The Cutting Edge: Computing / Technology / Innovation : INTELLECTUAL PROPERTIES : Appeals Court Ruling Opens Door to Further Software Patents

A federal Circuit Court of Appeals has ruled that patent applications for software should be given the same treatment as other inventions, rekindling a longstanding debate over whether patents will encourage or hinder innovation in the rapidly growing industry.

The July 29 decision in Washington overturned the Office of Patent and Trademark’s rejection of a 1989 patent application for scanning software by developer Kuriappan Alappat. The patent office had ruled that as software, it represented an abstract idea that was not patentable under the law.

The Court of Appeals decision “will make it easier to make computer programs patentable,” said Carl Moy, professor at William Mitchell College of Law in St. Paul, Minn., and a former patent examiner.

“It will force the patent office to have a more upfront discussion about why it is or isn’t willing to grant patents for software.”

Larger, established software companies such as Microsoft and Sun Microsystems have been strong backers of the use of patents to protect software ideas, but many smaller firms worry that the granting of further patents will amount to a tax on the industry in the form of litigation expenses.

The July 29 ruling helped clarify patent policy muddled by previous court decisions and Patent and Trademark Office policies that tended to discriminate against software products. The opinion holds particular force because it was made en banc , by all 11 judges rather than the usual panel of three.

Software companies have used copyright laws to protect intellectual property. Although software has been patentable since a 1980 Supreme Court ruling, patent office policy in effect has excluded many software applications.

Critics say patent examiners seeking easy ways to reject patents have tended to conclude that a particular piece of software does not fit statutory requirements of being a process, manufacture, machine or composition of matter.

The court decided that software becomes a manufactured product when it is used in a computer because “a general-purpose computer in effect becomes a special-purpose computer once it is programmed to perform particular functions pursuant to instructions from program software.”

Some analysts say the clarified policy will help reward innovation.

Lee Hollaar, a computer sciences professor at the University of Utah and a patent agent, said the decision will make it more difficult for patent examiners to dismiss whole classes of applications and force them to examine each particular innovation offered.

“This decision helps people who are doing truly innovative things,” Hollaar said. Since the patent office has been ordered to examine the structure of the innovation being offered rather than simply the new function offered, Hollaar said, examiners would also be less likely to award overly broad patents.

The patent office set off a firestorm earlier this year when it granted Compton’s New Media of Carlsbad, Calif., a broad-based patent that seemed to cover virtually every product offered in the booming multimedia business.

Others worry that software companies will have to spend more money and time on legal battles at the expense of innovative projects.

“The software industry progressed more rapidly than other industries in an era when software wasn’t patentable,” said Douglas Brotz, principal scientist at Adobe Systems Inc., a Silicon Valley software company. “I think increased use of patents will be a drag, not a spur. Patents are a tremendous burden on software companies.”

Many lawyers share Brotz’s concerns. William Rooklidge, a Newport Beach attorney, said he expects to have plenty of work litigating on both sides of the issue as a result of the new ruling. “You are going to have more software-related patents, more challenges to those patents and more people defending themselves from others’ patents,” he said.

The patent office said after the ruling that it was studying the decision and was not yet in a position to comment on it. Under new Commissioner Bruce Lehman, it has already begun to respond to past criticisms of its treatment of software patent applications.

The office held hearings earlier this year to collect views on the application of patents in the software industry. Lehman also recently hired nine computer scientists to help examiners make decisions with respect to software patents.