First Post-Bilski Decision - Software Patent Rejected

As eagerly as it was awaited, the United States Supreme Court’s decision in Bilski v. Kappos (2010) was a dampener as far as its impact (or the lack of it) on patentability of software was concerned. The Supreme Court totally avoided even mentioning software patents or the applicability of the machine or transformation test for software patents in its decision and while many claimed that it was status quo maintained, a few of us found a silver lining in the Court’s ruling of abstract ideas as unpatentable and its admission of an argument that patents do not necessarily promote innovation and may, sometimes result in limiting competition and stifling innovation. Our hope that the Bilski case furthered the cause of narrowing the patentability of software was not misplaced is evident from the first decision post-Bilski, of the BPAI, which rejected a software patent claimed by Hewlett-Packard. The BPAI, in In Re Proudler, rejected a patent claim for software made by Hewlett Packard on the ground that software, being an abstract idea, is not patentable. The BPAI relied on, among others, the Supreme Court’s decision in Bilski v. Kappos in holding that an abstract idea was not patentable.

The case before the BPAI was on appeal from the decision of the patent examiner who refused patent for the claim on the ground that it was obvious (on basis of prior art analysis) and therefore, “barred at the threshold” for patentability under US patent law. The patent was claimed for “a method of controlling the processing of data” comprising “defining security controls for a plurality of data items, and applying individualised security rules to each of the data items based on a measurement of integrity of a computing entity to which the data items are to be made available”. It was essentially a claim for software facilitation data processing and involving security controls for several data items. The BPAI refused patent for the claim but differed from the patent examiner in its reasoning. The BPAI held that all claims related to non-patentable subject matter and hence, could not be granted patent.

In coming to this conclusion, the BPAI relied on previous decisions including In Re Nuijten  which held that Section 35 of the US Code of Patents which allows patents for a machine, a manufacture, a process or a composition of matter constitutes “the exclusive reach of patentable subject matter”. In ruling that HP’s claim was not patentable, BPAI also held that software, being an abstract idea, was not patentable. The line of argument relied on by the BPAI was something like this – “[A] machine, a manufacture, a process or a composition of matter” constitutes the exclusive reach of patentable subject matter. Thus, laws of nature, abstract ideas, and natural phenomena are excluded from patent protection as held in the well known case of Diamond v. Diehr. The Federal Circuit in its decision in In re Warmerdam has held that an abstraction is not a patentable subject matter. In other words, a claim that recites no more than software, logic or a data structure (that is, an abstraction) does not fall within any statutory category. It has been held in Microsoft Corp. v. AT & T Corp. that an abstract software code is an idea without physical embodiment. Finally, and most significantly, the Bilski case has put the nail in the coffin by ruling that abstract ideas are not patentable. Against the background of these precedents, BPAI has confirmed the unpatentability of software on the ground that it is an abstract idea.

It is interesting that the BPAI also mentioned that “no true hardware structure is recited” in the claims to buttress its conclusion that the idea claimed was an abstract one. This means that the BPAI took note of the fact that although a hardware structure may have been essential to implement the abstract idea forming the claim such structure itself was not claimed for patent. The innovation claimed lay in the software alone and not in the hardware and therefore, did not merit patent protection. Thus, a claimed invention which is a combination of hardware (required to implement the software) and software may not be patentable as long as there is no ingenuity in the hardware as software alone, being a mere algorithm and an abstraction, falls outside the scope of patentable subject matter.

The first post-Bilski decision gives us more than one reason to cheer about –

• It refused patent for software on the ground that it was an abstract idea and hence, did not fall under patentable subject matter. Acceptance of software as merely an abstract idea is catching up and is thus, good news for those who challenge the patentability of software.
• The BPAI, in ruling software as an abstraction and thus, unpatentable relied directly on the Bilski decision and therefore, provided a clear, much-needed guideline for conclusively interpreting the Bilski decision as one restricting the patentability of software.
• The decision supported the argument that any combination of hardware and software, to be patentable, must demonstrate ingenuity in the hardware component. As long as there is no claim for hardware, the software itself, being an abstraction, cannot be patented. This brings about greater clarity in the definition of software to be limited to an algorithm (and thus, abstract) and to be looked at in isolation from a hardware component which is solely used to implement the software and no more.
  

It will be interesting to follow the developments in this case and in other future claims for software which may rely on the Bilski decision. In Re Proudler is certainly encouraging for limiting software patents especially in the aftermath of Bilski. As far as patentability of software is concerned, the Bilski decision may not be that insignificant after all.