Since the 1980s the United States Patent and Trademark Office (USPTO) has sometimes granted patent protection for software. The process for obtaining a patent for software is the same as any other utility patent. The USPTO employs examiners with a computer science background who can understand and fully examine an application for patent on software. Like other patents, software inventions must be novel, non-obvious, and useful. However the history of software patents show that obtaining one is not always easy.

Software was not always eligible for patent protection. In the 1960s the USPTO would not grant a patent to any invention which used a calculation from a computer. They made formal guidelines in 1968 to confirm this position. Naturally many inventors sued to challenge this ruling. The United States Supreme Court addressed the issue in 1972 in Gottschalk v. Benson, 409 U.S. 63 (1972). In this case the inventors claimed a program to convert binary-coded decimal numbers into pure binary numbers. The Supreme Court labeled this invention as a mathematical formula with no practical application. Patents cannot be granted to formulas or algorithms since they are laws of nature.

The Supreme Court started to change its position in the next decade. The next major patent case was Diamond v. Diehr, 450 U.S. 175 (1981). In this case the inventors created a process to cure rubber which used a computer to control the heating times. Because the inventors claimed a process the Supreme Court granted the patent even though it used software. After this case the Supreme Court stayed silent on software patents but many cases were heard by the Federal Circuit, a court created to hear intellectual property issues.

The Federal Circuit reviewed a patent application for a method of organizing stored data in a computer memory In re Lowry, 32 F.3d 1579 (Fed. Cir. 1994). The Court determined the invention was not a mathematical formula but instead a physical, electronic structure. After the Lowry case the USPTO issued new guidelines for software patents. The USPTO decided pure software patents would still not be allowed unless the claimed invention has a practical application or use. This could include a physical transformation (like curing rubber) or a process which does more than just calculate numbers.

The new regulations were in effect for the next notable Federal Circuit case. Signature Financial Services received a patent for a method for managing multiple mutual funds using computer software State Street Bank & Trust v. Signature Financial Group, 149 F.3d 1368 (Fed. Cir. 1998). The Court decided the software program was patentable because it provided a useful, concrete, and tangible result – final share prices.

The Supreme Court weighed in on patents again in Bilski v. Kappos, 130 S. Ct. 3218, (2010). The inventors tried to claim an invention that explains how commodities buyers and sellers in the energy market can protect, or hedge, against the risk of price changes. Previously the Federal Circuit had used a machine-or-transformation test to approve the patent. They said if an invention is tied to a machine or transforms something then it is patentable. The Supreme Court rejected this test as the sole criteria for evaluating process inventions while also denying the commodities patent for being an abstract idea. After this decision people are not totally sure how to approach software patent applications.

As you can see, software patent applications need to be handled with care. It is certainly possible to receive a patent from the USPTO but a proper application requires time and attention from a dedicated attorney. Stone Law is ready to help you protect your inventions. If you have any questions or are looking for a patent attorney you can contact Stone Law at 732-444-6303 or leave us a message on our website.