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Posted 01/30/2024 in blog by Daniel Rudoy Esq.

A Disciplined Investing Approach to Software-Related Patents


A Disciplined Investing Approach to Software-Related Patents

There is much speculation about whether it is still possible to patent software. Indeed, when it comes to software-implemented inventions, decision makers may be tempted to forego patent protection altogether in today’s rapidly-changing legal landscape. This is a mistake. Software-driven innovations continue to create a tremendous amount of commercial value in many different fields, including healthcare, finance, transportation, energy, and education. Such technology, and the value it provides, can be difficult to protect without patenting. How should a company approach patenting software-implemented inventions?

Disciplined Investment in IP

An investment in patents is a long-term exercise—each patent can take years to obtain and a company needs a healthy pipeline of patents to protect ongoing innovations. Long-term investors in financial markets generally do not alter their strategy based on short-term market variations. Likewise, although there are short-term variations in patent law concerning the patent eligibility of software-implemented inventions, the prudent approach is to take the long view and continue investing in a patent portfolio, supplemented by other forms of protection such as trade secret and copyright.


The law on patent eligibility of software saw recent changes, most notably after the Supreme Court’s 2014 decision in Alice Corp. v. CLS Bank International, which led to much hand-wringing over the supposed demise of software-related patents. Yet three and a half years after the Alice decision, patents for software-implemented inventions continue to be granted.


Alice and its progeny are tools for efficiently weeding out meritless patents that describe only high-level ideas and broadly claim them. Such low-quality patents are often asserted by patent trolls and much of the recent patent eligibility case law, including Alice, can be thought of as an intellectual property (IP) market correction aimed at curtailing troll activity.


Instead of worrying about changes in patent eligibility law, which constantly evolve, disciplined IP investors should focus on preparing and prosecuting high-quality patent applications.


Effective Approaches to Patenting Software-Implemented Inventions

A strong patent application describes not only what an invention does, but also how the invention does it, and requires time to prepare. Initially, a drafter—typically, a patent attorney or agent—should meet and actively engage with inventors to identify inventive concepts and separate them from implementation details. Business folks should be consulted as well to prioritize the inventive concepts according to their commercial value.


When a drafter does not take the time or have the right technical expertise to engage with the inventors, the resulting patent application will likely skim the surface, talking generally about the invention without pinpointing the inventive nuggets. Such low-quality applications are often rejected by the U.S. Patent Office (USPTO) and are a prime target of Alice-based attacks—both at the USPTO and in the courts.


A strong patent application should also clearly articulate the technical advantages of the invention relative to existing approaches. This goes a long way toward overcoming any patent eligibility challenges.


Broad claims are valuable. However, claims that state the result of using an invention without specifying its technical features—claiming the “ends” without the “means”—may encounter patent eligibility challenges and may take longer and cost more to get through the USPTO. Significant time should be devoted to drafting claims of appropriate scope that cover the core invention, but are not so broad that they invite a knee-jerk patent eligibility rejection. Indeed, patent examiners are under pressure to not allow overly broad claims.


Of course, the distinction between broad and overbroad is subjective, two examiners can treat the same claims differently, and claims are often rejected despite initial drafting efforts. High-quality patent applications describe the technical features of the invention at varying levels of detail, in part to allow for the greatest flexibility in incorporating some of these features into the claims to overcome any such rejections.


When facing a rejection during prosecution, especially in view of prior art that is close, negotiate with examiners instead of fighting with them. Examiners don’t want their decisions to be reversed, and at the same time need to get cases allowed and off their dockets. Understanding these dynamics is key to obtaining reasonably broad claims without prolonged prosecution.


For a fee of about $4,000 to $2,000 for small entities, the USPTO will examine a patent application within three to four months on average—as opposed to 18-plus months. Fast-tracking a patent application with claims strategically focused on the most valuable aspects of an invention may lead to a quick allowance with fewer rounds of prosecution, more than offsetting the expedited processing fee.


Success Stories

The above-described approaches to obtain patents on software-implemented inventions have been successful for us.


One fintech startup wanted to obtain a patent quickly to attract funding and discourage potential customers from adopting competitor platforms, but was concerned with patent eligibility because the technology was software used primarily in the financial industry.


We drafted a highly technical patent application that emphasized the use of sophisticated data structures and communication protocols to achieve both security and usability. We filed an application with four different, focused claim sets, and requested prioritized examination. We interviewed and built a good rapport with the examiner, and negotiated allowance of two claim sets within five months of filing, all before any office action was issued. We pursued the remaining claim sets in a follow-up fast-track application, which was assigned to the same examiner, and obtained allowance within three months of filing.


Another mid-size company wanted to significantly expand its patent portfolio ahead of acquisition talks, but was concerned about a crowded field of prior art. We made multiple day-long visits to brainstorm potentially patentable concepts with the engineering team, then drafted highly technical patent applications that emphasized unique techniques for filtering and analyzing data to improve speed and accuracy, and to reduce storage and user friction. We filed multiple fast-track applications, built rapport with the examiners, and negotiated allowances in all applications within eight months of filing in a process that included overcoming patent eligibility rejections. The company has now been acquired by a multinational financial services company.


These examples are evidence that it’s worthwhile for decision makers to continue to protect software-implemented inventions by investing in high-quality patent applications.


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