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The application of the patent laws to computer software has never been an easy fit. Many jurists view software code primarily as a series of written statements, which arguably places software squarely within the rubric of copyright law. Others view software code primarily as a series of self-executing instructions, which arguably makes software more akin to a patentable invention than a copyrightable expression. It was not surprising, then, that as the importance of software technology rose in the 1980s and 1990s, the application of patent protection to computer software became a controversial topic, drawing the attention of many prominent legal commentators. See, e.g., Pamela Samuelson, “Benson Revisited: The Case Against Patent Protection for Algorithms and Other Computer Program-Related Inventions.” Emory L.J. 39 (1990). By the turn of the millennium, the controversy seemed put to rest after both the U.S. Patent and Trademark Office (PTO) and the U.S. Court of Appeals for the Federal Circuit issued decisions firmly embracing software as patentable subject matter. Recent rumblings from the U.S. Supreme Court, however, indicate a strong desire to roll back these decisions and revive the software patent debate. In this uncertain environment, those seeking protection for their software advances need to ensure they take steps to anticipate any of a number of potential outcomes. The Supreme Court last touched on the propriety of patenting software in the 1981 case of Diamond v. Diehr, 450 U.S. 175 (1981). That case dealt with a patent directed to a computer-controlled process for curing rubber. Departing from a previous line of cases, a sharply divided court held that the claimed process was patentable even though its main novelty consisted of using a programmed computer to perform prior art calculations. Importantly, however, the majority opinion in Diehr did not reach the question of whether a software program itself could be patented. In a strongly worded dissent, Justice John Paul Stevens went to great lengths to argue that patent protection should not be afforded to software. He reasoned that software programs by their nature were synonymous with algorithms, a class of subject matter traditionally excluded from patent protection. More than 10 years after Diehr, the Federal Circuit took up the issue of software-related patents in the en banc decision In re Alappat, 33 F.3d 1526 (Fed. Cir. 1994). Kuriappan P. Alappat’s invention consisted of a general-purpose computer that executed an anti-aliasing program. In finding Alappat’s invention to be patentable subject matter, the court reasoned that a computer running a software program becomes in essence a special-purpose machine that qualifies for patent protection. While the Federal Circuit extended the Diehr doctrine in Alappat, it did so in a way that was consistent with the logic and reasoning of the Diehr court. If a process that used a computer program was patentable subject matter, it made sense that a machine using a computer program was also patentable subject matter. With Diehr and Alappat, patent practitioners finally had guidance on acceptable avenues for protecting software- related inventions. A computer program could be protected within the confines of a process as in Diehr or as part of a special-purpose computer executing the program as in Alappat. Neither of these options, however, provided independent protection for computer software. Key PTO, Federal Circuit rulings Prior to 1995, the PTO routinely rejected patent claims directed solely to computer software, finding such claims unpatentable under the “printed matter” doctrine, which held that pure printed matter, such as books, did not qualify for patent protection. In 1995, the PTO reversed its position in the case of In re Beauregard, 53 F.3d 1583 (Fed. Cir. 1995). Bucking the standards set out in Alappat and Diehr, Gary M. Beauregard filed a patent containing claims directed to a computer program that did not include a computer or otherwise patentable process. The PTO initially rejected the claims under the printed matter doctrine, and Beauregard appealed the rejection to the Federal Circuit. On appeal, the PTO changed its position and agreed with Beauregard that computer programs embodied in a tangible medium were patentable subject matter. Finding no further case or controversy, the Federal Circuit dismissed the case, tacitly agreeing with the PTO’s position. Shortly after the Beauregard decision, the PTO issued new guidelines unambiguously directing its examiners to allow claims drawn solely to computer software. See Manual of Patent Examining Procedure � 2106.01 (I). This type of claim, referred to by practitioners as a “ Beauregard claim,” became a staple of software patents filed after 1995. While the Federal Circuit’s approval of Beauregard claims was implicit in the Beauregard dismissal, the court took the opportunity to make its approval explicit in the case of Eolas Tech v. Microsoft, 399 F.3d 1325 (2005). In Eolas, Judge Randall R. Rader stated, “without question, software code alone qualifies as an invention eligible for patenting.” Id. at 1369. Given the PTO’s explicit acceptance of pure software claims and the Federal Circuit’s enthusiastic affirmation of software patentability, practitioners could hardly be faulted for believing that the controversy surrounding software patents had finally been put to rest. Recent dicta from the Supreme Court, however, paint a different picture. Reining in the Federal Circuit The year 2006 was considered by many patent practitioners as a landmark year in the history of patent jurisprudence, as the Supreme Court granted certiorari in four separate patent cases: eBay v. MercExchange, KSR v. Teleflex, Labcorp v. Metabolite and Microsoft v. AT&T. As these cases unfolded, a trend was clearly visible: The Supreme Court intended to rein in the Federal Circuit decisions that expanded the patent system beyond Supreme Court precedent. In eBay v. MercExchange, 126 S. Ct. 1837 (2006), the court reversed Federal Circuit precedent that made it easier to get injunctions in patent cases. In KSR v. Teleflex, 127 S. Ct. 1727 (2007), the court struck down a line of Federal Circuit cases that made it harder to invalidate patents as obvious. In Microsoft v. AT&T, 127 S. Ct. 1746 (2007), the court overturned a Federal Circuit decision that would have given limited extraterritorial effect to U.S. patents. While many believed that the court in Labcorp v. Metabolite, 126 S. Ct. 2921 (2006), was poised to similarly rein in the Federal Circuit’s precedent on the scope of patentable subject matter, the Supreme Court stopped short and dismissed its writ of certiorari as improvidently granted. This decision was not without its own controversy. In fact three justices � Stephen G. Breyer, John Paul Stevens and David H. Souter � appended a 15-page dissent to the court’s decision to dismiss certiorari. The dissenters argued that it was important for the court to clarify the law of patentable subject matter sooner rather than later. The dissent went on to criticize Federal Circuit precedent on the issue of patentable subject matter and to question “whether the patent system, as currently administered and enforced, adequately reflects the careful balance that the federal patent laws embody.” Window into high court’s views Because Microsoft v. AT&T dealt with a narrow issue of component exportation under 35 U.S.C. 271, the decision was largely overshadowed by the more broadly applicable eBay and KSR decisions. A careful look at Microsoft, however, reveals a good deal about how the current court views software patents and how a Supreme Court decision on patentable subject matter will affect the Beauregard/Eolas status quo. The patent at issue in Microsoft included an Alappat-type claim directed to an apparatus for digitally encoding and compressing recorded speech. The parties stipulated that a personal computer loaded with the Microsoft Windows operating system infringed the patent. The remaining issue in the case was whether Microsoft Corp.’s shipment of a Windows master disk to foreign manufacturers constituted exportation of a substantial component of a patented invention in violation of 35 U.S.C. 271. The Federal Circuit held that the Windows master disk was a component. The Supreme Court reversed, finding that the master could not be a component because it was never intended to be combined with a computer; it was only intended to be used to make disks that would then be combined with computers. While the majority opinion expressly declined to answer the question of whether exportation of individual Windows disks (which would then be installed in foreign computers) would have constituted exportation of components, at least three justices � Samuel A. Alito Jr., Clarence Thomas and Breyer � would have answered that question in the negative. Alito’s concurrence (which Thomas and Breyer joined) clearly takes the view that software is copyrightable expression, not patentable invention. During oral argument, Justice Antonin Scalia matter-of-factly stated that software, standing alone, is not patentable subject matter. “Justice Scalia: You can’t patent, you know, on-off, on-off code in the abstract, can you?; [Counsel]: That’s correct, Justice Scalia.; Justice Scalia: There needs to be a device.; [Counsel]: . . . It has to be put together with a machine and made into usable device.” With Scalia, there appear to be at least four justices who disagree with the Beauregard/Eolas framework. The Supreme Court appears poised to roll back the Federal Circuit’s jurisprudence on patentable subject matter. As with injunctions in eBay and obviousness in KSR, the court will likely eschew Federal Circuit decisions that expanded patentable subject matter beyond Supreme Court precedent. Patent practitioners, therefore, would be wise to revisit cases such as Diehr and Alappat for guidance in drafting claims that will withstand a rollback of the Beauregard/Eolas framework. Those with existing patents consisting solely of Beauregard-type claims should consider taking action within the PTO (e.g., reissue, continuation, etc.) to supplement those patents with Alappat-type claims. Mark C. Scarsi is a partner in the Los Angeles office of New York’s Milbank, Tweed, Hadley & McCloy, who litigates patent cases for several Fortune 100 companies. He may be reached at [email protected]milbank.com.

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