The recent Enfish court decision improves the outlook for US software patents.
Good news for software patents. The negative impact of the 2014 SCOTUS (Supreme Court of the US) “Alice” decision (invalidating some business method and financial software patents) has been somewhat mitigated by the recent “Enfish” court decision.
What is “abstract?” “You keep using that word, I do not think it means what you think it means.” Inigo Montoya, “The Princess Bride”.
In “Alice”, SCOTUS did not make business-method and financial software patents patent ineligible. Instead, they determined that “abstract” subject matter is patent ineligible. Unfortunately, SCOTUS refused to define the meaning of “abstract”, and then further confused things by using circular logic. The present two-step, circular-logic, SCOTUS mandated test for patent eligibility is:
Step 1) Determine if the patent is directed to “abstract” subject material. If not then congratulations, the patent passes this test.
Step 2) But if the patent is found to be “abstract” in step 1, then determine if the patent contains “something extra” beyond just “abstract” subject material. If there is nothing extra, then reject the patent as being “abstract”.
No one knows what “abstract” means. Unfortunately since late 2014, the USPTO has been generally assuming that patents for software running on standard computers must be abstract under step 1. Many USPTO examiners (and judges) have been totally skipping step 1 of the two-step Alice test. They just assume that a given software patent is abstract, and start their Alice test at step 2 “something more”. This makes it much easier to reject the patent.
What is “something more?” It is also undefined, but financial and business software generally seems to be lacking. We could substitute “evil spirits” for “abstract”, and “charisma” for “something more”. We could almost as validly say that lately, many USPTO examiners and judges have been rejecting most business and financial method patents because 1) assumption of evil spirits and 2) a further lack of charisma. It is easier to understand if you don’t expect logic.
In 1982, Congress established the Federal Circuit Court to bring more logic and consistency to patent law. In the recent (May 12, 2016) “Enfish v Microsoft” (Enfish) decision, the Federal Circuit has finally started to do its job. The Enfish court has ruled that examiners and judges can’t just arbitrarily skip step 1 of the two-step Alice test. Specifically, the Enfish court ruled that it is improper to assume that software running on standard computers is “step 1” abstract.
The Enfish court pointed out that in Alice, SCOTUS didn’t rule that software is automatically abstract. Further in Alice, SCOTUS also warned against running amok since every patent is somewhat abstract. So don’t make software automatically fail the two-step Alice test at step 1. The Federal Circuit further determined that software running on standard computers that improves an existing technology (such as a database) is not abstract at step 1.
This is another important point: “abstract” is an undefined legal term, and you and I lack the authority to officially define it. But the Federal Circuit does have the legal authority to define “abstract”. The USPTO and other judges have to follow this updated definition. So Enfish is good news for US software patent law.