Software Patents Research Articles

Patent Protection and Software Innovation: Evidence from Alice

Software innovations make up a cornerstone of the digital economy. The scope of their patent protection and the social and private value of software patenting are central to recent policy debates in the United States. The landmark 2014 U.S. Supreme Court ruling in Alice v. CLS Bank had a profound impact on software patenting, drastically narrowing the scope of patent protection on software innovations. Using Alice as a natural experiment, we found that narrowing the scope of software patents had no detectable downside for the value of software firms. Instead, it was associated with improved sales, a greater degree of open-source engagement, and a narrower scope of individual patents. Findings from this research note add to the software patent literature and offer renewed evidence of the roles of patents for software innovations in the digital economy. They also have compelling implications for patent policies on software and software-related inventions, such as artificial intelligence, big data, cloud computing, and other emerging digital innovations.

Issues to Consider Before Asserting A Software Patent

Software patents have garnered a lot of attention in recent years due, at least in part, to the proliferation of software-enabled devices, such as smartphones and tablets, and the use of software to control a range of devices from automobiles to kitchen appliances. Enforcement of software patents involves unique legal issues that should be considered before asserting a patent against an accused infringer. A primary issue to consider is whether the patent claims are still patent-eligible under recent changes in the law. Also, certain types of software patents are vulnerable to attack in U.S. Patent Office proceedings, but these proceedings are not available unless the patent owner takes step to provoke them. In addition, software inventions are often implemented as method patents, which have unique requirements and restrictions that should be considered. For example, steps of a method patent must all be performed by an accused infringer in the United States and must all be performed by the same entity (or under the direction or control of that entity). Where a software invention is not implemented as a method patent, pre-suit damages may not be available unless the patentee's own products are properly marked with the patent number, and software has very different requirements for marking than more tangible products. A careful consideration of each of these issues is essential before moving forward with a lawsuit.

A critical appraisal of IBM’S patent pledge model: The impact of patent quality on open source software START-UP’S market entry decision

In 2005, IBM provided open access to 500 of their software patents to establish a platform to further innovation. Recently, a paper by Wen and her colleagues empirically analyzed this relationship and found a positive association between IBM's patent pledge and open source software start-up firms' market entry. Despite their seminal findings, it is somehow questionable whether start-up firms enter markets regardless of the patent value of the market, as small-to medium-sized firms such as start-ups have a practice of selectively entering markets. By complementing Wen, Ceccagnoli and Forman's paper, we not only provide more contextual explanations, but also show that start-up firms tend to selectively enter markets where patents are filled with younger and higher citation rates.

Does the Political Ideology of Patent Examiners Matter? An Empirical Investigation

This study draws attention to the importance of exploring the relationship between the political ideology of patent examiners and their propensity to grant patents. To do so, we construct and analyze a database which pairs political ideology estimates derived from campaign contributions with individual patent examiners and their patent granting behavior. Our empirical analysis suggests that software patent applications assigned to liberal-leaning examiners are 39 percent less likely to be granted when compared to applications assigned to conservative-leaning examiners. We also explore changes in claim length, time to patent issuance, and the number of internal appeals, finding evidence suggesting that the observed differences in patent granting behavior are likely a result of liberal-leaning examiners being more stringent, rather than conservative-leaning examiners being more lenient. However, given the relatively small number of donating patent examiners, we stress that our study should not be viewed as providing a definitive answer on the role of political ideology in the issuance of patents. Rather, we prefer to interpret our results as evidence that we cannot robustly reject the possibility that the political ideology of patent examiners influences patent granting behavior. Overall, our study suggests more research on this topic is needed and underscores the need for broader data collection efforts, an expensive endeavor, which we argue is warranted given the central role of the patenting institution in the economy.

Quantum Machine Learning: A Patent Review

One of the central problems bottlenecking machine learning research is classical computational power limits. Quantum computing provides a solution, offering more processing power for less electric cost. Quantum Machine Learning (QML) is a research field at the intersection of quantum computing and machine learning technologies, driving the cutting edge in technological innovation. While the legal literature on software patents is rapidly scaling, the research focused on QML patents is noticeably nascent. As such, this Article contributes the first empirical patent survey for QML technologies.

Patents for NLP Software: An Empirical Review

Natural language processing (NLP) patents are one of the fastest growing niche segments in the technology patent marketplace. NLP technologies power the latest in Artificial Intelligence (AI) applications. For example, NLP technology supports Apple’s Siri, Amazon’s Alexa, and Facebook’s friend recommendation system. Yet, while the literature on software patents is visibly scaling – the literature specifically focused on NLP patents is non-existent. This Article draws on a growing body of computational linguistics, intellectual property, and technology law scholarship to provide novel NLP patent analysis and critique. Further, this Article contributes the first empirical NLP patent review, including novel software descriptions, market modeling, and legal analysis relating to patent claims. First, this Article discusses the two main technical approaches to developing NLP software. Second, this Article models an evolving NLP patent dataset, offering economic insights, legal claims analysis, and patent valuation strategies.

Deep Reinforcement Learning Patents: An Empirical Survey

Deep reinforcement learning is a new type of machine learning resulting from the technical convergence of two more mature machine learning methods, deep learning and reinforcement learning. Deep reinforcement learning is important because it is a scalable method for general intelligence – a machine capable of achieving any definable goal. Since 1995, the United States Patent and Trademark Office has granted over 600 patents with claim terms relating to deep reinforcement learning. Yet, while the literature on software patents is visibly scaling – the literature specifically focused on deep reinforcement learning patents is non-existent. First, this Article discusses technical approaches to deep reinforcement learning; second it contributes the first empirical patent review for deep reinforcement learning technologies, including market modeling, legal claims analysis, and valuation strategies.

Software Patents and Business Method Patents

In India and Europe unlike in the US, both business method and computer program are excluded. To understand why and to what extent are they excluded, one must first understand the meaning of ‘patents’, ‘invention’ along with meaning of both concerned subject matter. One must understand the language used in the legislation to find out to what extent there is possibility of interpretation in favour of patentability, the reason being that wherever the law has developed favour of software patents and business method it is due to the role of judiciary in constructing the legislative provisions and not as a result of any amendment. Therefore, they are also called non-statutory subject matter.

Software Patents and Firm Value: A Real Options Perspective on the Role of Innovation Orientation and Environmental Uncertainty

Our paper shows that software-based patents can contribute significantly to the value of firms. Our paper provides managers with insights into how different types of software-based innovations affect firm value in market environments exhibiting different levels of competitiveness and dynamism. Using a large-panel data set consisting of 602 U.S. firms, we find that firms with a software patent portfolio having higher levels of explorative innovation orientation achieve higher market value in environments with high competitiveness and low dynamism. By contrast, firms with a software patent portfolio exhibiting high levels of exploitative innovation orientation achieve higher market value in low competitiveness and high dynamism environments. Although some practitioners are still skeptical about the value of software patents, we provide empirical evidence that a firm’s software patents do contribute to firm performance, thereby helping practitioners to justify their investments in software innovation and assess the value of their software patents. Furthermore, our paper highlights key factors—both internal (i.e., innovation orientation) and external (i.e., environmental uncertainty)—that may affect the value of software patents. This can help firms formulate the appropriate innovation strategy for software patents that can lead to the greatest returns.

Does the Political Ideology of Patent Examiners Matter? An Empirical Investigation

This study draws attention to the importance of exploring the relationship between the political ideology of patent examiners and their propensity to grant patents. To do so, we construct and analyze a database which pairs political ideology estimates derived from campaign contributions with individual patent examiners and their patent granting behavior. Our empirical analysis suggests that software patent applications assigned to liberal-leaning examiners are 39 percent less likely to be granted when compared to applications assigned to conservative-leaning examiners. We also explore changes in claim length, time to patent issuance, and the number of internal appeals, finding evidence suggesting that the observed differences in patent granting behavior are likely a result of liberal-leaning examiners being more stringent, rather than conservative-leaning examiners being more lenient. However, given the relatively small number of donating patent examiners, we stress that our study should not be viewed as providing a definitive answer on the role of political ideology in the issuance of patents. Rather, we prefer to interpret our results as evidence that we cannot robustly reject the possibility that the political ideology of patent examiners influences patent granting behavior. Overall, our study suggests more research on this topic is needed and underscores the need for broader data collection efforts, an expensive endeavor, which we argue is warranted given the central role of the patenting institution in the economy.

The Current Dilemma and Future of Software Patenting

The unprecedented division over patent eligibility based on the “abstract idea” construct among the courts and judges in the Alice v. CLS case, the post-Alice contradictory decisions and the trend of rejecting or invalidating software patents, as well as the uncertainty about the concept of “computer program as such” (or “per se”) in Europe and China, present a chaotic reality and serious dilemma as to the future direction of the software patenting regime around the world. The recent revisions to patent examination guidelines by the patent offices in the US, Europe and China, particularly the “grouping” of “abstract ideas” by the USPTO, providing examples of a “further technical effect” by the EPO, and distinguishing a “computer program per se” and “computer-implemented inventions” by the CNIPA, although helpful in patent examinations, cannot solve the root problem and fix the dilemma. A more general definition, or a “safe harbour”, for the “abstract idea” or computer program “as such” is needed. In addition, to prevent patent trolls and promote true software innovation, the scope and length of software patent protection should be limited, e.g. allowing only the means of implementation but not the function to be patented; and granting 10 years of utility-model-type or sui generis protection. All the above proposed reforms should be undertaken at the international level, e.g. by adopting a Software Treaty under the auspices of the WIPO, because the software patent dilemma is a global one that deserves an international solution, especially in the age of the internet where most of the software patents cover borderless internet technologies.

Soft but Strong: Software-Based Innovation, Product Market Competition, and Value Creation in the IT Hardware Industry

It has been argued in recent years that software is a significant value-creating factor within the manufacturing sector, leading to an increased interest in understanding the mechanisms by which firms may benefit from software-based innovation. Empirical work in evaluating these mechanisms remains under-developed however. In this paper, we examine one such process by which software-based innovation may provide value for information technology hardware firms in the U.S. Specifically, we examine the influence of software patents on the extent to which firms are able to benefit from product differentiation in their product markets. Using data on over 380,000 patent grants for innovations filed by 730 public IT hardware firms over the time-period 19962015, we find that greater levels of software-based innovation within the firm are associated with higher levels of product differentiation in product markets: increases in the intensity of software patents within the firm’s patent stock, which we refer to as software intensity, are associated with lower total similarity of product offerings relative to those offered by rivals as well as fewer effective competitors in the market. Furthermore, using a different dataset consisting of 23,000 new IT hardware product announcements, we show that firms with greater software intensity subsequently launch a higher number of new products. Moreover, these firms are more likely to launch products that are not only differentiated from those of rivals but also distinct from their own product lines. Our research contributes to the emerging literature on software-based innovation by substantiating an important mechanism by which software helps transform industry sectors, specifically through product differentiation.

Financial impact of legal practice on software patent subject matter eligibility: Effectiveness of a workable standard

This article examines the financial impact of software patent subject matter eligibility by analyzing divergent legal practices by courts and administrative bodies. We illustrate these effects by empirical evidence relating to case-law decisions, notably Alice Corp. Pty. v. CLS Bank International (hereafter, Alice v. CLS Bank or Alice). In order to eliminate the ambiguity of legal practice of these two systems in relation to patent law, the patent office has been inspired by and aligned with the work of the judicial system and developed an analytical model concerning the application of the law. The effectiveness of this workable standard is then evaluated on the basis of its influence on firm value. The results suggest that the publication of the workable standard, the United States Patent and Trademark Office (USPTO) Interim Guidance, has had a significant positive impact on companies which have completely modified their patent strategies in line with the new USPTO policy. We conclude that the uniformity of legal approach by the judicial and administrative systems decreases legal uncertainty and contributes to financial performance. Consequently, a workable standard with clear and precise legal approaches enables the patent system to develop efficiently.

After Alice: how do Finjan and Core Wireless change the patentability of software in the USA?

Despite the lack of clarity arising from the US Supreme Court’s decision in Alice v CLS Bank,1 the Federal Circuit has begun to more clearly define the boundaries of patent eligibility for software. In particular, in early 2018, the Federal Circuit issued two decisions which build upon its 2016 ruling in Enfish LLC v Microsoft Corp,2 to more clearly permit the patenting of software which improves computer functionality. As a result of these decisions, software developers will be more likely to identify software as potentially patent-eligible, leading to increased attention to patent terms within software transactions, despite the traditional focus on copyright and trade secret protection. Although private contracts and industry customs do not have the force of judicial determinations, they are critical to the development of predictable outcomes in the area of intellectual property protection for software, given the uncertainty surrounding the eligibility of software for patent protection.

The Commercialization of Open Source Software: Do Property Rights Still Matter?

A major shift toward open source software is underway as companies are more critically evaluating the cost effectiveness of their IT investments, seeing the benefits of collaborative development, and looking for ways to avoid vendor lock-in. At the same time, academics and industry visionaries are criticizing the use of a traditional appropriation mechanism for innovation - the patent - by bemoaning the decisions of U.S. and foreign governments to permit software patents, the rising numbers of patents on software-related innovations (the so-called arms race build-up), and the cost and frequency of patent litigation in the software industry. The critics generally have applauded the shift towards open source, albeit for somewhat varying reasons. This paper responds to those trends by analyzing the role of property rights in the open source development model, with a particular focus on the effectiveness of the appropriation mechanisms that the open source model uses in lieu of intellectual property rights. I make two main points. First, I argue that open source's commercial success is intertwined with its incorporation into traditional commercial value chains. What that means is that open source cannot continue to grow in commercial importance without the property rights that are necessary for profit at other points of the value chain. Second, I argue that despite open source's distributed development process, open source in the real world is likely to support an increasing concentration in the software industry. The reason is that the proprietary firms best situated to exploit commercial interactions with open source will be large firms, particularly large service firms. Smaller firms will be less successful as services firms, and far less successful at exploiting the value-chain interactions that have driven commercial open source.

Do Patents Abridge the First Amendment Guarantee of Free Speech?

In a recent software patent case, Judge Mayer of the Federal Circuit wrote a concurring opinion in which he asserted that “patents constricting the essential channels of online communication run afoul of the First Amendment.” Arguments in line with Judge Mayer's view have been advanced in every significant § 101 case at the Supreme Court since 2005. Despite this steady barrage of First Amendment invocations, the Court has thus far declined to respond. At the same time, these cases were invariably decided in favor of the party for whom the First Amendment argument was made. This raises the question: Is there some merit to the proposition that patent rights must give way to free speech rights? Judge Mayer submits that the answer is yes. For the reasons discussed in this paper, however, Judge Mayer’s opinion is misguided. Patents — even those that unambiguously affect speech — are immune from First Amendment scrutiny, which is to say that courts can (and should) summarily dispose of First Amendment challenges to patent rights without trudging through First Amendment doctrine. And even if patents were subject to First Amendment scrutiny, they would emerge unscathed.

Is the Supreme Courtts Patentable Subject Matter Test Overly Ambiguous? An Empirical Test

In four cases handed down between 2010 and 2014, the Supreme Court articulated a new two-step patent eligibility test that drastically reduced the scope of patent protection for software inventions. Scholars have described the test as “impossible to administer in a coherent, consistent way,” “a foggy standard,” “too philosophical and policy based to be administrable,” a “crisis of confusion,” “rife with indeterminacy,” and one that “forces lower courts to engage in mental gymnastics.” This Article provides the first empirical test of these assertions. In particular, 231 patent attorneys predicted how courts would rule on the subject matter eligibility of litigated software patent claims, and the results were compared with the actual district court rulings. Among other findings, the results suggest that while the test is certainly not a beacon of absolute clarity, it is also not as amorphous as many commentators have suggested.

Falling through the cracks: The problem of granting software patents

Falling through the cracks: The problem of granting software patents

Symbols, Systems, and Software as Intellectual Property: Time for CONTU, Part II?

The functional nature of computer software underlies two propositions that were, until recently, fairly well settled in intellectual property law: first, that software, like other utilitarian articles, may qualify for patent protection; and second, that the scope of copyright protection for software is comparatively limited. Both propositions have become considerably shakier as a result of recent court decisions. Following Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014), the lower courts have invalidated many software patents as unprotectable subject matter. Meanwhile, Oracle America v. Google Inc., 750 F.3d 1339 (Fed. Cir. 2014) extended far more expansive copyright protection to functional software components than precedent suggested. The result of these developments has been a new period of uncertainty regarding the existence and scope of intellectual property protection for computer software. The root of the problem lies in Congress’s relative inattention to the question of what legal regime (if any) should govern the creation of computer software. Congress extended copyright protection to software largely without grappling with the consequences of applying a body of law designed to promote creative expression to functional, useful code. Meanwhile, Congress has spoken only obliquely to the question whether software warrants patent protection. The turmoil in the courts reflects a general lack of legislative guidance. This Article asks whether the time is ripe for remedial legislation and suggests some questions that ought to guide congressional inquiry.

Knowledge flows from business method software patents: influence of firms’ global social networks

Using patent citations as an indicator of knowledge flows, this paper examines the effects of firms’ global patent social networks on knowledge flows from business method software patents. Patent social networks are considered along several dimensions, including relative centrality, structural equivalence and brokerage roles. Identifying 19,385 software patents applications to the USPTO by 37 countries during 1995–2012, results show that firms positioned with a relative centrality or situated within the same structural equivalent cluster have more citations to their counterpart firms’ patents. Further, among the different brokerage roles, we find positive promotion to knowledge transfer when the citing and cited firms both serve the role of an itinerant as well as that of a gatekeeper/representative, while firms that act as gatekeeper/representative (alone) cite less patents from firms that do not enact this kind of a role. These unique insights provide a better understanding of channels of knowledge transmission and have implications for the pace of technological change.