5 Things you Need to Know about Software Patentability in 2019

If you are a developer, tech startup or otherwise considered trying to protect your amazing new idea or technology based in software, you probably have already looked into patents as a potential way to secure those technologies.  (I highlight idea, as we will come back to that very salient point in a minute).    Probably one of the first things you run across is everyone talking about Alice!

Who is Alice?  When people refer to Alice, they are referring to a Supreme Court decision in the case of Alice Corp. v. CLS Bank International, 573 U.S. __, 134 S. Ct. 2347 (2014).  In 2014, this was a landmark ruling that shifted the applicability of 35 U.S.C. § 101 to certain types of inventions.  One central component of this shift was related to the patent eligibility of inventions that were based in software (or those that were otherwise based on abstract ideas).

We will not dive too deep in the analysis of Alice in this article for two main reasons: 1) it has been covered ad nauseum elsewhere; and 2) the ruling is over 4 years old and while Alice is still the root to most eligibility analyses, there have been numerous rulings since that have broadened, extended and clarified exactly what is and is not patent eligible subject matter.

So let’s start with this, for all you developers and executives at software companies:

 

  1. Software is Patentable

Let us be clear, software is patentable, when done correctly.  Even things you and I may feel are simple processes are still protectable.  For instance, Gaming Arts, LLC. just received a patent for a software based “BINGO GAME WITH BONUS FEATURE” (See US Patent 10,242,531), and Sony Interactive Entertainment jut received a patent for playing a sound effect when a computer detects a user saying a trigger word (See US Patent No. 10,242,674).   Both were issued on March 26, 2019.

It is important to note that a utility patent covers the functionality of the software, through defining the software in terms of systems and methods.  What patents do not cover is the actual code.  Source code is covered largely by copyright, which can protect direct copying of the code, but does not provide protection against those who write their own code to do the same thing.  And that is exactly where patents step in.

Now, there is a certain bare minimum that must be reached for a software system and/or method to be patentable.  Which brings us back to why I highlighted idea back in the beginning.  Ideas are not patentable in and of themselves, as they are abstract and fall squarely into the realm of what is not patent eligible.

 

  1. An Idea is Not Enough

If you are forming the next great startup and you want to be the “Uber for X” or the “Instragram for Y”, that is not, in and of itself, going to get you cross the finish line for patent eligibility.   Remember, software patents are directed to covering systems and methods.  Software almost always is nothing more than a series of steps (i.e., instructions) that drive a computer to take some action (e.g., process data).  Some data goes in, software directs the computer as to what to do with that data, and the output is some generally useful result.  Whether it is finding the closest Uber, matching you to your next soulmate, adding two numbers together, or calculating the trajectory of a rocket for sending a payload into space, it all boils down to some data going in, being processed, and a result being output.

When putting together a patent to protect your invention, your invention must be more fully flushed out than simply stating in conclusory terms what your software will do.  The abstract idea alone is not protectable, but the steps you use to get to the solution (i.e., method) may be.  Develop the flowcharts for how your great idea gets from problem A, to solution B.  The road in between is your patentable method.  For some help on this topic, the United States Patent and Trademark Office (USPTO) has provided a useful resource in the form of a Quick Reference Sheet for Identifying Abstract Ideas.

Remember, the more flushed out your idea is, the more it becomes a methodology which may be protected.

 

  1. What you Disclose in your Patent is Important

The content you put into your disclosure is king when it comes to your patent filing, especially for software related inventions.   The basic requirement for a patent application is that the drawings and specification disclose the invention in enough detail that one of ordinary skill in the art would be able to practice the invention without undue experimentation.   While that is the bare minimum, remember, if it is in your application, you can use it later during examination to overcome examiner’s arguments related to novelty, obviousness and even indefiniteness.  Conversely, if you do not include detailed descriptions of the various aspects of your invention, you cannot later use them in your arguments.

One thing that should be remembered when preparing a patent application for software methods is that even though you may be filing a patent application for your unreleased software product that will be launched soon as an initial version (e.g., v1, beta), there is no need to limit the patent application disclosure to just the features that are in the software now.  In fact, there is no requirement to have a working prototype in order to file a patent application on an invention.  This is particularly important with software, where you may be going to market with a minimum viable product (MVP), but have a roadmap that goes through several iterations, versions and include numerous improvements and features not present in the MVP.

Since there is no requirement to have a working prototype, and the enablement requirements only require that you be able to describe the invention in enough detail that one or ordinary skill in the art would be able to practice the invention – something probably already at least partially contained in your roadmap – you should consider putting details of all your future concepts, features and improvements in your application.   What this does is secure your priority date for all of the future features and improvements you have planned.

This strategy also allows you to use these features and improvements in arguments and amendments during examination.  It generally takes 18-24 months to enter substantive examination at the USPTO.  By this time, you will have a greater insight as to what features and improvements became a big hit, and those that did not pan out as planned.  This allows you to focus the examination of the application on those key features that were later implemented, without the need to file additional patent applications on an ongoing basis.

Further, by disclosing additional features and improvements in the first application, you can later file one or more continuation applications at a later time to secure patents on the individual features and improvements at a later time.  Each of these continuation applications get the benefit of the earlier filing date, even though they may be filed years later.

 

  1. How you Write the Patent is as Important as the Technology

What you disclose in the application is only part of it.  How you write the application is critical.   The words you use can end up coming back to haunt you, by unnecessarily limiting the breadth and scope of your rights, or otherwise acting as self-sworn statements that you cannot back away from.

For instance, restrictive words, like, “only”, “must”, “always”, and “never” may limit the scope of an invention.   If in an application, the disclosure states, “The system always does X before Y”, then you have been committed to a system that either always does X before Y, or never does Y (if you don’t do X, you cannot do Y).  These kind of limitations can poke holes in the breadth of an application, particularly when related to software, where there are frequently dozens if not hundreds of other ways to accomplish a task.  Think to yourself when drafting or reviewing an application whether the statements you are making are really requirements, or just simply one way you have chosen to implement the solution.

In another example, statements about what have been done in the past or are done in an industry can act as prior art against your invention.  This is known as “Applicant Admitted Prior Art” (AAPA) and can be disastrous in certain cases.  Commonly found in the background section of a patent, some applicants (or their patent attorneys or agents) may end up making statements that go beyond what actually IS prior art and inadvertently giving up certain rights by making such statements.

Further, even beyond just admissions of prior art, statements in the application about what is well-understood, routine and conventional in the art can come back to haunt inventors and applicants, as this can give grounds to the examiner to provide a subject matter rejection under 35 U.S.C. § 101.  Avoid these statements at all cost, as they are generally unnecessary and add little value to the actual disclosure itself.

However, the recent federal circuit opinion in Berkheimer v. HP, Inc., 881 f.3d1360 (Fed Cir. 2018) also confirmed that the concept of applicant admissions in a patent specification works in the opposite direction as well.  In Berkheimer v. HP, Inc., and a later USPTO memo regarding implementation of the ruling as it relates to patent examination practice. In this case, the court found that the applicant’s statement that the novel improvements contained in the application were not convention, and represented an improvement over the art, created a factual dispute that would not permit a finding otherwise under a motion for summary judgment.  Simply put, feel free to include statements throughout the specification as to how the disclosed software works or functions differently than conventional software, and how it provides improvements over the conventional or routine functionality of other software.

 

  1. New Guidance Makes Obtaining Software Patents Easier

When it comes to patents on software based systems and methods, Alice’s spectre still haunts us to this day.  Examiners are still issuing subject matter eligibility rejections under 35 U.S.C. § 101 on otherwise valid and protectable systems and methods that are based in software.  Frequently, these rejections are held up only by loose accusations and conclusory statements about an abstract idea contained in the claims.

However, on January 4, 2019, the USPTO announced the issuance of revised guidance relevant to 35 U.S.C. § 101 (Subject Matter Eligibility) rejections. Entitled, 2019 Revised Patent Subject Matter Eligibility Guidance, the document adds a new pathway for patent eligibility, whereby a claim that includes a judicial exception is still subject matter eligible under 35. U.S.C. § 101, if the judicial exception, such as an abstract idea, is “integrated into a practical application” of the judicial exception.

Since the issuance of the new guidance, we have seen very favorable action on subject matter eligibility involving the “integration into a practical application” analysis as it relates to software patents.  For instance, on March 19, 2019, the USPTO marked as “Informative” the Patent Trial and Appeals Board (PTAB) finding in Ex parte Smith (2018-00064).  The matter involved “claims directed to a hybrid trading system for concurrently trading securities or derivatives through both electronic and open-outcry trading mechanisms.”

The board initially identified the claims as being directed to methods of organizing human activity, a category of inventions under 35 U.S.C. § 101 that constitutes an abstract idea, namely fundamental economic practices.  The board then reviewed the claims under the revised guidance relevant to 35 U.S.C. § 101 (Subject Matter Eligibility) rejections. Using this guidance, the board determined that the claims were “integrated into a practical application” of the abstract idea, and therefore patent eligible subject matter.

Interestingly enough, the board’s determination that the claims were “integrated into a practical application” was based on use of timers to delay automatically executing market orders (i.e., electronic) to allow “in-crowd” market orders (i.e., from “in the pits”).

However, we do have to be cautious with regards to this guidance, as the Court of Appeals for the Federal Circuit (CAFC) just stated in its opinion in Cleveland Clinic Foundation v. True Health Diagnostics LLC on April 1, 2019, that, “while we greatly respect the PTO’s expertise on all matters relating to patentability, including patent eligibility, we are not bound by its guidance.”

 

 

PTAB Finds Subject Matter Eligibility in Hybrid Trading System

The United States Patent and Trademark Office (USPTO), on Tuesday, March 19, 2019, marked as “Informative” the Patent Trial and Appeals Board (PTAB) finding in Ex parte Smith (2018-00064).  The matter involved a panel of judges at the PTAB finding “claims directed to a hybrid trading system for concurrently trading securities or derivatives through both electronic and open-outcry trading mechanisms” patent eligible subject matter under the revised guidance relevant to 35 U.S.C. § 101 (Subject Matter Eligibility) rejections.  While finding the decision “Informative” is below a fully “Precedential” decision, these “Informative” decisions help guide the judges on “recurring issues.”

The examiner had initially determined that the claims were directed to “an abstract idea of trading derivatives in a hybrid exchange system which is a concept within the realm of ‘fundamental economic practices’ because the concept relates to the economy and commerce.” See, Ex parte Smith (2018-00064).  The examiner determined that under the Alice test, since this was an abstract idea, and that under the Alice step 2 analysis, the claims were directed at generic computer components and did not impose any meaningful limits on the scope of the claims, the claims were therefore patent ineligible subject matter under 35 U.S.C. § 101.

The board initially identified the claims as being directed to methods of organizing human activity, a category of inventions under 35 U.S.C. § 101 that constitutes an abstract idea, namely fundamental economic practices.  The board then reviewed the claims under the revised guidance relevant to 35 U.S.C. § 101 (Subject Matter Eligibility) rejections. Using this guidance, the board determined that the claims were “integrated into a practical application” of the abstract idea, and therefore patent eligible subject matter.

Interestingly enough, the board’s determination that the claims were “integrated into a practical application” was based primarily on claim elements directed to the use of timers to delay automatically executing market orders (i.e., electronic) to allow “in-crowd” market orders (i.e., from “in the pits”).  A majority of the panel of judges for the board did note that that felt these timers were not trivial timers, but it was not a unanimous panel.  One judge did dissent, under the idea that these timers, no matter how they were implemented, were not “[T]echnical in nature and do not provide any ‘technical solution to a technical problem’ as contemplated by the Federal Circuit in DDR and Amdocs.” See, Ex parte Smith (2018-00064).

Conclusion

The marking of Ex parte Smith (2018-00064) as “Informative” with respect to patentability is a good sign for applicants in the space of computer implemented inventions of all sorts, but especially for those in the financial services space.  We are seeing more and more positive outcomes from the PTAB with respect to how they plan to leverage the new guidance on subject matter eligibility as it relates to abstract ideas “integrated into a practical application.”

While there have been some interesting developments at the Federal Circuit, which we will post about separately, guidance from the USPTO appears to favor subject matter eligibility for well-tailored claims that involve computer implemented subject matter.

WHAT IS A PRIOR ART SEARCH?

In its simplest terms, a patent is a legal construct that grants to inventors the rights to exclusively practice an invention in the United States for a period of time (currently 20 years from the filing date of a patent application).  In the United States, patents are to be granted only for inventions which are not only useful, but also novel and non-obvious in light of the prior art.

Novelty and non-obvious of an invention is determined based on prior art. The term “prior art,” as it is used in the United States, refers to any information that is available to the public in any form prior to the filing of a patent application.

What is a Prior Art Search

Simply put, a prior art search involves searching various publicly available sources to find out whether an invention has been previously described or detailed in other references (i.e., prior art). If an invention has been described in a prior art reference, a later filed patent application would not be granted as being anticipated by the prior art. In short, if there is a publication dated before the filing date of the patent application, and that publication describes all aspects of the invention as claimed, the invention is not novel, and therefore ineligible for patent protection.

The most obvious form of prior art is previously granted patents and published patent applications.  But even without a previously filed patent application, an existing product on the market that patent protection was never filed for is also prior art.  But this is not where the concept ends. A piece of technology that is centuries old can be prior art. A previously described idea that could not possibly work under the existing technologies of the time can be prior art[i]. Anything can be prior art. The sources of prior art include patents, published patent applications, periodicals, books, and products. However, the most common prior art used by Examiners at the United States Patent and Trademark Office (USPTO), by far, are previously granted patents and patent publications.

 Types of Prior Art Search

Prior art searches take four forms: novelty, validity, clearance and landscape searches.

  • A novelty search helps an inventor to determine if the invention is novel before the inventor commits the resources necessary to obtain a patent and is done before an inventor files a patent application.
  • A validity search is done after patent issues, the purpose of which is to find prior art that the patent office overlooked. These can be useful for competitors looking to contest the validity of a granted patents.
  • A clearance search is a search of issued patents to see if a given product or process violates someone else’s existing or pending patent(s).
  • A landscape search provides a high-level view of the technology space and is normally performed to understand the lay of the land when entering a new technological area, including recent trends in technology, competitors, filing activity, and white-space/adjacent technologies.

 Why Is Prior Art Search Important?

Prior art is important because it controls the ability to gain intellectual property (IP) rights over an invention. If the inventor is unable to gain IP rights, the invention may have a decreased market value, as the inventor may be unable to prevent competitors from entering the market, or be forced to obtain licenses from existing IP rights holders.

Furthermore, except where the inventor is a subject matter expert in the field of an invention and has a great deal of knowledge of industry trends and direction, without a prior art search, an inventor will be operating in an information vacuum and will not be able to form an educated opinion about whether the inventor can obtain a patent on the invention. A prior art search is therefore important to:

  • Avoid submitting patent applications with claims that are not patentable or that would easily be rejected;
  • Determine whether an invention is novel and non-obvious compared to public prior art;
  • Develop a strong patent claim strategy before filing a patent application (and reduce the chance of extensive amendments);
  • Account for close prior art when drafting your patent application. For example, you might want to describe advantages or improvements over relevant prior art, as this can help persuade the patent office that your invention is “non-obvious”;
  • Understand how your idea fits into the technological field;
  • Be better prepared to discuss your invention;
  • Look out for people who might someday infringe on the idea;
  • Look for inventions that you might accidentally infringe on the invention;
  • Find out how strong an idea is;
  • Save money by detecting existing developments;
  • Show you the best partners with whom you can collaborate;
  • Detect the latest publications in a research field and keep up-to-date on the progress made by others;
  • to assess the strength of a patented invention;
  • to acquire statistical analysis on the most innovative companies in a field;
  • to cancel a granted patent used against you by detecting new invalidating prior art that has not been considered in the patent grant process, etc.

 Does Prior Art Automatically Disqualify?

Not all prior art disqualifies an invention from being able to receive a patent. Prior art essentially refers to the entire span of human knowledge, and if one effectively differentiated an invention even from a similar one, a patent may be secured.  A patent cannot be obtained in the following situations:

  • The invention or a very similar one (i.e., obvious in light of the prior art or otherwise anticipated by the prior art) has been patented anywhere else in the world;
  • The invention has been previously described anywhere in the world in a printed publication;
  • The invention or something substantially similar is public knowledge, or well-understood, routine, and conventional in the art, even if not published or patented; and
  • The invention has been publicly used, demonstrated, or offered up for sale by the inventor over one year prior to a U.S. application filing.

 When Does Prior Art Not Count?

There are exceptions to prior art in which it may not count against filing a patent application. Certain experimental public uses might not count as demonstration or revelation. If an invention was secret and remained secret up until being abandoned by the original inventor, it may not apply as prior art. Trade secrets are not usually prior art, provided that employees and others with access to the information are under a non-disclosure obligation. Prior art generally does not include unpublished work or limited conversations.

However, it is important to be as careful as possible when having conversations with those not under an obligation of confidentiality.  In Medtronic v. Barry, the Court of Appeals for the Federal Circuit noted: The determination of whether a document is a “printed publication” under 35 U.S.C. § 102(b) “involves a case-by-case inquiry into the facts and circumstances surrounding the reference’s disclosure to members of the public.” For example, in Massachusetts Institute of Technology v. AB Fortia (MIT), a paper that was orally presented at a conference to a group of cell culturists interested in the subject matter was considered a “printed publication.” 774 F.2d 1104, 1109 (Fed. Cir. 1985). In that case, between 50 and 500 persons having ordinary skill in the art were told of the existence of the paper and informed of its contents by the oral presentation. Medtronic, Inc. v. Barry, 891 F.3d 1368 (Fed. Cir. Jun. 11, 2018)

 Prior Art Searches and Lawsuits

If someone sues you because they think you infringed on their patent, a prior art search can help. You can conduct a prior art search in order to identify prior art that could be used to invalidate their patent, whether at trial or via an action before the USPTO. If their patent is found invalid, then they do not have grounds to maintain a suit for patent infringement.

 What to invest in a prior art search?

The amount of effort spent in performing a prior art search should be proportional to the value of the invention and subsequent patent if the application is pursued to completion. A patent application filed for marketing purposes with no real intention of prosecuting until completion will not require much or any prior art searching. On the other hand, if an invention is the cornerstone of a company’s strategy, or if the field of the invention has a costly barrier to entry, a comprehensive prior art search may be warranted. As always, it should be the business goals that inform the IP strategy and the specific decisions made.

 Conclusion

In many cases, it may be advisable for inventors to conduct a prior art search with an eye toward both the technical features of the invention and the legal aspects of patentability, such as novelty and non-obviousness. A patent or patent application is not just a technical paper; it is also a legal document. Therefore, while familiarity with the technology is mandatory for a technical prior art search, a search will yield the most value if one has an understanding of IP law—specifically, patent law as it relates to validity and infringement.

[i] We are aware of a European patent application for a new bicycle that was rejected based on a 19th Century French manuscript that detailed nearly the same bicycle, but it would not work as described at the time, as the materials of the era were too heavy or too brittle to function.  The only difference between the old bicycle and the new, was the use of carbon fiber materials, which were light enough and strong enough to make the bicycle work.  The examiner submitted that the change of materials was an obvious change, noting the entire structure of the invention was substantially the same otherwise.

New Guidance from the USPTO – a Boon for Patent Applicants

On January 4, 2019, the USPTO announced the issuance of revised guidance relevant to 35 U.S.C. § 101 (Subject Matter Eligibility) rejections. Entitled, 2019 Revised Patent Subject Matter Eligibility Guidance, the document adds a new pathway for patent eligibility, whereby a claim that includes a judicial exception is still subject matter eligible under 35. U.S.C. § 101, if the judicial exception is “integrated into a practical application” of the judicial exception. The guidance was incorporated into the Federal Register on January 7, 2019, and applies to all USPTO personnel, which includes the examiners that review applications for 35 U.S.C. § 101 concerns, and the administrative judges that oversee appeals and disputes on these issues.

Of considerable note, the new procedure, referred to in the guidance and Federal Register as “revised Step 2A,” changes how Step 2A of the Alice/Mayo test is applied.

The old Step 2A asked whether a claim is directed to a judicial exception.   There are three enumerated judicial exceptions: 1) laws of nature; 2) natural phenomena; and 3) abstract ideas. If a claim had no judicial exception, it was patent eligible subject matter.  If a claim did have a judicial exception, the analysis would then move to Step 2B for further review.

The revised Step 2A still looks to see if there is a judicial exception in a claim, and if there is no judicial exception, the claim is considered directed to patent eligible subject matter.  However, the revised Step 2A differs in that if a judicial exception is identified, the claim is still directed to patent eligible subject matter if the judicial exception is “integrated into a practical application” of the judicial exception. For example, if a patent application with claims directed to a software method which incorporated an abstract idea, so long as that abstract idea is integrated into a practical application of that abstract idea, the claim is directed to patent eligible subject matter and may still be entitled to patenting.

 

The Guidance in Action at the Patent Trial and Appeal Board

Now that a little over a month has passed since the new guidance has gone into effect, we are starting to see some opinions from the Patent Trial and Appeal Board (PTAB).  While the PTAB has still issued a greater number of affirmed 101 rejections than reversals since the new guidance, the opinions have been positive with respect to those reversals.

One very telling reversal came on application 14/282,015, for claims directed to a software-based system for vehicles that allows users to provide consent for installing optional software updates that add a feature to a vehicle module or adjust a configuration of an existing feature, and, in lack of receipt of such consent, displaying an icon in a gauge cluster in the vehicle.  The examiner had initially rejected the claims under 101 as directed to: i) the abstract idea of updating software; and ii) organizing human activity (i.e., receiving consent to take an action).

The PTAB reversed, noting that there was a “specific practical application” of the abstract ideas in the claims.   The PTAB found that the claims were “directed to a practical application of updating software specifically for a vehicle module, in which user consent is required and in which lack of receipt of user consent is communicated to a user via an icon within the gauge cluster of a vehicle.  The opinion also noted that the claims were “directed to providing in a head unit display of the vehicle an indication of an optional status of the software update and a request for consent to install the optional update and upon receipt of user consent sends an update command over the vehicle bus and installs the update to a memory of the vehicle module.”

Notably, here we have an opinion from the PTAB identifying a quite low bar for application of the “practical application” standard.  In this case, the “practical application” seems to be not much more than having a prompt for approval that you would see on any software update (e.g., “accept the new Terms of Service”) and then displaying an icon on a display when there is an update still pending approval.

The second opinion we find interesting is one involving US Patent Application No. 12/374,372, and the following claim in particular:

A method of surfing the Internet comprising: a. selecting information on a web page; b. clicking on the information as it resides on the web page; and c. in response to the clicking, conducting a web search on the information.

The PTAB’s opinion in this case is less telling on the what constitutes “practical application” standard, as the opinion does not make such an analysis, and merely focuses on the examiner’s failing to adequately assert a valid analysis of the claim as an abstract idea unto itself.  Rather, the opinion simply notes that:

[T]he Examiner’s factual findings regarding the underlying abstract idea to overgeneralize the claimed invention under the patent eligibility guidelines at the time of the rejection in the Final Action and Examiner’s Answer and this same overgeneralized abstract idea similarly does not meet the Examiner’s requisite burden for analysis under the 2019 Revised Patent Subject Matter Eligibility Guidance.

 Given the simplicity and breadth of the claim, it is likely good news for applicants with inventions in the software space that the PTAB is not outright viewing broad claims as inherently abstract under the new guidance.  The opinion does note other likely issues with the application, but it is in the context of the PTAB’s views on 101 with which we are concerned.

Conclusion

It has only been a month since the USPTO issued the latest in subject matter eligibility guidance, and our initial impressions of how the PTAB is using the new guidance is positive and optimistic.  Even though a greater percentage of opinions citing the 2019 Revised Patent Subject Matter Eligibility Guidance affirmed the 101 findings of the examiner, the limited numbers are not truly representative of what we expect to see over the long run.  Further, a closer look at those affirmed 101 findings leads us to believe that the cases were destined to be maintained, regardless of the updated guidance.

Most notably for us is that the current interpretation of what constitutes when claimed subject matter is “integrated into a practical application” of the judicial exception seems to be initially very favorable for applicants, particularly for those with inventions in the software space.

Patenting and Protecting Artificial Intelligence in the United States

Advancements in Artificial Intelligence (AI) have been occurring at an ever-increasing rate, impacting almost every field of technology, from medical diagnosis and analysis, to driverless cars, to automated securities trading platforms, all the way to home security[i].  The arms of AI can be felt in every industry, in one way or another. Given the speed of advancement and the very nature of AI itself, it is important to consider the complex landscape around how to protect improvements in the AI space.

At first, it is important to note the types of intellectual property (IP) protection that can apply to inventions in the AI space.  The definition of IP generally comprises the core four – patents, copyrights, trademarks and trade secrets.  In the case of AI, each of these may apply, and each has its own particular usefulness and advantages.  Further, each of these types of IP has its own concerns with respect to the timing of obtaining the protection.  For this article, we will primarily be focusing on the two areas of protection that generally are of the most concern – patents and copyrights.

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Patenting AI

AI, in almost all cases, exists as a software component.  Depending on what the use case for the AI is, there may also be a hardware component (e.g., vision system, sensors, actuators), but these hardware components are generally peripheral to the core AI, which is software based.  While AI inventions based in combined software and hardware solutions or standalone software-based solutions may both be patentable, the analysis for whether an AI based system constitutes patent eligible subject matter does take into consideration what is actually involved.

Where there is a corresponding hardware component in use with the software-based AI component, the subject matter eligibility analysis is usually relatively simple, favoring eligibility over not.  For instance, if an AI system is used to automatically control a series of vision systems (e.g., security cameras) and detect intruders, the invention is likely eligible for patent protection from a subject matter perspective, assuming the application is drafted appropriately.

Where the AI system solely exists as a software solution, an examiner at the USPTO will likely give the invention more scrutiny under the subject matter eligibility tests.  We have written more on the patentability of software-based inventions in a separate article that you can find here. However, while patent applications directed to software only inventions may receive additional scrutiny, true AI inventions likely are sufficient to overcome these rejections.  In fact, USPTO Director Andrei Iancu has even discussed the patentability of AI, through discussions of “[H]uman-made algorithms”, during a hearing regarding the oversight of the USPTO in April of 2018.   Again, the critical point in securing a patent in a solely software based AI invention is appropriate drafting of the application.

With respect to patenting AI based inventions, particularly as it relates to the software component of the AI, it is important to note that a utility patent covers the functionality of the software, through defining the software in terms of systems and methods.  What patents do not cover is the actual code.  Source code is covered largely by copyright, which can protect direct copying of the code, but not those who write their own code to perform the same functionality.

In defining what an inventor wants to protect with respect to their software-based AI invention, it is important to look at the invention in terms of a method, or a series of steps.  Considering everything a computer does is generally a series of steps involving processing some data, framing the inventive aspects of the software-based AI invention in such a methodological manner is generally straightforward.

What inventors want to avoid is viewing the invention in the abstract, or very high-level depiction.  For instance, you cannot get a patent on the idea of “an AI based dating platform”, but you could potentially get a patent on the methods performed by the AI in order to find compatible matches (e.g., based on training models and predictive analytics).  So, a focus needs to be on what actual occurs in order to make the invention possible, not solely focusing on a conclusory statement about what problem is being solved.

Another important thing to remember when seeking patent protection for AI inventions, or any invention, is to do so sooner rather than later.  There are two main drivers for this.  First, the USPTO, and most if not all other national patent offices are “first-to-file” for priority on inventions.  What this means is that, even if you get to the market first with your invention, or conceived of the idea before another inventor, if another party’s application gets to the patent office before yours, then the patent rights will be theirs, and you will be prevented from getting a patent on the invention.

The second reason is that your ability to get a patent on an invention, even without worrying about what others are doing, can be jeopardized if you offer for sale or otherwise disclose your invention publicly before filing.  The USPTO gives you one year from making a public disclosure of the invention to file your patent application.  However, the rest of the world is not so nice, with many jurisdictions making it a bar on patentability if you publicly disclose your invention prior to filing a patent application in at least one jurisdiction first.

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Copyrighting AI

With respect to copyrighting all or portions of an invention based in AI, there are certain aspects of these inventions which are protectable and those which are not.  Copyrights cover artistic works, which includes everything from literary works, to graphical/visual works (e.g., paintings, movies, photographs), to musical works and even choreographed dances.

When considering copyrighting portions of an AI based invention, the focus is generally on copyrighting the source code.  Source code is considered a literary work for the purposes of copyrights, and inventors can receive a federal copyright registration in the uncompiled source code.

What is protected by a copyright registration on source code is the copying of the actual code.  It does not prevent others from creating code of their own that performs the same functions.  However, it does restrict the copying of subsets of the whole code, such as the copying of a module, or a series of functions.

One issue when considering copyrighting source code is how frequently the source code is updated.  Rarely is there a piece of software that is static for very long.   Updates in source code, while they may be considered derivative works of the originally copyrighted code, may not be independently covered by the initial registration.  Inventors should consider at what point they want to secure additional copyrights on later versions of a software-based invention.

It is important to note that while a copyright registration can be done at any time, as the works form in the author upon creation, statutory damages and attorneys fees are generally only available if the copyright registration is filed within 3-months of publication of the work[ii].  Filing your registration after that point will limit damages to “actual damages” (e.g., lost profit), which can be harder to prove.

Separately, more and more we see the question about whether it is possible to copyright the output of AI.  Recently there have been numerous instances of AI generating their own artistic works, such as The Next Rembrandt and Bayou.  The law is currently unsettled as to whether these works would be copyrightable.  For instance, in April of 2018, the Court of Appeals for the Ninth Circuit held that the Copyright Act only provides standing to humans[iii].  The case, involving copyrights associated with a Monkey Selfie, but the same findings would presumably extend to works authored by AI.

Of course, numerous scholarly and legal minds believe that works would be derivative works of the individuals who wrote the code for the AI, and as such those individuals would be the rightful owners of works generated by the AI.  We ultimately will have to wait to see how this plays out in the future.

 

Conclusion

Overall, it is important to understand and analyze what aspects of an AI based invention can be secured early on in the process.  Timing is crucial for both patents and copyrights with respect to being able to secure the rights and receiving the greatest protection available under the laws.  This area of technology is moving quickly, so delay and lack of planning can be devastating. Devoting at least some time to do the analysis may help with providing a roadmap for how and when to protect various aspects of your AI based invention so that you reap the greatest rewards possible.

[i]Check out our client Deep Sentinel: https://www.deepsentinel.com/

[ii] See, 17 U.S.C., 412 https://www.law.cornell.edu/uscode/text/17/412

[iii] Naruto v. Slater http://cdn.ca9.uscourts.gov/datastore/opinions/2018/04/23/16-15469.pdf

 

Accelerating Patent Grants and Reducing Costs for Inventors from Singapore by Leveraging the US Patent System

Companies and Inventors from Singapore can leverage programs at the United States Patent and Trademark Office (USPTO) to substantially accelerate the process of obtaining of a patent in Singapore, all while reducing the overall cost to create a global patent portfolio.

 

Background

It may come as no surprise that Singapore ranked as one of the most innovative countries in the world.  Singapore ranked #3 in the most recent 2018 Bloomberg Innovation Index.   Singapore also ranked #3 in the World Economic Forum’s Global Competitiveness Report 2017-2018, and #5 in the International Property Rights Index.

Specific areas of technology that Singapore may be known best for pushing the boundaries on are: 1) Immersive Media; 2) Artificial Intelligence (AI) and Data Science; 3) Cybersecurity; and 4) Internet of Things (IoT) and future communications 1.  All areas that are of worldwide significance and growth.  Given this, the innovations developed in Singapore are of global appeal and warrant analysis of whether international protection of the intellectual property associated with those inventions are advisable.

Given that international protection of intellectual property rights can be costly and take a lot of time to obtain, it is important to consider all ways that the process can be optimized for both time and cost.

 

Time and Cost Analysis – Singapore

Preparing and filing a patent in almost any jurisdiction is not an inexpensive endeavor.  An inventor can expect to spend around S$10,000-20,000 in professional fees for the drafting of a patent application in Singapore, and filing fees that start around S$1,700.  At current exchange rates, that is an estimated $8,500-15,800 USD.

According to the Intellectual Property Office of Singapore (IPOS), the average time to get a patent through until grant is about 2-4 years.

 

Time and Cost Analysis – United States

Preparing and filing a patent in the United States is similar in complexity to doing so in Singapore.  Drafting expenses may be slightly lower, with estimated professional fees for preparing a patent application averaging about $6,000-10,000 USD (S$8,200-13700) (our firm averages slightly lower drafting fees of around $4,000-$8,000 USD). Standard filing fees are also a bit lower, with a small entity (companies with fewer than 500 employees) having a base filing fee of $785 USD (S$1,077).

The average time on a standard timeline application in the US is about 2-3 years.

 

Options to Accelerate in the US

Both the USPTO and the IPOS share options for accelerating examination of a patent application.  However, only the USPTO offers an easy acceleration process that is based solely on the payment of an additional fee.  Called Track I Prioritized Examination, the USPTO provides the ability for applicants to pay a fee ($2,000 for small entities or $1,000 for micro-entities) and receive a first office action in the merits, and final disposition within 1 year.

Done right, the Track I Prioritized Examination procedure at the USPTO gives patent applicants quick and clear insight on patentability of an invention.  The accelerated timeline of a Track I Prioritized Examination application also gives patent applicants the ability to have insight on whether foreign filings are worthwhile, will also providing options for accelerating granting of patents in those foreign jurisdiction.

For instance, applicants can leverage the Patent Prosecution Highway (PPH), which is a series of agreements the US has with foreign patent offices, such as Singapore, whereby when a first patent office (e.g., USPTO) allows a patent application, the second patent office (e.g., Singapore) will, upon submission of a request, accelerate the examination of the patent in the second office.

I have written a blog post about this separately elsewhere.

 

One Caveat on Acceleration in Singapore

While the Track I prioritized examination of US applications is available for applications in any industry, IPOS does offer an option for inventions that are in the FinTech space that may be even more advantageous.  A new program launched in 2018 at IPOS, called the FinTech Fast Track initiative, aims to have the time to grant of such FinTech patent applications in as little as 6 months.

So, if your invention is in the FinTech space, you may still be best served by filing in Singapore.  However, if your invention is in any other technological field, the Track I Prioritized Examination application at the USPTO may offer additional benefits over filing directly in Singapore.

 

One Additional Requirement

Before filing directly in the USPTO, those applicants that are Singapore residents till must contact Singapore (IPOS) for national security clearance to file an application abroad before filing an application in Singapore.  Luckily, this is not a complex process and usually only takes a few days to a week or so prior to getting the appropriate clearances.

 

Conclusion

There are several options to accelerate receiving of a patent in the USPTO that should be quite interesting to Singapore companies and residents.  From reduced costs, to quicker allowances, and allowances that can accelerate issuance in Singapore as well as numerous other foreign countries.

With all the options available, it may be time to look at you or your company’s IP practices and identify whether some of these options may work to increase the value of your IP, while simultaneously reducing the cost to protect it.

 

 

 

Leveraging Track I Prioritized Examination at the USPTO to Slash Global Patent Filing Costs and Accelerate Obtaining of Foreign Patents

Global patent filing using conventional procedures entails significant costs.  Optimizing the use of Track I in an enterprise’s patent filing processes may provide an overlooked strategy to help drive down the cost of foreign prosecution and accelerate issuance of a global patent portfolio.

The Conventional Approach

When going global with patent filings, Applicants often follow the same route.  They begin with either a provisional or nonprovisional application in the U.S. or another jurisdiction, such as wherethe Applicant is located or where its R&D takes place.  If the covered invention warrants global filing, Applicants often pay to file an international application under the Patent Cooperation Treaty (PCT) at 12 months from the earliest priority filing.  Perhaps, with luck, they will receive a first action on the merits during the second year of the first application’s pendency.  If an Applicant filed the first application with the U.S. Patent & Trademark Office (USPTO), the examining art unit’s backlog typically determines the wait until examination starts.

By the time the 30/31 month due date under the PCT arrive, an Applicant may still be engaged in prosecution of the original application and may not have a clear view of patentable subject matter.  Depending on the art unit, or if the Applicant first filed a provisional utility patent application at the USPTO, the original application may not haven even received a first action on the merits prior to the national filing deadlines under the PCT.

Accordingly, Applicants may find themselves in the situation of making national stage filing decisions without having a clear picture of their odds of success in obtaining valuable patent scope for a given invention.  Depending on the number of countries an Applicant wishes to file in, an Applicants can easily spend $25,000 to $100,000 on these national stage filings.  This figure is just detailing the filing fees and does not include costs for prosecution of each application during examination.  All this expenditure occurs without really knowing if an Applicant stands a chance of acquiring valuable global intellectual property.  If patent prosecution turns sour in the U.S. or elsewhere, or an application collides with unforeseen prior art, then the already-invested resources may simply evaporate into a loss.

Gaining clarity relatively early in the global filing process through use of the Track I Prioritized Examination program at the USPTO, though, can avoid wasting the enterprise’s resources later during worldwide patent prosecution.

Track I:  Gaining an Earlier Picture of Clarity

As an alternative to the usual flow of global prosecution sketched above, Applicants may consider taking a different tack by maximizing the benefits of the Track I Prioritized Examination program offered by the USPTO.

As a quick background on the Track I Prioritized Examination program, it is basically a Pay-to-Play system for fast tracking the examination of a US Non-Provisional Utility Patent Application.  For an additional fee of USD $4,000 on top of usual nonprovisional patent filing fees, patent owners may file a request for prioritized examination with the USPTO, gaining access to Track I benefits.  Small entity Applicants will enjoy access to the Track I program for half of that fee ($2,000), while micro-entity discounts bring the Track I fee down to USD $1,000.    Given that most universities and other institutions of higher education can take advantage of the micro-entity status, the Track I program becomes a very viable option for those with heavy domestic and foreign patent prosecution programs.

The Track I Prioritized Examination program includes a number of special conditions, but they will typically not amount to an onerous requirement for most Applicants.  For example, patent owners may not take extensions, must file no more than 4 independent claims and 30 claims total, and must be sure to pay all fees at application filing.

As long as the Applicant files the paperwork correctly and overall U.S. Track I filings have not exceeded the Office’s quota for the year, the USPTO will usually accept the application for prioritized examination.  The Office will then issue a first Office Action within approximately 3-4 months and produce a final disposition, such as a Notice of Allowance or a Final Office Action, within 12 months.  The USPTO currently advertises that it actually issues final dispositions much earlier, by about the six-month mark.  If the final disposition displeases the filer, the Applicant retains the option to either re-pay the Track I fee to pursue another round of prioritized examination, or revert back to the standard examination timeline by submitting a request for continued examination (RCE).

Applicants may elect to use the Track I Prioritized Examination program for applications in which they expect to attempt global filing based on the anticipated value to the organization of filing in various nations.  Although the USPTO offers other techniques for accelerating prosecution, Track I has emerged as the go-to program for prioritized examination.

In contrast to the conventional approach for global filing, a Track I Prioritized Examination application will likely provide a filer with clarity on patentability before the one year deadline for PCT filing.  The insight provided by the Track I Prioritized Examination program may make global filing decision-making clearer, and help to ensure that the organization focuses resources on applications that have a significant probability for earning strong protection.  For a relatively small up-front additional fee of a few thousand dollars, Applicants may avoid wasting tens of thousands of dollars on applications that may ultimately be doomed by unknown prior art.

As a quick aside, Applicants should also consider checking to see if any inventor on an application is over 65.  If at least one inventor is over 65, the USPTO will make an application special and advance it out of turn for relatively quick prosecution.  Filing a simple petition asserting an inventor’s age will expedite prosecution.  The USPTO charges no fee for acceleration on the basis of age.  Patent owners may accordingly also use age-based acceleration to gain earlier clarity on patentability, without a fee.  Age-based acceleration, though, will most likely not be as fast as Track I Prioritized Examination.

Combining Track I with the Patent Prosecution Highway

In addition to the advantage of gaining the earlier clarity highlighted above, Applicants may also leverage other foreign filing programs available through the USPTO in conjunction with the Track I prioritized examination program.  For example, the USPTO has a number of Patent Prosecution Highway (PPH) agreements with other patent offices worldwide in which subject matter deemed patentable by one office may be allowed with little or limited additional examination.  The USPTO participates in such PPH programs with counterpart offices in Europe, Japan, Korea, China, Russia, Australia, and other jurisdictions.  Although procedures vary based on the nations involved, the basic process usually involves filing an indication of allowable subject matter from a first patent office with a second patent office patent filing, along with a petition to participate in a given PPH program.  The patent owner may thereby request limited or streamlined examination to issue a patent in the second nation based on the allowance in the first nation.

Turning back to Track I Prioritized Examination program, if an Applicant receives a Notice of Allowance or other indication of allowable subject matter relatively quickly, the owner may then parlay that allowance into accelerated allowances in other nations based on using various available PPH programs.   This not only accelerates the granting of the foreign patents, but also reduces the overall cost of foreign prosecution, as fewer office action responses are required in each jurisdiction.  The cost savings can be massive, particularly when the Applicant is entering a large number of foreign jurisdictions.

In practice, PPH programs work with varying degrees of success based on the nations involved.  For example, commentators have noted that using PPH to turn USPTO allowances into patents at the European Patent Office (EPO) may tend to hit headwinds, with the EPO essentially fully examining a given application notwithstanding a U.S. allowance.  However, using Track I allowances as a springboard to obtain accelerated allowances in other nations remains, in general, a viable option for quickly driving a global patent family to issue.   Further, if an EPO patent is part of the strategy for a given application, an Applicant’s US based patent attorneys or agents can draft and prosecute the claims of the US application with that in mind, in order to keep claims that will eventually be allowed in the US patent more similar to those that the EPO would typically grant.  This is something an Applicant would want to address early on with their counsel, so that the strategy is in place during the examination of the Track I application.

Takeaways

For slightly higher initial filing fees in the USPTO, an Applicant may leverage prioritized examination under the Track I Prioritized Examination program to gain clarity on patentability of a patent application intended for international filing.  Patent owners may thereby avoid expending resources on global prosecution of applications that perform poorly during Track I prosecution.  Owners may accordingly use Track I to inform decision-making to optimize the probability of success for global patent acquisition.  Applicants may also combine the benefits of Track I with Patent Prosecution Highway programs, leveraging Track I prioritization to accelerate prosecution globally and significantly reduce the overall cost of foreign prosecution.

Authors

James M. Smedley, Esq. & Steve Keefe, Esq.

Steve Keefe, Esq.
Senior Attorney
James M Smedley LLC

Steve is an attorney in the firm’s Intellectual Property law group. Steve has extensive experience in patent prosecution and corporate transactions. Steve’s career has given him experience both in the law firm setting as well as time spent as in house counsel. Steve’s experience with both national and international IP matters is extensive.