Patent Protection for Software

In the past, patent protection has been largely unavailable for computer software. This is because most types of software have been viewed by the patent office as a mathematical algorithm not eligible for patent protection. However, under newly proposed guidelines recently issued by the Patent and Trademark Office, the question of whether a computer-implemented invention is a mathematical algorithm will no longer be the first question asked.

Instead, the new guidelines require a patent examiner to begin by classifying the computer-implemented invention into one of three categories: (1) compilations of information or natural phenomenon; (2) a specific machine or manufacture; or (3) a series of steps to be performed on a computer.

An invention that falls into the first category is not patentable, because information is not patentable (though it may be copyrightable if it meets the requirements of the Copyright Act). Examples of such "inventions" include compilations of information, data structures absent any physical structure, and natural phenomena.

An invention that falls into the second category probably is patentable, because new and useful products are generally patentable. Examples of such inventions would include new types of computers, new types of memory chips, new storage media, and new computer peripherals.

The third category is the most problematic. Most computer software programs will fall into this category. Software instructions are viewed as a "process" under § 101 of the Patent Law. The examiner will attempt to classify the process in one of three ways: (1) a manipulation of abstract ideas; (2) a solution to a mathematical problem; or (3) a process for transforming physical material, or data representing physical phenomena, into a different state or thing, to achieve a practical application. If the invention is classified in either of the first two categories, it is not patentable. If it is classified in the third category, it is patentable. Thus, software programs now have an increased likelihood of being patentable. In the past, the Patent Office usually rejected outright any claims for patent protection for software embedded in some type of computer-readable memory (like disks), if the claim was made that they should be patented apart from their existence in physical form on a disk. Instead, computer programs are now to be viewed as independently patentable processes. See, In re Beauregard, 35 U.S.P.Q.2d 1383 (1995).

At least one court has cited these guidelines in evaluating a patent claim for software. In State Street Bank and Trust Company v. Signature Financial Group, Inc., 927 F. Supp. 502 (D. Mass. 1996), the court was called upon to determine whether a computerized system for managing a mutual fund investment structure was patentable. The court held that it was not, because it found that the main function of the program was to perform certain mathematical algorithms, the program did not "physically transform" anything, and that the system was essentially an (unpatentable) "method of doing business." This decision, if followed by other courts, may limit the patentability of new computer software innovations. On the other hand, some commentators believe that the State Street decision overlooked portions of the new Patent Office guidelines which state that a patent may be issued for software that represents an innovative new "practical application in the technological arts." An application which invokes this particular clause might succeed in obtaining a patent in spite of the holding of the State Street case. In this way, these new guidelines may yet prove to expand the availability of patent protection for software.

It should be understood that even if a computer program is still not patentable under the guidelines, the specific words or symbols that constitute a computer program may still represent the expression of the computer program and as such may still be a copyrightable literary creation.