Software is a work of authorship and thus is automatically protected by copyright law as soon as it’s fixed in a tangible medium of expression – for example, when it’s saved on a hard drive or in the cloud. However, automatic protection is quite limited.
In order to sue someone for copyright infringement, you have to have registered the copyright with the US Copyright Office. This is a relatively simple and cheap process (it costs around $35-55).
Also, if you register the copyright before infringement or within three months of the date the software is published, you may be able to get statutory damages of up to $150,000 per act of infringement, plus recover your attorney’s fees and costs of bringing the lawsuit to enforce your rights.
However, copyright covers only specific sequences of code. It doesn’t protect you from competitors accomplishing the same thing using different lines of code. To do that, you need a software patent.
The challenge with trying to get a software patent is that, as the US Supreme Court held in the 2014 case of Alice Corp. v CLS Bank International, you can’t just take an abstract idea (like using a financial intermediary to create trust in transactions) and add “do it on a computer” to make it patentable.
To be patentable, under Alice, a claimed invention must be more than an abstract idea, or it must somehow “transform” the abstract idea into a patent-eligible application. This is less than clear, and courts have been struggling to apply Alice to software-based inventions ever since the case was decided.
In general, if a patent application is for something that improves a computer’s functionality – for example, speeds up the computer or makes it more secure — then it’s not merely an “abstract idea” and it’s theoretically patent-eligible.
However, if the application is for a generic process that’s merely implemented by a computer, then the claimed invention isn’t patent-eligible.
As Forbes notes,
Clearly, we need a physical processor to execute the software, but beyond that, there are some software inventions that clearly are patentable without the inclusion of other external hardware. For example, an encryption program that receives a software key and reversibly encodes data in a way that allows the data to be decrypted using a separate software key is certainly patentable. Audio and video compression algorithms like MP3 have long been patentable, as have data processing techniques for removing noise from scratchy signals. Autotune processing techniques that let singers of living room karaoke sound like Andrea Bocelli — well, maybe almost like Bocelli — are patentable.
Software may also be patentable if it improves a technical process.
Where a specific invention falls on the patentable-unpatentable spectrum is often unclear and the subject of court battles that can drag on for years. Who wins in such a case may depend at least as much on how well the software patent application is drafted as on the merits of the invention.
Is it worthwhile to seek a software patent? There are a number of pros and cons to consider.
It usually takes two to three years for a patent to be granted (if it’s granted at all). Software evolves so quickly that by the time the patent is issued the software may be outdated. Or the software may have evolved so much by the time the patent is issued that the patent may not cover the current version.
Also, as noted, above, copyright protection for software may be a more cost-effective alternative to a patent.
On the other hand, having a patent (or even a pending patent application) can make a startup more attractive to investors and increase a company’s value by suggesting that it has a “unique” intellectual property asset.
The need to design around your patent can also slow down your competitors and make them expend additional resources, putting them at a competitive disadvantage. Your application can also constitute “prior art” that prevents a competitor from getting a patent.
A patent that can be licensed – whether or not you use it in your own business – can produce a steady revenue stream.
In summary, a software patent is a business asset with an uncertain value, and you should carefully consider the costs and benefits before investing in the software patent application process.
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