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US Perspectives: US Cracking Down on Software Patents

October 01, 2014

​Fenwick & West patent partner Robert Sachs was prominently featured in an Intellectual Property Watch article regarding a recent crackdown by U.S. courts and the U.S. Patent and Trademark Office (USPTO) on software patents in the aftermath of a U.S. Supreme Court decision in Alice Corp v. CLS Bank.

The patents unanimously struck down by the Court were for an electronic escrow service for online securities sales. The Supreme Court ruled that an abstract idea like escrow, which has been around for hundreds of years, does not become patent eligible simply by being executed online.

Since then, the USPTO has drawn a much tougher line regarding similar patent claims.

Said Sachs, “The patent office has taken Alice and pushed it as far as the agency can. The patent office is rejecting everything it can. Some applications are even being pulled after allowance, which is unheard of in my experience.”

The USPTO’s administrative appeals unit, the Patent Trial and Appeal Board (PTAB) has been similarly tough, but Sachs says that the PTAB’s rulings have been inconsistent.

“Some PTAB panels are more liberal and others more aggressive on Section 101 rejections [patent-ineligible subject matter]. There is no clear dividing line on when claims will be allowed and when they will be rejected,” he said.

The USPTO’s handling of patent applications is similarly inconstant, according to Sachs. “We are seeing different approaches from different examiners and different art units.”

The overall effect has been dramatic.  Said Sachs, “This certainly changes the dynamic of patent litigation. It tilts the field in favor of defendants.”

This approach to patent claims makes the U.S. more aligned with its European counterparts.

As Sachs put it, “It appears we are moving towards a European-type test for the patent eligibility of software-related inventions. To patent these inventions in Europe, there must be a technical solution that is being claimed. In the U.S., software-related claims now have to cover something technological – such as an improvement in the functioning of the computer, or an improvement in any other technology or technology field – but that doesn’t put us directly in camp with the European model.”

Sachs added that Europe still maintains a tougher stance on these matters.

“Articles 52 and 53 of European Patent Convention exclude certain items from patentability, such as business methods, computer programs, and diagnostic methods. We in the U.S. haven’t gone as far as that,” he said.