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It has been more than a year since the U.S. Supreme Court issued its decision in Alice v. CLS Bank which ruled that the two-step Mayo analysis should be applied to all patents in determining patent eligibility under 35 U.S.C. 101. While this analysis provides a few bright line rules (e.g., implementing a known process using generic computer elements is not patentable), it failed to offer any clarity regarding how to perform the two-step Mayo analysis on software inventions, which requires determining whether an abstract idea is recited, whether there is preemption of the abstract idea, and whether an “inventive concept” is recited such that the invention is directed to something “significantly more” than the abstract idea itself. One leading patent commentator has been even more blunt, characterizing the Alice opinion as “intellectually bankrupt.”

Since Alice was decided, the Federal Circuit and District Courts collectively have issued more than 100 rulings on section 101-eligibility of software-related patents. A few clear trends have emerged from these rulings.

First, software inventions directed to business or financial processes have been universally invalidated, even when the patented invention was conceded by the Court to be novel and even when the identified abstract idea of the invention was conceded by the Court as not being completely preempted. While this result would seem to contradict the reasoning in Mayo and Alice, the Courts have spoken and the message has been consistent. The USPTO has followed suit, refusing to issue any new patents directed to software-based business or financial processes, despite issuing examination guidance documents based on Alice that would appear to allow for issuing such patents if they recite an inventive concept and do not preempt an abstract idea.

Second, software inventions that are not directed to business or financial processes also are being invalidated at a high rate based on a myriad of rationales that are difficult to reconcile with each other or with existing section 101 case law. Again, the USPTO has followed suit, and traversing section 101 rejections now is a routine part of patent prosecution, even for practitioners who do not prepare or prosecute inventions directed to business or financial processes.

So what should inventors do if they believe they have invented the next Google search algorithm or the next business process to revolutionize health care delivery and wish to protect the IP at the heart of the invention? For the foreseeable future, inventors have a few options regarding protection of software inventions:

1. Consider whether the invention can be protected as a trade secret and take the necessary steps to do so. For most inventions, this admittedly is easier said than done and likely will be impossible for some inventions that require some form of public exposure.

2. File any new patent applications with a Request for Non-Publication so that no publication of the patent application will occur. If no patent can be obtained, the patent application will remain in secrecy forever. The main downsides of this approach (no foreign filings can be made, no damages are available for infringement activity during the patent application stage) often are insignificant for software inventions, and particularly for inventions directed to business or financial processes.

3. Prepare any new patent applications to preemptively address the most common reasons that courts find software inventions to be ineligible under section 101 by clearly identifying the inventive concept and explaining why the invention cannot be performed with “pen and paper,” with the caveat that even such showings may not be sufficient to avoid a section 101 rejection during the examination process at this time.

4. If possible, include at least one non-generic computer element and/or hardware component in the claims. This admittedly is difficult to do for most software inventions directed to a business or financial process because such inventions typically are designed to execute on generic computer equipment and would be too easy to invent around if limited to specialized computer elements or hardware components.

5. If an existing patent application is under a section 101 rejection that the Examiner will not or cannot withdraw, file a Request for Continued Examination (RCE) or an appeal brief to maintain pendency, with the hope that the winds may shift in a more pro-patent direction with future court decisions that the USPTO legally would be bound to follow.

It may take an act of Congress (no pun intended) to steer the courts away from invalidating every asserted patent directed to a business or financial processes, as well as many other software patents. In the meantime, inventors must rethink their options for protecting many types of software inventions.

For a detailed look at the political landscape surrounding this issue, check out the blog post at IPWatchDog®“The Case for Software Patentability, an Interview with David Kappos” (Director of the USPTO from 2009 to 2013).

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