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November 13, 2014Client Alert

District Court Finds That Software Remains Patentable in the Wake of the Alice Decision

In the wake of the Supreme Court’s recent Alice decision, the U.S. Patent Office cautioned its examiners that the case “neither creates a per se excluded category of subject matter, such as software . . . , nor imposes any special requirements for [the] eligibility of software.” This instruction was not sufficient to stop a flood of subject matter eligibility rejections, under the Alice framework, directed toward software and computer-implemented applications. In an order dated November 3, 2014, a United States District Court recently acknowledged that “Alice has brought about a wave of decisions finding software patents ineligible.” Nonetheless, in California Institute of Technology (“Caltech”) v. Hughes Communications, Inc. et al, the District Court for the Central District of California found that computer software remained eligible for patent protection.

The patent claims at issue in the Caltech case are directed to error correction code. Caltech sued Hughes for patent infringement, and Hughes moved for summary judgment, seeking to invalidate Caltech’s patents for lack of patentable subject matter. The court denied Hughes’ motion and presented some insights into software patentability post-Alice.

The court noted that Congress addressed the patent eligibility of software when it passed the America Invents Act (“AIA”) in 2011. The AIA indicates that computer programs are not part of a prohibition that excludes tax strategies from patentability. The court also pointed out that the Supreme Court at least “implicitly endorsed the patentability of software” in Alice, when it acknowledged that “software may be patentable if it improved the functioning of a computer.”

In its discussion, the court noted that, while the door to software patentability has not been closed entirely, no Supreme Court precedent, including Alice, defines precisely when the door to software patentability is open. The court also notes that recent the Federal Circuit decisions Digitech Image Technologies, LLC v. Electronics for Imaging, Inc., Planet Bingo, LLC v. VKGS LLC, and buySAFE, Inc. v. Google, Inc. offer little help in that regard, providing instead more examples of when software patents are directed to ineligible subject matter.

Before performing its analysis of patentability, the court noted some “broad themes” in Supreme Court precedent. In particular, the court opined that “the concern underlying [patent eligibility] is preemption. Preemption is the idea that allowing a patent on the invention will impede innovation rather than incentivize it.” 

In its analysis, the court found that Caltech’s patents were directed to the abstract idea of encoding and decoding data for error correction. However, the court found that meaningful limitations in the claims, including “the irregular repetition of bits and the use of linear transform operations” represented sufficiently inventive concepts. The court found that these “limitations are not necessary or obvious tools for achieving error correction, and they ensure that the claims do not preempt the field of error correction.”

The court refused to adopt an analysis focused on whether a software invention includes “mental steps [that] can be performed by a person with pencil and paper.” The court found this analysis “unhelpful for computer inventions,” noting that “pencil-and-paper analysis can mislead courts into ignoring a key fact: although a computer performs the same math as a human, a human cannot always achieve the same results as a computer.”

The court concluded by saying that, with regard to software patent eligibility, “it at least must be true that [the patent statute] protects a unique computing solution that addresses a unique computing problem.”

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