The History of Software Patents

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Ex parte Bilski (Software Patents)
By Deepak MalhotraFebruary 22, 2007

Despite the fairly clear message of previous Federal Circuit cases including, in particular, AT+T Corp. v. Excel, the U.S. Patent and Trademark Office has been particularly hostile against anything that looks like a business method patent application. They even have a two tier review. If an examiner is inclined to allow a business patent application, another examiner reviews the decision. There is a disincentive for the first examiner to allow an application, due to the fear of being criticized. Allowance rates are at near record lows. Applicants having business method patent applications, and even some applicants having software patent applications, are facing long, drawn out, expensive prosecutions. The USPTO is likely reacting to bad publicity generated by the allowance of the…

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Ex parte Rice (Software Patents)
By Deepak Malhotra

After the Beauregard case, many commentators took the position that signal claims should also be statutory. Software developers have an interest in being able to protect against infringers who transfer software over the Internet. Such software would not be embodied in a computer readable medium (Beauregard). The U.S. Patent and Trademark Office was allowing patent applications including claims directed to a “carrier wave” embodying computer program code to perform various functions.

Ex parte Rice is a Board of Appeals decision for a patent application directed to a “spread Spectrum Transceiver.” The invention was directed to an electromagnetic signal” and an “electromagnetic signal” produced by a certain process. One representative claim was:

2. An assembly of simultaneously transmitted electromagnetic signals,…

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2005 Interim Guidelines for Examination of Patent Applications…,
By Deepak Malhotra

Interim Guidelines for Examination of Patent Applications for Patent Subject Matter Eligibility were published in late 2005. Although software related patent applications were now generally accepted as being capable of patent protection, Examiners still had trouble with business method patent applications. These guidelines were issued to help examiners determine whether or not a business method patent application was statutory. I personally find it simpler to read the AT&T v Excel case and consider whether there is some practical application that produces a useful, tangible, and concrete result, such as a transfer of money from one person to another.

Because this is an important historical document, I have placed a copy on my web server, and it is available here:
https://www.patentsusa.com/2005_Interim_Guidelines.pdf

The Guidelines, in my…

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2005 Interim Guidelines for Subject Matter Eligibility
By Deepak Malhotra

The following guidelines were provided by Robert Weinhardt, Business Practice Specialist in Technology Center 3600 to assist Examiners determine whether business method patent applications are or are not statutory subject matter. Because this may turn out to be an important historic document, it is reproduced below in its entirety. Note that signals and rules of games are stated to be per se non-statutory.

Interim Guidelines

* Purpose: To assist examiners in determining whether a claim is directed to statutory subject matter under 35 U.S.C. § 101.
* Published in the O.G. 11/22/2005
* Period for public commentary runs until June 30, 2006.
* Submit comments via…

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NTP v. RIM, 2005
By Deepak MalhotraFebruary 21, 2007

Though not a typical software case, this case is significant because there have been calls for “patent reform” to reduce the impact of so-called “patent trolls” in view of this case. There were allegations of impropriety and lobbying which will be discussed later. A number of members of Congress use Research-In-Motion’s Blackberry devices and were concerned that an injunction could disrupt use of their devices.

The patents involved included U.S. Patent Nos. 6,317,592; 6,272,190; 6,198,783; 6,067,451; 5,819,172; 5,751,773; 5,745,532; 5,631,946; 5,625,670; and 5,438,611.

The technology at issue related to systems for integrating existing electronic mail systems (“wireline” systems) with radio frequency (“RF”) wireless communication networks, to enable a mobile user to receive email over a wireless network. RIM’s system utilized the following components:…

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Ex Parte Lundgren, 2004
By Deepak MalhotraFebruary 20, 2007

Lundgren’s invention related to the economic field of industrial organization and more particularly to the reduction of incentives for industrial collusion by making managerial compensation depend on relative profits rather than absolute profits. If managerial compensation depends only on the profits made by the manager’s own firm, firm managers will attempt to maximize absolute profits. If managerial compensation depends on the profits made by the manager’s own firm relative to the profits made by rival firms, then firm managers will attempt to maximize relative profits. If it is the goal of each firm to maximize relative profits, it is not possible for a group of firms to collude so as to increase the profits of all firms in the group. This eliminates incentives for industry-wide collusion.

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AT+T Corp. v. Excel Communication, 1999
By Deepak Malhotra

This case blew the door wide open for business method patents.

U.S. Patent No. 5,333,184 describes a message record for long-distance telephone calls that is enhanced by adding a primary interexchange carrier (“PIC”) indicator. The addition of the indicator aids long-distance carriers in providing differential billing treatment for subscribers, depending upon whether a subscriber calls someone with the same or a different long-distance carrier. AT+T’s claimed process employed subscribers’ and call recipients’ PICs as data, applied Boolean algebra to those data to determine the value of the PIC indicator, and applied that value through switching and recording mechanisms to create a signal useful for billing purposes.

AT+T in 1996 asserted ten of the method claims against Excel in this infringement suit. The independent…

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State Street Bank & Trust Co. v. Signature Financial Group, Inc., 1998
By Deepak Malhotra

This case opened the door for business method patents, at least where the business method was implemented in software in a system that included some hardware, like a processor and storage means.

Signature Financial Group, Inc. appealed from a decision of the United States District Court for the District of Massachusetts granting a motion for summary judgment in favor of State Street Bank & Trust Co., finding U.S. Patent No. 5,193,056 invalid on the ground that the claimed subject matter was not encompassed by 35 U.S.C. Section 101.

Signature was the assignee of the ‘056 patent entitled “Data Processing System for Hub and Spoke Financial Services Configuration.” The ‘056 patent is generally directed to a data processing system (the system) for implementing an investment structure which was developed…

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1996 Examination Guidelines for Computer Related Inventions
By Deepak Malhotra

After In re Beauregard, the U.S. Patent and Trademark Office issued its Examination Guidelines for Computer Related Inventions. This marked a real turning point in that now internal PTO guidelines were published that applicants could use when arguing with Examiners. Examiners were being told that they could actually allow certain software patents. Though many were still reluctant.

The most relevant points (in my opinion) of these guidelines are as follows (keep in mind that this was only the Patent Office’s interpretation):

The utility of an invention must be within the “technological” arts. A computer-related invention is within the technological arts. A practical application of a computer-related invention is statutory subject matter.

1. Non-Statutory Subject Matter
Claims to computer-related inventions that are clearly non-statutory fall into the same general categories as…

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In re Beauregard, 1995
By Deepak Malhotra

Beauregard was a very important case in the History of Software Patents.  In re Beauregard is the case that opened things up completely for software patents. It signaled the end of the U.S. Patent and Trademark Office’s resistance to allow patent applications that contained algorithms.

Beauregard’s invention, described in U.S. Patent Application Serial No. 07/521,858, now U.S. Patent No. 5,710,578 (to IBM), related to graphical raster displays, and to a system and method for filling in the area defined by the boundaries of a polygon that is being displayed on a graphical raster display system. The software patent relates to accurately filling a polygon by including the points in an algorithm, called the Bresenham algorithm, that define the boundaries of a polygon in the resulting filled polygon.

The…

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