Software inventions have been able to receive broad protection in the United States. However, in CyberSource v. Retail Decisions, the Court of Appeals for the Federal Circuit upheld a lower court ruling that a Beauregard claim was not patentable subject matter. Is the CyberSource ruling the beginning of a change in patent law, or an outlier that will eventually be corrected?
In the United States, "any new and useful process, machine, manufacture, or composition of matter..." is patentable. Software executing on a general purpose computer has been considered to create a machine that is patentable. See In re Alappat, 33 F.3d 1526, 1545 (Fed. Cir. 1994). The Federal Circuit established a machine or transformation test to determine if an invention was patentable, and the Supreme Court slightly broadened the scope of software patentability by holding that the machine or transformation test was a useful clue in determining patentability, and not the only test.
The CyberSource decision suggests that reciting the use of a computer to execute an algorithm may not be enough to create a machine. In particular, the court cited a recent Federal Circuit decision that a machine "must play a significant part in permitting the claimed method to be performed." SiRF Tech., Inc. v. Int'l Trade Comm'n, 601 F.3d 1319, 1333 (Fed. Cir. 2010). The ruling also suggests that manipulating data may not be enough to be considered a transformation.
The overall effect of the ruling would seem to move US law regarding software patents much closer to European law, where a software invention must solve a technical (physical) problem to be patentable, and where algorithms that can run on a general purpose computer are not patentable. One wonders if this change is because of the sharp increase in software patent infringement suits. The US patent system has come under much public criticism because of this increase in litigation. A change in the requirements for patenting software could invalidate the patents in many of these suits, while still leaving a way to protect software inventions. However it is difficult to determine if this ruling is merely an outlier or a new direction in US patent law.
Major judicial changes in patent law are often made en banc, where a majority of the federal circuit judges hear the case instead of the usual three judge panel. An en banc hearing would clarify whether the CyberSource ruling was really the new standard for software inventions.
Of course, until there is an en banc decision, inventors will still be filing patent applications to protect their software inventions. The ruling suggests a number of ways that claims for software inventions can be strengthened. Until the law regarding protecting software is clarified, these techniques should be employed to assure that inventions can still be protected if the law changes.
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