The Patent Statute of the US defines patentable subject matter as ‘any new and useful process, machine, manufacture, or composition of matter’ and any improvements. But patent cannot be granted for laws of nature, natural phenomena, or abstract ideas. In June 2014, the US Supreme Court’s ruling in Alice Corp. v. CLS Bank sent software patents down the rabbit hole. Essentially, the Court ruled that ‘implementing the abstract idea’ on a computer does not make it patentable. To determine whether claims are patent-eligible or not, the Supreme Court gave a two-part test- In step 1, the Court has to determine whether the claims are directed to an abstract idea or not; Step two- If the claims are directed to an abstract idea, then the Court determines whether the claims include elements showing an inventive concept that transforms the idea into a patent-eligible invention. Within two years of the decision, more than 8400 applications got abandoned while 60,000+ applications got rejected due to the decision. The ambiguity and uncertainty still reign for both the patent owners and the defendants, making it difficult to navigate the eligibility issue.

Amidst the rejection of software patents, there have been some decisions where the claims of the patents overcame the 35 U.S.C. § 101 challenge under the Alice Decision, giving us hope that even this tunnel of uncertainty can reach an end.

In, Amdocs (Israel) Ltd. v. Openet Telecom, Inc, the Court while examining the ‘065 Patent which represented ‘a computer program product embodied on a computer-readable storage medium for processing network accounting information’, noted that it would take into consideration the District Court’s claim construction, as well as the patent’s written descriptions. When the case went before the District Court, under step one, the District Court determined that the instant claim was directed to the abstract idea of ‘correlating two network accounting records to enhance the first record’ and under step two, it was found out that claim 1 did not add a sufficient ‘inventive concept’ to confer eligibility. The United States Court of Appeals found out that, claims in an invention which are somewhat facially similar to some other claim will be eligible under Step one- if they are directed to an improvement in computer functionality or recite a sufficiently inventive concept under step two; particularly when the claims solve a technology-based problem, even with conventional, generic components, combined in an unconventional manner. Claim 1 solves a technological problem; it though involved some conventional components but also involved limitations which when considered individually would be ‘something more’ than the performance of ‘well-understood, routine, and conventional activities, previously known to the industry. Thus, to survive the Alice Essentials, the claim’s enhancing limitation necessarily requires that the generic components operate in an unconventional manner in order to achieve an improvement in computer functionality.

Similarly, in the case of Broadcom Corp v. Sony Corp. case, Broadcom (Plaintiffs) alleges that Sony has infringed the Patent. Defendants, Sony moved to dismiss the Patent on the ground that they are directed towards the patent-ineligible subject matter. The Court found that the claims of Patents ‘663 are a continuation of the ‘387 Patent which is directed to an abstract concept under Step one of the Alice Test. Under step one, the Court needs to consider whether a patent’ claim is ‘directed to’ excluded subject matter, such as an abstract idea. However, the concept of an abstract idea does not have a clear definition and therefore the Court needs to compare the claims in issue with claims in previous cases.  Broadcom asserted that the claims in both patents are just a series of steps and not mathematical algorithms. To this, the Court after viewing precedents declared that steps in the ‘387 Patents are described in mathematical formulas and steps in ‘663 are mathematical in nature. In the second step, the Court needs to examine whether the elements of the claim contain an inventive concept sufficient to transform the claimed abstract idea into a patent-eligible application. On a hearing, Sony argued that the Courts must consider only the claims’ language to determine the inventive concept, however, the court relied on the specifications during step two of the Alice analysis, and concluded that the claims do not simply use general computers to perform abstract ideas instead, the mathematical formula attempts to improve the functioning of compressing and decompressing video, images, and signals and therefore, an incentive concept sufficiently transforms the nature of the claims in the ‘387 Patent and in the ‘663 Patent into patent-eligible inventions.[8] Sony had argued that ‘387 and ‘663 Patents ‘simply instruct the practitioner to implement the mathematical binarization algorithm within a feature of the conventional computer, however it misstated the purpose of the invention. The Court finally held that the claims at issue do not simply have a computer to perform a mathematical algorithm but instead the claims at issue use a mathematical algorithm to improve a computer.

Thus to beat the Alice Rejections or not to be ineligible under  §101, it is important to identify ‘adequate technical content’: the technical aspects of the invention, the technical problem solved the invention, any technical improvement or critical computer functionality provided by the invention, which would thereby help bolster the technical aspects of the invention and avoid the invention being characterized as being directed towards an abstract idea and secondly even if the invention involved some conventional components, they are combined in an unconventional way or are ‘something more’ than the conventional activities previously known or sufficiently ‘inventive’. Henceforth, it can be said that the recent court decisions have cleared the dark, murky, clouds of Alice Rejections and have rather thrown a stream of sunlight acting as a ray of hope for software companies. 

Indian Take on Software Patents: Taking the Indian context, the position of a software patent is no different from the UK or European Law. Although it is different from the US Patent Act that provides that anything man-made under the sun is patent-eligible: the Indian Patent Law has specific eligibility provisions inbuilt into the Patent Act itself under Section 3. Section 3 (k) is often criticized for its ambiguous wordings of “computer program per se”. Although the Indian Patent Act does not explicitly disallow software programs, the flexibility of the provision has left scope for interpretation, which has in turn benefitted a lot of companies. Moreover, in 2016, the Indian Patent Office came out with revised guidelines for Examination of Computer-related Inventions (CRIs) wherein, it has been made clear that the Patent Office is averse to software patents subject to the condition that it is not excluded under Section 3(k) of the Patent Act, 1970.