In the past, patent law was not frequently used to protect software related inventions. If you are interested in the history of software patents, I prepared a history of selected important cases relating to the patenting of software related inventions: http://patentsusa.blogspot.com/ (a new window will open).

The law has evolved substantially over time. Reviewing the history starting with the older cases first will provide the reader with an appreciation of how difficult it was in the past to obtain patent protection for software related inventions, and how resistance has softened over the years. However, some challenges remain. For example, if an invention becomes classified as a "business method," there will be two tiers of review and much reluctance on the part of the U.S. Patent and Trademark Office to grant a patent, despite the progress made in the AT&T v. Excel case.

In the past, it used to be very difficult to obtain patent protection for software related inventions, and patent applications covering software related inventions were typically rejected as "unstatutory." Unstatutory inventions are those which fall within certain classes for which patent statute prohibits issuance of patents. Algorithms are included on the list of unstatutory inventions. In the past, software related inventions were rejected as unstatutory for attempting to patent an algorithm. Software related inventions also frequently received "printed matter" rejections. Merely arranging information on a piece of paper is not considered to be patentable unless the printed matter bears a new and non-obvious functional relationship to the substrate, and software code has been rejected in the past on these grounds. Various rejections were appealed to the Court of Appeals for the Federal Circuit, which has found many software related inventions to be statutory, and capable of patent protection. For example, claims including an analog to digital converter were found statutory in one case, and claims including a ROM look up table were found statutory in another case. However, the U.S. Patent and Trademark Office interpreted these decisions very narrowly, and continued to reject patent applications covering software related inventions. The Patent Office was most likely to allow a software related application if there was some novel hardware other than the computer itself. Thus, the Patent Office favored inventions relating to control processes, but not inventions involving pure software. Patent attorneys took steps such as disguising an invention as hardware, using block diagrams, to try to avoid such rejections.

Because of these difficulties, and controversy about whether software should be capable of patent protection, some companies relied in the past solely on copyright protection and licensing agreements to protect their software.

Software patent guidelines issued by the U.S. Patent and Trademark Office in 1996 for internal use by Examiners made it substantially easier than before to obtain patents on software related inventions.

The software guidelines issued by the U.S. Patent and Trademark Office were very helpful in that they provide instructions to Examiners as to when they must find inventions to be statutory. This was an internal procedure that had to be followed. Patent applications could more easily be drafted to ensure that the software inventions they cover will be considered statutory after these Guidelines were published.

The 1996 guidelines stated that if a claim defined a useful machine or manufacture by identifying the physical structure of the machine or manufacture in terms of its hardware or hardware and software combination, it defined a statutory product. A machine or manufacture claim could be one of two types: (1) a claim that encompasses any and every machine for performing the underlying process or (2) a claim that defined a specific machine or manufacture.

(1) If a claim was found to encompass any and every computer implementation of a process, the claim would be considered statutory only if the underlying process is statutory. A "safe harbor" was provided if physical acts were performed outside the computer, where those acts involved the manipulation of tangible physical objects and resulted in the object having a different physical attribute or structure ("post-computer process activity"). Processes fell within another statutory "safe harbor" if they required the measurements of physical objects or activities to be transformed outside of the computer into computer data, where the data included signals corresponding to physical objects or activities external to the computer system, and where the process caused a physical transformation of the signals which were intangible representations of the physical objects or activities ("pre-computer process activity"). If a claim did not clearly fall into at least one of these safe harbors, it could still be statutory if it was limited by the language in the claim to a "practical application in the technological arts."

Case law of the time had minimized, or arguable eliminated, the need to recite hardware in the patent claims. For years, the U.S. Patent and Trademark Office issued patents for software related inventions without much focus on the issue of whether the subject matter was statutory; i.e., capable of being patented.

However, the U.S. Patent and Trademark Office issued new interim Guidelines in 2005 and Examiners are again raising rejections we saw 10 years ago, sometimes even when they are not appropriate. Allowance rates for business methods have declined substantially to the point where applicants should expect long, drawn out, difficult proceedings if their inventions could be classified business methods.

During the evolution of patent law, case law eroded the value of copyright protection. In addition to the fact that copyright protection does not prevent against independent invention, but requires copying, menu structures have been held to be not capable of copyright protection in a recent case between Lotus and Borland. Still, copyright protection can exist in addition to patent protection. Registration can provide some important advantages (e.g., provisions for attorney's fees and statutory damages) at a cost of possible loss of trade secrets.

It is clear that software patents are here to stay. The law and U.S. Patent and Trademark Office practice regarding business methods, where no computer is required, is not completely resolved. There is no doubt that software can be protected by patent law. Patents provide strong protection in that they prevent against independent invention, and against reverse engineering. Copyright protection protects against copying, but "clean room" techniques can be used to circumvent copyright protection. Such a technique involves one team that decompiles software and prepares flowcharts or a description of how the software functions. A separate team, which is not provided access to the code, prepares independent code based on the flowcharts or description. Copyright protection also does not protect against independent creation. With regard to whether copyright should be relied on instead of patent protection, you should be aware that the courts are severely restricting the ability to use copyright law to prevent infringement. In addition to the fact that copyright protection does not prevent against independent invention, but requires copying, menu structures have been held to be not capable of copyright protection in a recent case between Lotus and Borland. On the other hand, a patent is not subject to a defense of independent development. Anyone making, using, or selling a patented computer program is an infringer even though they had no knowledge of the computer program. When asked to compare the difference between copyright and patent protection for his PC spreadsheet program, the inventor of Visi Calc was quoted to state "With a patent the only difference would have been several hundred million dollars."

Software patent applications are typically more complex than patent applications covering mechanical inventions, and are therefore more expensive to prepare. If desired, the actual computer code can be included in the application, or appended as a microfilm. The more information that is included, the more likely the application will be valid, but more trade secrets will be lost. If the source code will be generally available, and not kept as a trade secret, it may be advisable to include a microfilm of the code. Otherwise, source code is typically not disclosed in a patent application.

Once filed, the patent application is assigned to an Examiner in the Patent and Trademark Office. It typically takes one and a half to four years to receive a communication from the Examiner. Almost invariably, the Examiner believes it is in his or her duty to question the patentability of an invention. An attorney must then analyze each Examiner's position and advise the client concerning the required response. The number of issues raised by the Examiner will determine the fees involved in actually responding to the Office Action. Often, two to three such Office Actions and Responses are involved during prosecution of a patent application. If an Examiner is being particularly unreasonable, interviews, appeals or other steps are sometimes advisable. I provide my clients with estimates of all fees and expenses at each step. I do not proceed without specific authorization.

Whether you decide to proceed with a patent application is a business decision you must make based on a variety of factors. Before proceeding with an actual patent application, you may wish to consider a patentability search to determine whether the cost of an actual patent application is merited.

While it is fairly easy to obtain software patents in the U.S., if properly drafted, case law in other countries is still evolving. For example, it can still be extremely difficult to obtain software patents in Europe, although some cases are indicating increased tolerance towards software patents. One cost effective way to protect software internationally is through trademark protection. It is difficult for pirates to sell illegally copied software without also using its name. The cost of obtaining trademark registrations around the world is much less expensive than obtaining patents around the world, and trademark rights are less expensive to enforce. It is much easier to prove that a trademark is being infringed than to prove that a patent or copyright is being infringed, because the issue is simple.

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Note that copyright protection is possible even if a patent application is filed. Therefore, copyright notices should appear in screens and printouts. Copyright protection is created automatically when software is fixed in a tangible medium. There are additional benefits to registering a copyright. Namely, a registration is necessary to bring a suit, and it may be possible to obtain statutory damages and attorneys fees if a registration was obtained within a certain time period. If you decide to file an application to register the copyright in your software, you must choose from the options below.

You should choose whether or not to include screens in the copyright application. Copyright in computer code may cover screens generated by the code even if printouts of the screens are not submitted to the Copyright Office. We typically recommend against filing the screens because it has not been conclusively decided that screens may be separably protected by copyright. The Copyright Office typically examines screens, if submitted, for copyrightability and may give an undesired opinion that a particular screen is not capable of copyright protection. A court may later defer to this opinion, and it is preferable not to have such an opinion from the Copyright Office.

If you plan to file a copyright application for a computer program containing trade secrets, there are various deposit possibilities from which you must choose:

1) file the first twenty five and last twenty five pages of source code with portions containing trade secrets blocked out;

2) file the first ten and last ten pages of source code alone, with no blocked out portions;

3) file the first twenty five and last twenty five pages of object code plus any ten or more consecutive pages of source code, with no blocked out portion; or

4) for programs fifty pages or less in length, file the entire source code with trade secret portions blocked out.

You typically want to include enough information to be able to prove copying, while giving away as little trade secret information as possible. It is difficult to say if any of the above options is preferable over another. The risk of supplying source code to the Copyright Office is that a skilled programmer may be able to figure out the program, and may even be able to code the software in a sufficiently different manner so as to avoid copyright infringement.

It is suggested that you may include some red herrings in the code to assist in proving wholesale copying. For example, include some code that does nothing other than an unnecessary loop, or code that can never be reached and processed by the computer.

An important issue regarding copyright law is that of ownership. Although not always practical, it is legally preferable that only employees write any code. Employees should be subject to employment agreements in which they agree to maintain in confidence any trade secrets or know how. If any independent consultants are used to write code, agreements should be put in place in which they agree to transfer all ownership in any copyrightable work they create, and in which they waive so called "moral rights" of integrity of their work and of attribution.

Note that icons, if sufficiently unique, may be capable of a trademark registration and/or a design patent.

If you wish, we can assist you in determining how best to protect software related inventions, given your budget. If a software patent is desired, we have experience in preparing patent applications for software related inventions and in successfully prosecuting them to allowance. We would be happy to provide you with estimates. Please call if you wish to discuss your particular situation. The legal fees for this call will be based on our hourly rates.

Conclusion

Software is valuable and must be appropriately protected. Patents provide the strongest form of intellectual property protection, and protect against reverse engineering and independent creation. Guidelines issued by the U.S. Patent and Trademark Office in 1996 made it easy to obtain patents on software related inventions. However, allowance rates are now at record lows. Patience is required, along with competent counsel.

Copyright protection can exist in addition to patent protection. However, recent case law has eroded the value of copyright protection. Copyright registration can provide some important advantages (e.g., provisions for attorney's fees and statutory damages) at a cost of possible loss of trade secrets.

Trademark registrations provide a cost effective way to protect software worldwide.

Icons may be protected by design patents and/or trademark registrations.

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