The pendulum has slightly adjusted to the center. It has become easier to obtain software patents and a little harder to challenge the validity of such patents in the U.S. as the result of a series of favorable decisions by the Court of Appeals for the Federal Circuit (CAFC) and resulting changes in policy at the U.S. Patent and Trademark Office (USPTO) in 2016. Software patent applicants and owners should expect to see some improvement to the valuations of their portfolios as a result. Hopefully, these signs will continue into 2017.
This recent adjustment from the challenges faced by software patent owners after the Supreme Court’s Alice decision is most clearly illustrated by the memo that the USPTO wrote to all patent Examiners in November, requiring Examiners not to reject patents for being directed to “abstract ideas” unless strict standards established by recent CAFC decisions are satisfied. Notably those decisions reversed the invalidation of patent claims covering pure software inventions implemented on general-purpose computers without any new hardware. These decisions clarify that Examiners and district courts should not reject or invalidate software patent claims merely because they are directed to an algorithm implemented on a general-purpose computer.
I am already seeing the USPTO memo have a positive impact on the patent applications that I prosecute for my clients. Alice-based rejections have become less common and more easily overcome than any time since Alice was decided in mid-2014. This is resulting in faster and less expensive prosecution, and higher rates of success.
We should expect the CAFC decisions to reduce the rate at which federal district courts invalidate patents in the coming months. This will have a positive effect on patent portfolio valuations.
Robert Plotkin has specialized in software patent prosecution for over two decades, and is a recognized leader in obtaining high-value patents for clients worldwide.
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