Alice update: A new hope?

The value of strategies which give software patent applicants time and flexibility to counteract the effects of the US Supreme Court’s Alice decision becomes more apparent every day. As I pointed out in a previous blog post, these strategies are valuable because:

• The United States Court of Appeals for the Federal Circuit (USCAFC) continues to issue clarifications of the Alice decision, and
• The United States Patent and Trademark Office (USPTO) continues to issue clarifying guidelines for applicants to deal with the impact of the Alice decision.

The recent USCAFC ruling in Enfish LLC vs Microsoft Corp. and accompanying USPTO memo are prime examples.In its decision, the USCAFC stated that:

"Software can make non-abstract improvements to computer technology just as hardware improvements can, and sometimes the improvements can be accomplished through either route. We thus see no reason to conclude that all claims directed to improvements in computer-related technology, including those directed to software, are abstract… Therefore, we find it relevant to ask whether the claims are directed to an improvement to computer functionality versus being directed to an abstract idea"

 The USPTO memo explained to examiners that:

“The fact a claim is directed to an improvement in computer-related technology can demonstrate that the claim does not recite a concept similar to previously identified abstract ideas.”

Additionally, the USPTO memo cautioned examiners against "describing a claim at a high level of abstraction untethered from the language of the claim when determining the focus of the claimed invention." Finally, the USPTO memo highlighted that the fact that the USCAFC “identified the specification’s teaching that the claimed invention achieves other benefits” over prior art.

So, what are the main take-home points for patent applicants? Firstly, it is important to draft the claim to cover the improvement to the prior art. It may even be worthwhile to reduce the scope of the claim around the enhancement or improvement. Furthermore, the applicant should clearly indicate within the specification how the invention either enhances or improves over the prior art.

In all of this, it has been my experience that when it comes to Alice, examiners seem to operate by the "I know it when I see it" rulebook. That is, perception is often a major deciding factor as to whether an Alice rejection is issued or not. To reduce the possibility of negative perception, it is useful to describe the underlying hardware in non-generic terms and have claims which refer the underlying hardware. Speaking from experience, anything which can prevent a claim disappearing down the Alice rabbit-hole from the outset is useful.

Alice update: Further eligibility guidance issued

As I pointed out in a previous blog post, strategies which give software patent applicants time and flexibility to amend patent claims are valuable in counteracting the effects of the US Supreme Court’s Alice decision. This is partially because the United States Patent and Trademark Office (USPTO) continues to issue clarifying guidelines for applicants to deal with the impact of the Alice decision.

This is borne out by recent events. At the start of May 2016 the USPTO issued further eligibility guidance. Since many software patents have been rejected due to claims allegedly reciting “abstract ideas”, this post focuses on the material in the eligibility guidance pertinent to abstract ideas.

Firstly, if an examiner concludes that a patent claim recites a court-identified abstract idea, then this guidance pressures the examiner to cite the relevant court decisions. Next, the guidance pressures the examiner to identify additional elements recited in the claim beyond the abstract idea, and explain why either individually or in combination these elements do not amount to more than the abstract idea. The memorandum goes on to emphasize the importance of addressing the combination of additional elements.

When an additional element is considered individually by the examiner, the additional element may be enough to qualify as "significantly more" if it

• meaningfully limits the abstract idea,
• improves another technology or technical field,
• improves the functioning of a computer itself, or
• adds a specific limitation other than what is well-understood, routine, conventional activity in the field or unconventional steps that confine the claim to a particular useful application.

If an element does not amount to significantly more individually, it can still amount to significantly more when considered in combination with the other elements of the claim. With specific reference to software, it is important that the elements not be seen as generic computer components performing generic, that is, well-understood, routine and conventional functions.

So what does this mean for software patent applications? Firstly, software patent applicants should adopt the following best practices:

• drafting claims in such a way so as to not be considered abstract,
• providing sufficient written support for claims to be drafted in such a manner, and
• including extra explanations within the specification to “distance” the claimed invention from generic computer components performing generic functions.

With regard to the last point above, extra care should be paid to describing the hardware on which the software would run. The specification should describe the hardware using non-generic computer components and explaining how, for example, the software differs from generic software programs as understood by one of skill in the art.

“Defence in depth” is also a useful tactic. That is, there should be sufficient supporting material in the specification to provide claim amendment flexibility in the event of an abstract idea rejection.

Finally, pressuring examiners to explain their subject matter ineligibility rejections helps reveal the examiner's mindset to the applicant. The applicant will then be better positioned to move the claim away from the “danger area”. 

Reducing intellectual property flight risk

Intellectual property (IP) flight risk is the risk of losing valuable IP from a company, thereby reducing the value of the company. Organizations are vulnerable to losing IP if: 

• IP is not properly identified; and/or
• IP is not properly secured.

Since innovative companies such as high technology or biotechnology startups are heavily dependent on IP as a driver of value, IP flight risk poses a major threat to value for these companies. If these companies have invested heavily in, for example, branding, marketing and product development, losing IP results in reduced return on these investments.

A first step in reducing IP flight risk in a company is instituting an “IP-aware” mindset within the company. Company stakeholders should be aware of the importance of IP to company value, and the need to protect IP. Fostering such a mindset requires the formulation, implementation and dissemination of an effective IP policy. A well-formulated IP policy will contain 3Ps:

1. Proactivity – the policy should prompt the employee to proactively consider whether valuable IP is being created. This is achieved by explaining the importance of IP to the company, and providing examples of how IP could be created.
2. Processes – The policy should explain the processes necessary to identify and secure the ownership of the IP.
3. People – the policy should identify the key people and their responsibilities in carrying out the processes.

Once the policy has been formulated, it needs to be implemented and disseminated. Proper implementation leads to employees “buying into” the IP policy. Dissemination serves to make employees throughout the company aware of the processes and people for the protection of IP. Dissemination could include emphasizing the importance of IP during formal onboarding or orientation sessions; and holding periodic seminars within the company to remind employees of the importance of IP to the company and the processes and people contained within the IP policy.

A second step to reduce IP flight risk is securing the company’s IP ownership within employee, contractor and partnership agreements by using appropriate IP ownership clauses. The IP policy should explain the importance of including these  IP ownership clauses in such agreements. 

A third step is running periodic IP mining sessions to identify the IP created within the company. These sessions should involve personnel responsible for the creation and protection of IP, such as technical, marketing and legal personnel. All IP identified during the session should be documented, preferably in forms. The identified IP should then be evaluated and the appropriate processes to protect the identified IP should be carried out. The IP policy should explain the importance of running these periodic IP mining sessions; and the processes/people to document, evaluate and protect the identified IP. The second and third steps are interlinked with each other. Once IP has been identified in a mining session, the agreements serve to secure the company's ownership of the identified IP.

In conclusion, while IP flight risk is a threat to value, proactive measures to identify and secure IP can be put in place to mitigate this risk.

Patent practice in a time of Alice

The Alice Corporation vs CLS Bank Limited decision by the Supreme Court of the United States has cast a huge shadow over software and business method patents. Many are concerned that their previously valid granted patents are now invalid. Many are also concerned about “non-patentable subject matter” rejections during patent prosecution. 

Usually with such decisions, as time progresses, the situation becomes clearer. This has been the case with the Alice decision. Since Alice was brought down in June 2014, the US Court of Appeals for the Federal Circuit has produced clarifying decisions. Based on these clarifying decisions, the United States Patent and Trademark Office (USPTO) issued clarifying guidelines in December 2014 and July 2015. 

Therefore, strategies which give applicants time and flexibility to amend patent claims are valuable in counteracting the effects of Alice. Such strategies include, for example, those which provide future opportunities to draft new patent claims; and defer prosecution of a pending patent application.

Strategically using continuation and continuation-in-part (CIP) applications helps provide future opportunities to draft new claims. In the prosecution of an initial application, applicants may submit very narrow claims to overcome Alice rejections. However, if the applicant then files either a continuation or a continuation-in-part, the applicant may be able to obtain broader claims as new clarifications are issued. Furthermore, if an older patent in a family is invalidated due to Alice rejections, having live continuations and CIP applications in the family allows preservation of patent protection. 

Applicants can also defer prosecution by filing provisional patents. After filing a provisional patent, an applicant can wait for up to 12 months before filing a nonprovisional application claiming priority to the provisional patent. One strategy is as follows: During the 12 month period, the applicant actively monitors for clarifications. On receiving clarifications, the applicant can file new provisional patents with modifications based on these clarifications. At the end of the 12 month period, the applicant can file a nonprovisional claiming priority to the previously filed provisional patents. This helps reduce Alice claim rejection risk in prosecution. 

This “rolling provisional” strategy is potentially cheaper and less time consuming than dealing with Alice rejections in prosecution over multiple office actions. While there is a downside of having to wait 12 months to file the corresponding nonprovisional, this is countered by the reduction in time and cost spent dealing with an Alice rejection. Furthermore, over a 12 month period avenues to protect difficult to patent subject matter may arise after the clarifications are issued. Using rolling provisionals affords applicants ways to exploit these new avenues.

In conclusion, while Alice has created, and continues to create uncertainty around software and business method patents, it is likely that with time the situation will become clearer. Therefore strategies that extend the timeline to obtain patent rights such as filing of continuations and continuations-in-part and using rolling provisionals will be valuable.