Patenting Software in the USA ISYM540 Topic 4 – Societal Issues Len Smith July 2009

Requirements for Patenting New Useful Nonobvious Patentable subject matter –No laws of nature “mechanisms” –Nothing “printed” Only read by man –Not forms of energy - signals

“Ancient History” 1960s –USPTO - software not patentable 1970s –Supreme Court agrees 1980 –Supreme Court supports software patent 1990s –Freeman-Walker-Able, any physical steps?

State Street Bank Useful, concrete, tangible results (no need to tie to machine) 1998 – 1400 applications filed/306 granted 2008 – filed (7.5x) /1350 granted (4.5x) Massive backlash

Bilski (1) initiating a series of transactions between a commodity provider and commodity consumer, (2) identifying market participants for the commodity with a counter-risk position to consumers, and (3) initiating a series of transactions between the provider and market participants at a fixed rate

an electric power plant might be a purchaser and user of coal, which it purchases from coal-mining companies (producer-sellers) and uses to make electricity. The power plant might seek to insulate itself from upward changes in the price of coal by engaging in hedging transactions. The risk can be quantified in terms of dollars (termed a risk position). Thus, if the purchaser-user uses 1000 tons of coal in a given period, and the potential price spike is $10 per ton, the purchaser-user’s total risk position for that period is 1000 × $10, or $10,000

Bilski – Judicial Process 1. An abstract idea – not patentable –No computer recited 2. CAFC, new test –(1) it is tied to a particular machine or apparatus or –(2) it transforms a particular article into a different state or thing

Supreme Court Decided to hear the case June 1 SCT judges have indicated disliking for software-related patents –but, also do not like bright line tests –and decision may be interpreted as conflicting with Congress’s intentions

Impacts Impact on economy could be huge –10 years organizations relied on State Street Renegotiation of patent licenses Loss of exclusivity, for small organizations

Broader Societal Issues Are patents good? –Why should “ideas” be protectable? Disclosure promotes science/technology Are they good for software (vs. drugs?) –Too long lasting –Too long to get –Copyright good enough Tough questions!

Questions/Comments? Thank You!