Twenty-four years ago, I wrote my first software patent application, "Debugging Parallel Programs by Serialization." A little more than two years after filing the application, the patent issued with claims that lacked mention of any structural component of a computer. In fact, the closest the first claim came to a tangible result was the step of "displaying information." The software patent attracted little attention during its lifespan and expired unnoticed.

My, how things have changed. Today, everything about software patents is different than when I filed that application in 1989. In fact, the issues surrounding software patents have significantly fueled allegations that the U.S. patent system is "broken." Why has the world of software patents become such a huge mess? The problem is multifaceted.

First, consider how much time it currently takes for a software patent application to mature into a granted patent. While the Official Gazette of the U.S. Patent and Trademark Office reports (as of June 30) that examination of software patent applications are currently at a 17-month backlog, that is only part of the story. After receiving two rejections in a patent application, an attorney is normally required to file a request for continued examination (RCE) in order for the patent office to further examine the application. Many examiners examining software patent applications, however, adhere to internal patent office guidelines that permit those examiners to process no more than one RCE per month.

Thus, for example, if an attorney files an RCE and that RCE becomes the 24th RCE in an examiner's backlog, then the attorney may need to wait 24 months for that RCE to be processed. Furthermore, the office's Patent Trial and Appeal Board (PTAB) reports that they are currently processing appeals that were filed in 2010 for software patent applications. Thus, the time period from when an attorney files an RCE in a software patent application until the PTAB issues a decision can exceed five years. Add to that number the one-and-a-half-year delay until examination begins and one year in prosecution for filing two responses, and the time period from filing the patent application to when the patent grants can easily be at least eight years. Given the short life span of commercial software products, eight years is an incredibly long time to wait for a patent to issue.

Another issue is the patent office's allowance rates for software patents. Patent office examiners are divided into art units, and each art unit examines applications relating to respectively different areas of technology. In January of last year, IPWatchdog.com issued a study in which it calculated the allowance rate in art units that examine certain types of software patent applications, namely patent applications relating to the subject matter of "data processing: financial, business practice, management, or cost/price determination." Allowance rate was obtained by dividing the number of cases allowed by the total of number of cases allowed plus the number of cases abandoned.

Some of the results of the study were startling. While the average allowance rate for all applications (i.e., across all areas of technology) filed in the patent office typically hovers around 50 percent, the allowance rate for two art units examining the above software patent applications was 6.8 percent and 4.3 percent, respectively. Thus, the allowance rates of patent applications in those art units are significantly lower than the patent office average. Because these numbers have been so drastic, some authors have actually suggested that patent applications should be written with specifically chosen keywords so that patent office software that scans and assigns patent applications to appropriate art units will not assign applications to art units with low allowance rates.

Part of the reason for the backlog relating to software patents and the lower allowance rates may be attributed to the second level of review that business method/software patent applications receive. In particular, applications in those technology areas must be reviewed by two examiners before applications can be allowed. Several studies have suggested the additional time that results from two levels of review contributes to the delays associated with patent grants.

To its credit, the patent office is engaged in significant efforts to try to address the problems outlined above. For example, total patent application backlog across the entire patent office has dropped approximately 20 percent over the past four years. Also, the patent office is currently engaged in a significant study (in which it has solicited input from the public) regarding problems with the RCE system. The office is also involved in many efforts to achieve further funding in order to increase the total number of employees in the examining corps.

The delays in the patent office in the procurement of software patents is only part of the problem. The other side of the coin relates to all of the frivolous litigation that has occurred at the hands of some patent software owners. Currently, many companies are threatened with lawsuits over software patents that they are accused of having infringed. Such threats are often accompanied by "settlement offers," which include an offer to license a patent at a cost of, for example, $30,000. Given that the cost of defense in a patent lawsuit could conceivably exceed $1 million, many companies simply pay the demanded fees.

The companies making these demands have often been referred to in the literature as "trolls," although today the term "nonpracticing entity" is used more frequently. A few of these companies are legitimate companies that have developed software and seek to protect their investment. Unfortunately, many of these companies are asserting overly broad patents with the hopes of collecting licensing fees from accused companies that would rather pay the licensing fee than litigate.

Part of the reason why some of these patents are overly broad is because of confusing case law that does not clearly articulate patentability requirements of software-based technology. The most recent high-profile case dealing with this issue, CLS Bank v. Alice, 2011-1301 (Fed. Cir. May 10, 2013),received huge amounts of criticism from the intellectual property bar when a 10-member en banc panel of the U.S. Court of Appeals for the Federal Circuit issued seven different decisions. While the majority stated, "It is difficult to conclude that the computer limitations here do not play a significant part in the performance of the invention," what is odd to me is the lack of claim limitations that were quoted in the majority opinion. In other words, the majority opinion held that the claims had patentable subject matter. Yet, there was almost no discussion of the actual language in the claims that led to the majority's conclusion.

Today, when most intellectual property attorneys write software patent applications, those attorneys know to simply include the word "microprocessor" in the claims. Typically, software claims that do not include the word "microprocessor" are currently rejected as being nonstatutory, while claims that do include the word "microprocessor" rarely are rejected as being nonstatutory. Most intellectual property attorneys will agree that the case law relating to the patentability of software is exceptionally "muddy" and the courts have not yet articulated a bright-line test.

With all the problems that currently exist in the world of software patents, public opinion has reached such a fever pitch that the White House has recently become involved. On June 4, the White House issued five executive actions with the goal of preventing "frivolous litigation" and ensuring "the highest quality patents." Legislative recommendations include creating court discretion for awarding attorney fees when court filings are deemed to be frivolous and expanding the patent office's ability to conduct post-grant review.

White House executive actions include the patent office initiating a review-making process to require patent applicants and owners to be more transparent in their ownership information. Patent office examiners will also now be trained to require greater claim clarity in patent applications. (See my article from the July 3 issue of The Legal, "The Need to Provide Understandable Patent Claims.")

On August 23, the U.S. Government Accountability Office issued a report regarding frivolous litigation based on software patents. The report's sole recommendation was for the patent office to avoid issuing patents with overly broad claims by monitoring litigation trends. The report issued to mixed reviews. While it is important for patents to not have overly broad claims, other deterrents are also needed to discourage the filing of frivolous lawsuits.

Part of the problem is that much of the public does not have a good and detailed understanding of the significant problems that plague the patent system. For example, my experience has been that patent applicants that are new to the patent system (for example, startups), typically have no understanding of the patent office's backlog and low allowance rates for many software patents. Furthermore, and again referring to startups, many are shocked and overwhelmed when threatened with litigation over a frivolous and overly broad software patent. Part of the solution is to make the public more aware of the issues that are causing the current problems. It is hoped that by creating public awareness, lawmakers will be pressured further to properly address these complex issues.

Lawrence E. Ashery is an intellectual property attorney at RatnerPrestia with more than 20 years of experience procuring patents, building portfolios, drafting legal opinions, counseling clients, and lecturing extensively throughout the United States and Asia. Contact him at leashery@ratnerprestia.com.