art, given what already existed in the
particular area of the invention (the prior art).[18] This last requirement is often the most difficult
hurdle for a new invention since it is normally a very subjective process to determine whether the
differences between the new invention and the prior art are "obvious" solutions to known
problems.

The Patent Application Process

The process for obtaining a patent on an invention typically starts with a patent attorney
preparing and filing a patent application for the inventor and owner of the invention with the
United States Patent and Trademark Office ("PTO")[19]. The first inventor is entitled to the
patent over any subsequent inventors, even if the subsequent inventor files first, provided the
first inventor can prove the earlier date of invention. The application must be filed no later than
one year after:

1. public use of the invention;

2. the placing on the market of the invention for sale in the United States; or
3. the publication of a description of the invention anywhere in the world.[20]
In exchange for the patent, the inventor is required to disclose the material aspects of the
invention, many times including trade secrets. Thus, there is a tension between the inventor's
desire to disclose as little as possible and the patent law's requirement of disclosure. The
application itself must meet very technical requirements for describing the invention. The United
States Code provides in part:
The specification shall contain a written description of the invention, and of the manner and
process of making and using it, in such full, clear, concise, and exact terms as to enable any
person skilled in the art to which it pertains, or with which it is most nearly connected, to make
and use the same, and shall set forth the best mode contemplated by the inventor of carrying out
his invention.[21]
Because of the specialized nature of a patent application, the applicant should seek the advice of
a patent attorney or patent agent having knowledge and/or education in the discipline of the
invention. Only those persons admitted to the U.S. Patent Bar are allowed to file and prosecute
patent applications for others before the PTO.

What happens when the PTO says no?

A patent application can travel up two levels in the PTO and then two more levels in the federal
court system before reaching the "final" word on whether the claimed invention is patentable. In
addition, once a patent has been issued, it can be challenged in a lawsuit filed in a United States
District Court; a decision from those courts may be appealed to the United States Court of
Appeals for the Federal Circuit (its equivalent prior to 1982 was the Court of Customs and Patent
Appeals) and then to the United States Supreme Court under certain circumstances.
United States Supreme Court
||
United States Court of Appeals, Federal Circuit
||
PTO Board of Patent Appeals and Interferences
||
PTO Examiner

The courts decide the validity of a patent with regard to both the language of the Patent Act and
to interpretations of the Patent Act in other cases. Those other interpretations form the body of
case law which, in the U.S. judicial process, is respected as precedence.

II. Patentability of Computer Software - An Overview

The courts, particularly the appellate courts (Federal Circuit and Supreme Court), have not seen
many cases involving issues about the patentability of computer programs. Before even getting
to the traditionally most difficult area of "obviousness", the courts have been struggling with the
subject matter requirement for patentability. Specifically, the courts have had trouble deciding
whether various types of software can accurately be characterized as falling under any of the
areas of patentable subject matter, such as "processes" or "machines".[22] Further, the advances
in computer technology have made the early cases (of only 20 years ago) seem archaic with
respect to inventions and common knowledge within the industry.
As of today, inventions that include computer programs as all or part of the invention may be
patentable under certain circumstances. However, before discussing recommendations for
software owners or the current state of the patent law as applied to software-related inventions,
an examination of the history and development of this area of law is in order.

The struggle with the definition of "algorithm" - Gottschalk v. Benson.

Amazingly enough, although computer programs have been developed for many decades, the
United States Supreme Court did not see a case that raised the issue of whether a computer
program is patentable until 1972.[23] In that case, the Court reviewed a patent application
describing an invention as a method for converting binary-coded decimal numerals into pure
binary numerals in a general purpose digital computer. Although the Court found that the
invention was not patentable, it stated that this decision did not preclude ever finding a computer
program patentable.[24]

In the 1972 United States Supreme Court case, Gottschalk v. Benson,[25] the Court framed the
issue as: "The question is whether the method described and claimed is a 'process' within the
meaning of the Patent Act." [26] The Court went on to describe the claimed invention:

The patent sought is on a method of programming a general-purpose digital computer to convert

signals from binary-coded decimal form into pure binary form. A procedure for solving a given
type of mathematical problem is known as an 'algorithm.' The procedures set forth in the present
claims are of that kind; that is to say, they are a generalized formulation for programs to solve
mathematical problems of converting one form of numerical representation to another. From the
generic formulation, programs may be developed as specific applications.[27]
Prior United States Supreme Court cases had interpreted the word "process" in Section 101 of
the Patent Act to preclude patents on "scientific truth or the mathematical expression of it".
Accordingly, the Court in Benson decided the claimed invention was just a mathematical
algorithm, and thus not within the subject matter of patentable inventions as a "process".

The wake of the Benson decision caused all sorts of difficulties with the word "algorithm". These
difficulties arose out of decisions of Patent Examiners who rejected patent applications because
an application contained the word "algorithm"[28] or the examiner used an overly expansive
definition of "mathematical algorithm."[29]

In 1976, the Court of Customs and Patent Appeals (the "CCPA") reviewed a patent application
that claimed an invention for dynamically rearranging priorities in a multi-program operating
system. The PTO Board of Appeals had taken the position that Benson precluded patentability of
computer programs. The CCPA decided differently, limiting the Benson decision to precluding
patentability of mathematical algorithms, but not computer programs generally. The CCPA was
careful to explain the difference under Patent Law (as it understood it in 1976) between a
mathematical algorithm and general algorithms:

Over-concentration on the word 'algorithm' alone, for example, may mislead. The Supreme Court
carefully supplied a definition of the particular algorithm before it, i.e., '[a] procedure for solving
a given type of mathematical problem.' The broader definition of algorithm is 'a step-by-step
procedure for solving a problem or accomplishing some end.' Webster's New Collegiate
Dictionary (1976). It is axiomatic that inventive minds seek and develop solutions to problems
and step-by-step solutions often attain the status of patentable invention. It would be
unnecessarily detrimental to our patent system to deny inventors patent protection on the sole
ground that their contribution could be broadly termed an 'algorithm.'[30]
In 1978, the CCPA reviewed a patent application that claimed a new method for typesetting
alphanumeric information (such as a mathematical expression) using a computer-based control
system (employing a hierarchical tree data structure) in conjunction with a phototypesetter. The
PTO had rejected the application on the basis that Benson precluded patentability of an invention
where the only "novel" part was the computer program. Once again the CCPA stated that Benson
only precluded patentability of mathematical algorithms, but in this case, the claims were
broader algorithms:
The 'local positioning algorithm' described in appellant's specification is the order of steps in
processing the hierarchical tree structure and spatially relating the various characters to be
displayed. Appellant has thus used the term 'algorithm' as a term of art in its broad sense, i.e., to
identify a step-by-step procedure for accomplishing a given result. [31]
Only a few months later, the CCPA again had to reverse a decision of the PTO Board of Appeals
that rejected a patent application for a computer program. The PTO Board of Appeals had used
the broad definition of "algorithm" instead of the narrower definition of "mathematical
algorithm" in its interpretation of Benson.[32] The invention in this case claimed a method of
translating from one natural language (e.g. Russian) to another natural language (e.g. English).
The CCPA held that the process described did not solve a mathematical problem, directly or
indirectly, and thus was not precluded from patentability.

1981 - The Supreme Court speaks again: Diamond v. Diehr

Even by 1980, the PTO was still trying to argue that an invention that claimed a stored program
in a computer was not patentable. The United States Supreme Court, in a case called Diamond v.
Diehr, reviewed a patent application for molding raw, uncured synthetic rubber into cured
precision products including constant measurement of actual temperature inside the mold during
the curing process to recalculate the cure time (by a computer program).[33] The PTO examiner
had rejected the claims (in 1976) on the basis that Benson precluded patentability of the steps of
the process that used a computer program, and the remainder of the steps were already known in
the industry.[34] The appellate Court (CCPA) reversed the finding, but the PTO Commissioner
requested the United Supreme Court to review the decision in 1980. The United States Supreme
Court addressed only the issue of whether a process employing a mathematical algorithm is
patentable. The Court found that the invention used a mathematical algorithm, but as a whole,
the invention directed itself to the process of molding rubber and was thus patentable.

Because the invention in the patent application in Diehr did not encompass a general non-
mathematical algorithm (or so says the Court), the Court stated that this decision was confined to
mathematical algorithms:

The term 'algorithm' is subject to a variety of definitions. The petitioner defines the term to
mean:
 1. A fixed step-by-step procedure for accomplishing a given result; usually a simplified
procedure for solving a complex problem, also a full statement of a finite number of
steps.
2. A defined process or set of rules that leads [sic] and assures development of a desired
output from a given input. A sequence of formulas and/or algebraic/logical steps to
calculate or determine a given task; processing rule.'[citation omitted].

This definition is significantly broader than the definition this Court employed in Benson and
Flook. Our previous decisions regarding the patentability of 'algorithms' are necessarily limited
to the more narrow definition employed by the Court, and we do not pass judgment on whether
processes falling outside the definition previously used by this Court, but within the definition
offered by the petitioner, would be patentable subject matter.[35]

A history of the lower courts trying to understand.

So where did the Supreme Court decisions leave us regarding the patentability of software-
related inventions? In August 1982, the CCPA reviewed a patent application for a method of
controlling the internal operations of a programmed computer that allow for the execution of
several formulas independent of the order in which the steps are presented.[36] This particular
patent application apparently had a long and tortured treatment: it was originally filed with the
PTO in 1970 (2 years before the Benson decision). The applicants had used the word "algorithm"
to describe the invention. The PTO examiner rejected the application in 1972 on the basis that
Benson precluded "algorithms". The PTO Board of Appeals affirmed the rejection on the basis
that the invention was obvious. The CCPA reversed, finding that the invention claimed no
mathematical algorithm (even if it manipulated mathematical algorithms) and that Benson and
Diehr did not preclude patentability of computer programs generally. [37]

In September 1982, the CCPA reviewed a patent application for a process and apparatus for
testing a complex system and analyzing the results according to a factor of function or
malfunction (illustrated as a process for diagnosing neurological disorders in patients).[38] The
CCPA held the claims were not patentable because they really distilled down to a mathematical
algorithm representing a mental process that is not applied to physical elements or process steps.

In 1989 the Federal Circuit Court of Appeals (the successor court to the CCPA) again held that
claims for a method of testing a complex system to determine whether the system condition is
normal or abnormal and to determine the cause of any abnormality was non-patentable as a
mathematical algorithm.[39] The only "physical" step in the invention was the gathering of data
for input, a step which was not significant enough to take the invention out of the category of
unpatentable mathematical algorithms. Three days later, the Federal Circuit Court of Appeals
held that an auto-correlation circuit for use in voice pattern recognition was patentable despite
the use of computer algorithms.[40] In this second case, the Court emphasized that the overall
invention was the apparatus (the interrelation of the various hardware components which operate
according to an algorithm) and not the algorithm itself.[41]

The next case from the Federal Circuit issued in March of 1992, Arrhythmia Research
Technology, Inc. v. Corazonix Corporation.[42] That case originated in the District court after
the patent had already issued. The invention was for a method of analyzing electrocardiograph
signals using a computer to diagnose heart attack patients who are at high risk for heart
arrhythmia. The lower court had held the patent was invalid because the mathematical algorithm
used to detect certain heart signals predominated. The Federal Circuit disagreed, holding that the
overall result (not the process) controlled: in this case, the conversion of one physical electrical
signal to another signal.

This distinction between the method and its result appears to indicate a more liberal view from
the Federal Circuit on the issue of patentability of computer programs. However, the PTO
continues to err on the side of conservatism. Presently, one of the policies of the PTO has been
articulated as:

`Claims that deal with 'computer programs,' equations or mathematical calculations, or methods
which might be suspect under the Supreme Court's exclusions...need to be carefully analyzed...If
the claim is the least bit suspect regarding the 101 question - make the rejection...The whole
'software' question is very sensitive...If too many patents are issued that are borderline or that are
perceived as being borderline, the unfriendly publicity could adversely affect us. [43]

Recent Federal Circuit Decisions.

More recently, the Federal Circuit has issued several cases dealing with the question of whether
various software-related inventions fall outside the areas of proper subject matter as unpatentable
mathematical algorithms. In the decision of In re Schrader[44] the court found a competitive
bidding method to include a mathematical algorithm which rendered the claims unpatentable.
The court found that even though no mathematical formula was explicitly stated in the claims,
the method implied the use of a simple summing method without physical elements or process
steps.

However, after a very divided court issued the case of In re Alappat,[45] the future appeared
brighter for the viability of broad computer software patents. The claims of that upheld patent
were directed toward a "machine" for smoothing waveforms for an oscilloscope. Since the
claims were directed toward a machine, including elements described in a "means-plus-function"
format, it appeared that claim drafting techniques would be the answer to making software-
related inventions patentable subject matter. The case pointed out that although specific
hardware structures had been disclosed in the specification, (ALU, ROM, shift registers) the
claim at issue would also read on a general purpose computer programmed to carry out the
invention.[46]

The case of In re Warmerdam[47] seemed to support this view since the court found the robotic
collision avoidance system "method" and "data structure" claims of that patent to be unpatentable
subject matter, yet upheld the claim directed toward a machine including memory generated
according to the unpatentable method. Another interesting note regarding that case is that the
court avoided the issue of determining a definition for a "mathematical algorithm", instead
finding the issue to be whether the method for generating a data structure representing the shape
of a physical object was "a process that goes beyond simply manipulating 'abstract ideas' or
'natural phenomena'".[48]
Later in the year, the Federal Circuit decided the case of In re Lowry[49] to reverse a decision by
the Board of Patent Appeals and Interferences to find a claim to a "memory" with a particular
"data structure" for organizing memory to be patentable subject matter. However, rather than
presenting a direct argument under 35 U.S.C. § 101, the Board argued that the data structure was
analogous to printed matter, and thus obvious under 35 U.S.C. §§ 102 and 103. The court
disagreed and found the "memory" claims to be patentable.

Finally, the most recent and troubling case addressing the patentability of software-related
inventions is the case of In re Trovato.[50] In this case, the court found both method and
machine claims directed toward planning a path for an object to follow in a physical task space
to be unpatentable subject matter. The court upheld application of the Freeman-Walter-Abele[51]
test and found that although the claims did not express the mathematical algorithm in terms of a
mathematical formula, the court re-stated that words in a claim operating on data can serve the
same purpose as a formula.

Of particular importance to the court was the lack of disclosed structure in the specification,
prompting the court to find the machine claims to be drafted in "illusory apparatus format."[52]
Finally, the court noted that "Trovato does not claim to have invented a new kind of computer
which the recited mathematical algorithm controls.[53] Nor do they claim that the recited
mathematical algorithm has been combined with a new memory controlling a computer known
to the art."[54]

In conclusion, In re Trovato seems to erase the perception created by the court in In re

Warmerdam that claim drafting techniques will provide the entire answer for the persistent
subject matter problems for software-related inventions. Instead, future specifications will
apparently be scrutinized much more closely for detailed structural disclosure, and mathematical
algorithms will apparently be found to exist in more unlikely locations.

The Patentability Spectrum

The case law to date indicates that the patentability of software-related inventions can be
described by examining the spectrum of those inventions; the ends of the spectrum are clear, but
the lines in the middle are very fuzzy:

Mathematical algorithms found not to be patentable by themselves.

 a computer software algorithm for converting from binary-coded decimal numerals to

pure binary numerals (Benson)
 formula for computing an updated alarm limit during a catalytic conversion process
(Flook)
 an improved mathematical equation for interpreting seismic waves (In re Walter)
 a competitive bidding method where simply summing was found to be a mathematical
algorithm (In re Schrader)
 a method and a data structure for collision avoidance (In re Warmerdam)
 a method and a machine for planning object movement (In re Trovato)
Algorithms that are expressed as mathematical formulas found not to be patentable by
themselves, and those algorithms which appear to replicate human decision-making skills found
not to be patentable:

 a process and apparatus for testing a complex system and analyzing the results (for use in
medical diagnosis), using functions of K elements (any arbitrary subdivision of the
system such as neuropathways in the human nervous system) (In re Meyer).
 a process for determining "abnormalities" in a complex system (In re Grams)

Computer algorithms unrelated to mathematics found to be patentable:

 computer program for the translation of natural languages (In re Toma)

 computer program for executing several equations regardless of the order of their input
(In re Pardo)

Computer algorithms that pertain to the operations of the hardware found to be patentable:

 system software (Chatfield)

 firmware (Bradley)
 algorithm for typesetting alphanumeric equations (Freeman)
 waveform smoothing algorithm for oscilloscope (In re Alappat)
 a machine with a collision avoidance memory (In re Warmerdam)
 a memory with data structure for organizing data (In re Lowry)

Processes or apparatus that use computer programs as a component of the overall invention
found to be patentable:

 rubber curing process (Diehr)

 improved CAT scan procedure (Abele)
 apparatus for voice pattern recognition (Iwahashi)
 method for analyzing electrocardiograph signals (Arrhythmia)

Despite the various analyses by the Courts that result in this categorization of the cases, it is also
clear that some of these cases have differences without real distinctions. The Arrhythmia case
(1992) appears to be not different in real principle from the Walter case (1980)(the process of
analyzing electrocardiograph signals is patentable although the process of analyzing seismic
wave signals is not patentable). Further, it is difficult to really say that the "mathematical
algorithms" in the two systems analysis cases reflect a natural truth (like the "law of gravity"), as
the patent application claims read more on a methodology of estimating probabilities.
Accordingly, it appears the analysis of "algorithms" and "data structures" needs further
refinement as the Courts better understand the function and result of computer programs.

Recommendations to the Computer Software Developer

Regardless of your opinion on the issue of whether software-related patents are good or bad for
society, the fact remains that a rapidly increasing number of software companies are filing
software-related patent applications every day. Furthermore, the number of software-related
patents issued by the PTO continues to increase. These facts create a need for software
companies to begin developing programs and procedures to also protect their intellectual
property through the patent system.

One of the reasons for building a patent portfolio is the common practice of patent cross-
licensing. Among companies with patent portfolios, it is a very common practice for one
company to offer to cross-license one or more patents of its own when accused of infringing a
patent belonging to another company. Through this practice, the patent assets of both companies
are increased. Another related reason for utilizing the patent system is to create a more effective
defense to patent infringement suits. In other words, if another company is aware of your patents
and fears retaliatory patent infringement actions, this knowledge can often provide a fairly
effective "defense".

Thus, software companies should begin evaluating the best internal procedures for identifying
potentially patentable ideas and pursuing patent protection for such ideas. Since software-related
patent applications are often relatively expensive and time-consuming, appropriate business
decisions should also be made to support such an endeavor.