Everyone is confused by the current state of software patentability

I have read CLS v. Alice a half a dozen times. I have read the follow-up cases, including Ultramercial v. Hulu (holding software patentable, opinion by Judge Rader) and its counterpart Accenture v. Guidewire (holding software as unpatentably abstract, opinion by Judge Lourie).

Greg Aharonian of the Internet Patent News Service collected some quotes from the judges in CLS v. Alice.

the patent-eligibility test has proven quite difficult to apply
Judge Lourie

the current interpretation of 101 is causing a free fall in the patent system
Judge Moore

our court is irreconcilably fractured
Judge Moore

we have propounded at least three incompatible standards, devoid of consensus, serving simply to add to the unreliability and cost of the system of patents as an incentive for innovation
Judge Newman

the intervening commotion [since Diehr and other decisions] leaves us with little, if any, agreement amongst us even though the statute as not changed a syllable
Chief Judge Rader

[o]ur opinions spend page after page revisiting out cases and those of the Supreme Court, and still we continue to disagree vigorously over what is or is not patentable subject matter
Judge Plager

courts could avoid the swamp of verbiage that is 101 by exercising their inherent power to control the processes of litigation [by focusing on 102, 103 and 112]
Judge Plager

Based on this, and the opinions, I have come to two conclusions. First, the Court of Appeals for the Federal Circuit is just as confused as I am about software patent eligibility. Second,  the panel members you draw on the CAFC will determine whether a software patent will be upheld as valid or struck down as abstract. If you draw Judge Newman, Rader, Linn, and O’Malley, the software patent will live. If you draw Judge Dyk, Prost, and Reyna software is clearly abstract.

Patent Statistics in the GAO Report

The GAO just released a report on patent litigation: IP: Assessing Factors That Affect Patent Infringement Litigation Could Help Improve Patent Quality (GAO-13-465).
In this report, the GAO states that “The implication as of now, the year 2013, is that half of all issued patents are software-related, and that the PTO is issuing about 2200 software patents a week.”

Aharonian, in a pointed screed addressing the GOA report, points out that this is inaccurate. He provides a graph of software and non-software electrical patents issued weekly.

As the graph shows, the number of software patents per week (blue line), as of 2012, is about 1100, half of the GAO figure.  Further, little has changed in decades in the relative number of software and non-software electronics patents (red line). So not only are software patents not the majority of issued patents, they are not even the majority of issued Electronics patents. That the two lines much correlate reflects the fact that software is part and parcel of technology, so intimate with the rest of the Electronics arts that software patent numbers fluctuate with economic forces that affect patent filings. He notes that his data is based on a few assumptions on what characterizes a software patent.  

However, the GAO’s assumption is based on a combination of “a number of entire patent classes that PTO economists have said are most likely to include patents with software-related claims, and this includes method patents. For the list of these classes.” (GAO paper, footnote 27).

The problem, of course, is that there are no “exclusively software” classes. So if an entire patent class is counted, it is extremely likely to include non-software cases as well.

Aharonian concludes his screed by offering to provide all of his data to the GAO, if requested. And even offering to release his software and databases to them, to enable them to recreate and verify his numbers. I hope that the GAO takes him up on his offer.

The Price of Globalization (Foreign Filing Licenses)

I have spent a couple of hours trying to figure out where I need to file a patent application, and I still don’t have a good answer.  The scenario is pretty simple, and an effect of globalization.  My US company client has a patent application that has five inventors.  The inventors include on American national, a Chinese national, a German national, a Swedish national, and a Turkish national.  I have been tasked with figuring out where we can file, to maintain the ability to file elsewhere internationally, and minimize the possibility of penalties.

The US has the most restrictive foreign filing license requirement.  It requires that any invention made by a US national, or for a US national, be filed initially in the US or in the PCT with the US as the search authority.  Alternatively, a foreign filing license could be obtained, without filing in the US.  Failing to follow this rule will result in loss of patent rights, and can result in significant penalties including fines and potentially jail time.

China requires an initial filing in China, for any invention conceived or completed in China, or receiving a foreign filing license.  However, that license may take up to four months to issue.  The penalty for failing to do so, is loss of Chinese patent rights. Of course if state secrets are disclosed, more severe penalties may be imposed.  But that is not a real risk in this case.

Germany requires a foreign filing license for any invention with a German inventor that has a secrecy aspect.  Getting that license may take up to four months.  The penalty is focused on disclosure of state secrets, and for that it is severe.  It is unclear whether there are any penalties if you fail to seek a foreign filing license, but no state secrets are disclosed.  At least one source said that these requirements only apply to national security related applications.

Sweden appears not to have any restrictions, at least in my review of their patent law. If you have any input on it, let me know.

Turkey appears to have no restrictions, at least in my review of their patent law.  If you have any input, let me know.

This kind of project is only going to become more common, as global corporations have inventors in various countries, working together.  If anyone knows of a good source that explains these laws, I would very much appreciate knowing about it.  Otherwise, I’m just going to keep adding to my little spreadsheet, as I encounter inventors from various countries.

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