The Great Digital Land Grab
Late 2019 USPTO patent eligibility changes open the flood-gates for software patents
Abstract Ideas have always been ineligible patent subject matter
Since the establishment of the US Patent and Trademark Office, the idea of Judicial Exception has been instrumental in determining a patent’s eligibility. Judicial Exception excludes the following as patentable subject matter:
- Laws of Nature
- Natural Phenomenon (Product of Nature)
- Abstract Ideas (Mathematical Concepts, Methods of Organizing Human Activity or Mental Processes)
Software development is the creation and manipulation of Abstract Ideas — Mathematical Concepts, Methods of Organizing Human Activity or Mental Processes
Software development is the creation and deliberate manipulations of the connections between Abstractions. The software patent process, until late 2019, was a game of obfuscating Abstract Ideas into something, anything, perceived by the examiner as more admissible. Furthermore, the exact definition of an Abstract Idea has been subject to change via:
- Court rulings on different patent cases
- Different patent examiners taking conflicting positions
And patent examiners are NOT incentivized to grant patent applications, they are incentivized to deny them!
Before 2019, declaring a patents’ claims as Abstract Ideas created an easy route for patent examiners to dismiss software patents as ineligible. Further, no remediation process was available for the patent applicant. The remaining claims, if any, needed to amount to significantly more than the Judicial Exception. For many software patent applications, all the included claims would be labelled by the patent examiner as Abstract Ideas effectively killing the entirety of the patent application.
Now Abstract Ideas ARE allowed IF Additional Elements create a Practical Application.
The new guidance adds multiple pathways around the Judicial Exceptions, nearly doubling the pathways to eligibility. See D and E pathways in the below diagram:
Unprecedented IP landscape expansion
After these changes took effect at the end of 2019, my patent attorneys successfully resurrected dozens of software patents that were near abandonment. This includes one of my own patents and several of my clients’ patents, all of which were blocked as Abstract Ideas. Late last year, I understood the magnitude of this change and successfully doubled down on my invention.
Multiple patent blogs summarize this change in similar language:
As evident from this chart, the new guidance changes the incentive structure for Examiners. Eligibility is favored, with multiple off-ramps to this result. In contrast, to find ineligibility an Examiner faces a singular and difficult gauntlet.
If applied as intended, this new guidance will generally result in more efficient (or “compact”) patent prosecution and lead to more consistent and predictable outcomes. For those seeking patents, this is a welcome clarification and improvement.
If followed faithfully by Examiners, this new guidance should mark a drastic course correction for how patents — and particularly software patents — are examined.[4]
If your organization does NOT have an intellectual property process, two outcomes are likely:
1. Inventing patentable ideas but giving those inventions away by launching new products or product features without evaluating patentability. A year after release, patentable ideas automatically become public domain.
2. Not inventing patentable ideas, which means the organization is not innovating but rather emulating its competitors. This treading water does not drive exponential growth, create strategic competitive advantages or master emerging digital business models. Emulation is not an effective low-risk substitute for real innovation. It cannot result in the exclusive ownership of a set of owned innovations driving revenue growth from the monopolistic capture of enduring digital business models.
Because patents are the exclusive Grant of Monopoly for the Use of an Innovation, an essential success metric for the most ambitious type of Digital Transformation is a growing valuable intellectual property software patent portfolio. Startup Investors place a high premium on a sound business plan backed by broad and solid patents because they appreciate the defensive, and offensive advantages as well as the valuation multiplying effects of owning a legal monopoly.
First mover advantages will be immense
Purchasable technology is almost always also a technology commodity as any competitor can make the same non-exclusive investment and create the same non-exclusive outcomes. Therefore acquired non-exclusive technology will rarely function as a sustainable strategic competitive advantage because it cannot be owned as a monopolistic intellectual asset. The creation of sustainable strategic competitive advantages requires owning unique and valuable intellectual property that cannot be purchased via non-exclusive licenses like purchased software.
Organizations with a systemic plan and process for intellectual property acquisition will out-innovation their more adhoc unfocused competitors. They will out-grow competitors allowing them to invest more money innovating in a virtuous cycle, resulting in an ownership race for industry dominance.
Many companies successfully avoided exploring the patent landscape — This is no longer possible
Something as simple as how you ask customer questions and use this data to personalize your offerings or products for your industry, if you discover a new and better way, is now patentable. Something as simple as how you use data to make decisions, if you discover a new and better way, is now patentable. Every software application you create is possibly patentable, potentially many patents because all the Abstractions of Ideas contained in the code are now patentable. Entirely new markets can be owned, if you invent new ways of thinking about and solving an important problem.
Prediction: By 2030 we will experience 2x to 4x increase of filed and enforceable patents
- Abstract Ideas are now patentable
- An entirely new class of software patents is now available — it’s a “Great Digital Land Grab”
- The patent process is more predictable allowing more reliable outcomes that are less risky to operationalize
By allowing Abstract Ideas, US companies, universities, and inventors can now wrap existing software patents leaping ahead of others with an existing lead. This applies to you and your industry along with your competitors both domestic and international.
Please contact me. I’m passionate about discussing how to teach your teams to play with ideas and operationalize an intellectual property strategy?
Part 1 of 2 of a Blog Series on Innovation and Intellectual Property:
Alan Rodriguez is an accomplished digital leader, startup founder, and patent author with a passion for innovation, strategy and emergent digital business models. He’s available to lead a tailored IP strategy for a few select organizations.
214 476 7448
References:
1. GB 1039141
2. Beresford, K (2000). Patenting Software under the European Patent Convention. London: Sweet & Maxwell. p. 4.
Kretschmer, Martin (4 July 2003). “Software as Text and Machine: The Legal Capture of Digital Innovation”. Journal of Information Law & Technology (JILT). Centre for Intellectual Property Policy and Management, Bournemouth University.
4. https://www.knobbe.com/news/2019/01/new-101-guidance-uspto-%E2%80%93-what-does-it-change
