It is becoming clear that the Supreme Court’s decision in Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S.Ct. 2347 (2014) marks a sea change in the patentability of computer software. The numerous recent decisions invalidating software patents under Alice will force software owners and developers to find other ways to protect their investments in their software products. Chief among these alternatives are non-disclosure and confidentiality agreements and trade secret protections, but software owners should also keep in mind the potential for copyright protection for their intellectual property.
Under the two-step framework set forth in Alice, it can be relatively easy to characterize software patents as directed to an abstract idea because software applications often boil down to abstract steps or computations performed by a computer. Software patent claims are also often written in language that is both general and vague in order to gain a broad claim scope, heightening the abstract nature of the claims. Moreover, mere implementation of such general abstract steps in the form of computer software is not likely to satisfy Alice’s requirement of an “inventive concept” that can transform the idea into a patent eligible invention. This is especially true for software applications that perform business functions or do any sort of manipulation or analysis of data.
Since Alice, the Federal Circuit and District Courts around the country have invalidated all manner of computer software patents, almost uniformly holding that computer-implemented methods are not patent eligible. These post-Alice cases involve patents as complex as software that automatically synchronizes the lips and facial expressions of animated characters, McRO, Inc. v. Activision Publishing, Inc., 2014 U.S. Dist. LEXIS 135152 (C.D. Cal. Sept. 22, 2014), to straightforward methods that computerize the steps in guaranteeing a party’s performance of an online transaction. buySAFE, Inc. v. Google, Inc. 2014 U.S. App. LEXIS 16987 (Fed. Cir. Sept. 3, 2014). Here in the EDVA, Judge Leonie Brinkema recently invalidated, in almost summary fashion, patent claims relating to correlating two network accounting records to enhance the first record. Amdocs (Israel) Ltd. v. Openet Telecom, Inc., 2014 U.S. Dist. LEXIS 152447 (E.D. Va. Oct. 24, 2014).
The trend is clear. Software patents, especially software patents for performing business applications, are subject to serious challenge under Alice. As a result, software developers and owners will need to use other tools to protect their intellectual property. Chief among these tools is the use of non-disclosure and confidentiality agreements with employers, contractors, customers and potential investors. These and other measures to maintain secrecy are necessary to preserve protection under laws protecting trade secrets. Other tools include potential tort claims against competitors and third parties for tortious interference with contract and perhaps business conspiracy.
Using private contractual agreements and trade secret law to protect intellectual property, though, is not easy. It requires vigilance and attention to detail at all levels of a company. Software owners must make sure that they obtain non-disclosure agreements whenever they reveal any confidential information. They must also insist on employment agreements and vendor contracts that make clear their ownership rights and must regularly update and renew these agreements over the course of time. When dealing with potential customers and investors, software owners must be able to discuss the value of their product at a non-trade secret level to avoid inadvertent disclosure of confidential information. Protecting secrecy may also limit the ability to use emerging technologies, such as cloud computing, that can pose threats to the secrecy of software code.
Finally, software owners should consider their rights under copyright law. The Federal Circuit’s recent decision in Oracle America, Inc. v. Google Inc., 750 F.3d 1339 (2014) clarifies how broadly copyright law protects software, but a petition for certiorari is now pending before the Supreme Court (a good summary of the cert. petition can be found here at Patently-O). A copyright claim requires evidence that a defendant had some access to the software that could support a finding of copying, however, and so provides far narrower protection that patent law.
After Alice, the approach software owners must take towards protection of their intellectual property is in many ways the opposite of the strategy for obtaining patent protection. Instead of trading the disclosure of their intellectual property in a patent for exclusivity for a period of time, software owners must focus on using non-disclosure and secrecy to obtain exclusivity. Maintaining such secrecy while exploiting a software product in the marketplace is difficult, but after Alice, the choice between patenting and secrecy for software owners now falls very clearly on the side of secrecy.