So you code algorithms used in your business and you want to protect them. Your mind goes straight to patenting—since that’s where all the value is, right? You could be wrong.
The Patent Act §101 authorizes utility patents for “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” But the U.S. courts have additionally carved away at the definition of patent-eligibility; “naturally occurring” things, and “laws of nature, natural phenomena, and abstract ideas” may not in themselves be the subject of a patent. While coded algorithms meet the “man-made” patentability requirement, they run the risk of falling into the “Laws of Nature” or “abstract idea” categories—strictly proscribed from patent protection in the infamous 2014 U.S. Supreme Court case, Alice Corp. v. CLS Bank International.
In Alice, the Court explained that mathematical algorithms themselves are akin to a mathematical formula, or law of nature, and therefore cannot be patented. And further, that since computer programs consist of mathematical algorithms, they may not be eligible for patent protection in and of themselves. The court held that the patent claims for the computer system in Alice were not patentable subject matter, because the computer system “merely implemented an abstract idea.” In the aftermath of Alice, it seems patenting software is nearly impossible. Alice, and its resulting U.S. Patent and Trademark (USPTO) Examiner Guidelines for patentable subject matter, provided a patent eligibility hurdle so extreme, that few software inventors continued to apply for patents.
Still bent on a utility patent? There is one other way: the “business method” patent. A 1998 case established that business methods were patentable subject matter. However, since that time, patents granted based on “business method” eligibility have developed a bad rep—since there is no way to research the internal business processes of other businesses, it is basically impossible to say that one business method is “novel,” and thus patentable subject matter. As a result, the America Invents Act (AIA) requires a “transitional post-grant review” for all business method patents. The AIA states that a “covered business method patent” is “a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.” Technological inventions are not defined. All in all, applying for a patent under the “business method” theory seems almost as promising as avoiding the “abstract idea” disqualification. Both are dismal at best. However, there could be a light at the end of the tunnel—the copyright tunnel.
Copyright law provides protection for “original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated either directly or with the aid of a machine or device.” And “works of authorship” include literary, musical, dramatic, choreographic, pictoral, graphic, sculptural, audiovisual, sound, and architectural works. Computer programs are considered “literary works” that are protectable subject matter. Their authors are entitled to copyright protection in both their literal expression (source code or object code), as well as in nonliteral expression, like the program’s structure or organization.
But how do you copyright the structure of a computer program? The Second Circuit adopted a test in the Altai case (also known as the “abstraction-filtration-comparison” test) that breaks down the computer program into different elements and removes those that are non-copyrightable (ideas; functions; external components; and those taken from the public domain) to determine which remaining structural components can be copyrighted. While this test might seem to obliterate hope of copyrighting software one component at a time, not all is lost. The same court more recently took a step back when it clarified that a programmer’s original selection and arrangement of uncopyrightable elements may still be copyrighted despite the Altai test, because components may be viewed as copyrightable in the aggregate.
However, in California and other states within the Ninth Circuit, when a programmer relies on selection and arrangement expression as the basis for his or her computer program structure copyright, the courts deem the copyright a “thin copyright”—or not very strong copyright. When a “thin copyright” holder then attempts to sue for copyright infringement, these courts will only find infringement liability if the infringer’s program is “virtually identical” to the copyright holder’s, rather than the usual, “substantially similar” standard.
For programmers, the best bet seems to be copyright. The 1976 Act expressly protects computer programs, which it defines as “a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result.” In order to protect the fruits of coding labor, software should be copyrighted with the US Copyright Office as soon as possible, and strategically licensed for others’ use.
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