There are many ways to obtain intellectual property protection for software creations. Many keep the software code confidential and maintain the software as a trade secret. Others seek patent protection on the software, which discloses the higher-level concepts surrounding the software without explicitly publishing the source code. Recent changes in patent law have changed what types of software inventions are patentable and the requirements for obtaining such patents. However, the evolution of the law has been ongoing for quite some time.
The Supreme Court has struggled to define what types of software inventions are patentable in a string of cases over the past fifty years. The most recent case, Alice Corp. Pty. Ltd. v. CLS Bank Intern., 134 S. Ct. 2347 (2014), held that an invention directed to an abstract idea is not patentable simply because it is implemented on a general purpose computer. In particular, Alice and its progeny held that a software invention is not patentable if it (1) recites an abstract idea; and (2) does so without claiming “something more” that transforms “the nature of the claim into a patent-eligible application.” Id. at 2357.
The “abstract idea” prong has been confusing at best. Alice failed to define the test for determining what constitutes an abstract idea. Id. “[W]e need not labor to delimit the precise contours of the ‘abstract ideas’ category in this case.” As a result, courts and patent practitioners have struggled with this lack of guidance from the Supreme Court, with one court even recognizing it “could never succeed in intelligibly” defining what constitutes an abstract idea, but that “I know it when I see it.” McRO Inc., v. Activision Pub., Inc., No. CV 14-336-GW, 2014 WL 4759953, at *5 (C.D.Cal. Sept. 22, 2014). The Patent Office itself declined to issue a bright line rule, instead opting to rely on examples provided by the courts. July 2015 Update to Interim Guidelines, p. 1 “Because the courts have declined to define abstract ideas, other than by example, the 2014 IEG instructs examiners to refer to the body of case law precedent in order to identify abstract ideas by way of comparison to concepts already found to be abstract.” Nonetheless, many software inventions are not considered abstract ideas.
The “something more” prong has borne more fruit for software patents. For example, the Court of Appeals for the Federal Circuit declined to invalidate a patent for an invention that overcomes a problem in computer networks. DDR Holdings v. Hotels.com, No. 2013-1505 (Fed. Cir. December 5, 2014). The patents in DDR Holdings addressed a problem in e-commerce, that a third party merchant can “lure” away visitors of a host web page when a user clicks on the link of the third party merchant. The system of the DDR Holdings patents “generates and directs the visitor to a composite web page that displays product information from the third-party merchant, but retains the host website’s ‘look and feel.’” Id. at 3-4. While the majority opinion did not specify whether the invention was directed to an abstract idea, it held the invention was patent-eligible due to its function of improving computer technology. The software in DDR Holdings is but one example of a patent-eligible software invention.
There is no “one-size-fits-all” solution for protecting software. Trade secret protection can be inexpensive, but can become weak if the software is publicly disclosed or otherwise disseminated. Also, trade secret protection can be obtained in combination with patent protection, with the patent protecting the higher level concepts around the software and the trade secret protecting the source code or other details. In the end, it is best to determine the type of invention sought to be protected and the best form of intellectual property that fits the particular invention.