How the US got its Patents

Now, this site is predominantly about the condition in which we find ourselves in the UK, but it is useful to look at the US. The UK and, as a whole, Europe is heading down a path that is not a new path: we are following in the steps of the US. For people to realise where we are headed, then, we just have to look to the US and the experiences of our transatlantic cousins.

Pre 1981

Originally, the US had similar laws to ourselves with regard to excluded items: software was not something that could be patented, nor business methods. By 1981, the computer industry had grown rapidly - some of the most famous names (Apple, IBM, etc.) were already in existance, most of the technologies with which we are familar today (Unix, Graphical User Interfaces, networks, etc.) had not only been thought of, but were already in mass use.

However, the US did have a problem, much like our current predicament. People were patenting things that were effectively software patents, but were having to bend the rules to do so. In 1980, 250 patents were filed that could be considered software patents, representing 0.38% of total patents (these figures are from Greg Ahronian's Patent News Service, Copyright (C) 1995 by Gregory Aharonian).

1981 Supreme Court Decision

1981 was the first key year for software patents in the US. The case of Diamond v. Diehr was of a patent of a rubber-curing process. This process was controlled by software, but the Supreme Court found that since the patent was for rubber-curing, and not software per se, it was patentable. The first slip down the slope occurred: the Supreme Court was saying that if you did something "new", the fact that you did it with software did not matter.

It's worth noting that, as the laws stand, this is roughly where we are: patenting software is supposedly allowable, so long as the software "does something". However, the American position was a lot more concrete - their change occured in a court of law. The current practice of the UKPTO has been changed by a board of appeals in a European quango.

The Supreme Court at this stage had probably made a mistake; although they were never to admit this. The key fault with this decision was that while the Supreme Court had said that something should be patentable even if it is based in part in software, they had also required that mathematical algorithms should not be patentable. So, the decision on whether or not a piece of software should be patentable essentially turned into an argument as to whether or not the software represented a mathematical algorithm, or something more. In Diamond v. Diehr, the patent was given on the basis that the process as a whole was new, even though the process was made up of known art (the curing frame) and a non-statutory object (the software). This was essentially self-contradictory, although it was partially acknowledged:

"We view respondents' claims as nothing more than a process for molding rubber products and not as an attempt to patent a mathematical formula. We recognize, of course, that when a claim recites a mathematical formula (or scientific principle or phenomenon of nature), an inquiry must be made into whether the claim is seeking patent protection for that formula in the abstract.
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To hold otherwise would allow a competent draftsman to evade the recognized limitations on the type of subject matter eligible for patent protection. On the other hand, when a claim containing a mathematical formula implements or applies that formula in a structure or process which, when considered as a whole, is performing a function which the patent laws were designed to protect (e.g., transforming or reducing an article to a different state or thing), then the claim satisfies the requirements of section 101."

Although on the face of it these seems sensible - that the patentability for an industrial process should not be based on how the patented process is performed - it doesn't answer the question of why software is a non-statutory object, and how that should affect claims.

1981-1995

During this period, limited software patents were available, a little like in the UK now. This time also saw substantial growth in software patenting, as people realised what they were able to get away with. From 0.42% in 1981, patent applications for software had boomed by 1995 to over 200% of what they were in 1981. By 1995, they represented almost 6% of all patent claims.

At this time, the courts were still struggling with the Supreme Court decision in Diamond v. Diehr; during the early 1990s the definition of whether or not a software program was patentable had been refined further to:

Is the invention in actuality only a mathematical algorithm, such as a computer program designed to convert binary-coded decimal numbers into binary numbers? If so, then the invention is unpatentable. However, if the invention utilizes the computer to manipulate numbers that represent concrete, real world values (such as a program that interprets electrocardiograph signals to predict arrhythmia or a program that analyzes seismic measurements), then the invention is a process relating to those real world concepts and is patentable.

Incidentally, the number conversion example given above is not made up: in the case Gottschalk v. Benson, the applicant attempted to patent the process of converting BCD-format numbers to binary numbers. Thankfully, this was rejected, on the grounds it was a mathematical formula.

1996

Finally, the USPTO was beginning to define what software was patentable, and what software was not. Even now, software was not patentable - what had to be patented was a machine, or process. The three types of software patent allowed were:

1. software with "significant post solution activity" (the software program is used to control something external to the software routine, such as curing rubber),
2. software with "pre-computer process activity" (software programs that manipulate numbers representing concrete, real world values, such as electrocardiograph signals and seismic measurements).
3. software claimed with a specific machine or product (such as software which controls the communications line on a machine)

1998

This was the year that all hell broke loose. Although software patents were still technically disallowed, it was clear that they could be easily gained, and people also saw that they could push the boundaries back even further, due to the inconsistencies of previous decisions. The law, as it stood, was untenable.

The case in question was State Street Bank & Trust Co. v. Signature Financial Group, Inc., U.S. Court of Appeals for the Federal Circuit. We can see that the previous delineation of non-statutory objects was being further eroded:

"The Supreme Court has identified three categories of subject matter that are unpatentable, namely 'laws of nature, natural phenomena, and abstract ideas.' Diehr, 450 U.S. at 185. Of particular relevance to this case, the Court has held that mathematical algorithms are not patentable subject matter to the extent that they are merely abstract ideas.
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In Diehr, the Court explained that certain types of mathematical subject matter, standing alone, represent nothing more than abstract ideas until reduced to some type of practical application, i.e., 'a useful, concrete and tangible result.' Alappat , 33 F.3d at 1544, 31 USPQ2d at 1557."

So, mathematical algorithms were in fact patentable, so long as you were using them. They also blew the business method exception out of the water, saying " We take this opportunity to lay this ill-conceived exception to rest". The reasoning behind this was that these limitations were judicially created rather than consitutionally, and from now on, the Court was going to be bound by the rather general wording of the law, and apply the new, modern meanings to 'machine', 'process', etc. Indeed, they summed it up rather nicely:

Indeed, the Supreme Court has acknowledged that Congress intended s.101 to extend to "anything under the sun that is made by man."

So, in 1998, in black-and-white, the Courts acknowledged that patentable matter included everything under the sun. In one fell swoop, not only were software patents clearly patentable matter, but business methods, mathematical formula, everything. The previous worries about being hoodwinked by skilled draftsmen were long forgotton, there was no more loophole: the Courts now clearly stated that anything, and everything, was fair game.