Patents on Software and Business Methods – Still Possible but Challenging

02/19/2015 / Craig Lervick

In the past several months, it has been suggested that software and business methods can no longer be patented. Generalizations like this are often very easy to make, but the true analysis is typically more complex. This is especially true when examining the current state of law related to the patentability of software and business methods.
A recent case, Alice Corp. v. CLS Bank Int’l, decided in the summer of 2014, the U.S. Supreme Court considered the patentability of software and business methods.[1] This was a patent case involving current technology, thus the decision of the Supreme Court received considerable press and made clear that patents in these areas of technology would be much more difficult to obtain. One of the clear results of this decision was a confirmation that an abstract idea cannot be made patentable by simply adding “done on a computer” to the steps or the process involved. Since this decision, the federal courts have found several patents invalid, using the standards set forth in the Alice decision. More recently, a decision by the Court of Appeals for the Federal Circuit provided additional insight, and possibly some hope, for those pursuing patents related to software and computer systems. The DDR case[2] further analyzed a computer-related invention, in light of the Supreme Court’s Alice decision.
Starting with the clear rule that abstract ideas are not patentable, which generally include fundamental economic practices, methods of organizing human activities, an idea of itself, and mathematical relationships and/or formulas, the DDR court found that the invention involved in the DDR case provided more. More specifically, the court determined that the invention at issue involved a solution that was necessarily rooted in computer technology to solve or overcome a problem specifically arising in the realm of computer networks. Given that determination, the court determined that the invention did not cover an abstract idea alone, but provided patent-eligible subject matter. The particular technology involved the creation of an online marketplace which transparently transferred a purchaser from a host site to a merchant site when making purchases.
While these decisions will be further reviewed and analyzed as time goes on, they provide the outline for analyzing the eligibility of software and business methods for possible patent protection. The USPTO is also trying to capture this information, and provide appropriate guidelines to examiners and patent applicants.
While many believed the Alice decision provided the end to any patents covering software or business methods, the DDR decision changed that perspective, albeit in a small way. If new ideas are in the technology area patented in DDR, it would be wise to conduct further review to see if patent protection may be available.
[1] Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014).
[2] DDR Holdings, LLC v. LP, Fed. Circuit No. 2013-1505 (decided December 5, 2014).