Business Software Patents: Everything You Need to Know

Business software patents are distributed to protect the development of new computer
software designed to improve performance for businesses. 3 min read

What Is a Software Patent?

Business software patents are distributed to protect the development of new computer
software designed to improve performance for businesses. 
Intellectual property (IP) is a hotly contested subject in the realm of technology. Because
computer software can be such an abstract discipline, software patents are not legally
defined. 
The method of protecting IP differs around the world when it comes to software patents in
particular. In the United States, patents are not granted for protection of ideas that are
considered to be too abstract. Many patent applications have been denied for this reason. 
Restrictions for patents do not cover any software inventions in Europe. 
The patent and copyright processes are similar. However, they cover certain aspects
of intellectual property regarding software. For business software to be protected under a
copyright, it must be written out or "expressed." Patents, however, can cover software
developments in the ideation stage, or procedures and methods. Business software patents
tend to be more expensive and complicated than copyrights. 
For software to qualify for coverage under a patent, it must:

 Cover concrete subject matter (not too abstract)

 Be applicable to the tech industry
 Be completely original (a patent application must argue for originality when it is an
innovation of a pre-existing software)
 Meet the formal standards set for patent applications

Things to keep in mind when applying for a business software patent:

 Protection of abstract ideas, even those with a commercial value, have differing legal
methods depending on the patent's location. 
 If too many software innovations are patented, this could cause developments in the
realm of technology to come to a crawl as everything gets bogged down with legal
issues.
 The categories of what is and is not patentable when it comes to software differ
throughout the world.
 Software innovation can get legally and technically complicated. 

How Software Patents Work

Software patents in the United States protect computer processes in the form of software. All
inventions must be original, inventive, and cannot be obvious innovations in order to be
patentable, and software is no exception. 
Business software patents have to be tied to a machine to be eligible for protection. This is to
ensure that individuals do not attempt to patent their methods of conducting business, or
processes that are not linked to anything concrete. 
Inventions or innovations in the software world are meant to provide a new way of
functionality within the technological process. Individuals applying for a business software
patent must have a thorough understanding of how their innovation will work and affect the
overall system. Basically, you need a big-picture view as well as a detailed understanding. 
The application process for a software patent should be sure to cover all the bases for full
protection. Ask yourself these questions when mapping out your IP coverage needs:
 What is the overarching vision of this innovation?
 What do I hope to accomplish with this new process?
 How will this affect the software as a whole?
 How will the innovation affect specific aspects of the software and processes?
When you are sure that everything from the big idea of the invention down to its unique
features and processes are covered, you will be able to secure the best protection for your IP. 
Inventors should always begin by performing a patent search to be sure they can showcase
what makes their invention original and unique during the application process. 

Patenting Business Methods

Once business methods were allowed to be protected under patent laws, an influx of patent
applications hit the United States Patent and Trademark Office.
This overwhelming number of applications was due to the fact that the United States was the
only country to allow such patents, and because the invention of an innovative business
process is actually fairly easy to conceptualize.
Since around 2002, obtaining a patent for a business method has been difficult. The patent
laws continue to change regarding whether business methods can be protected.
Currently, if an individual wants to patent his or her business method, the person must make
sure it can produce practical results that can be measured.
Business software patents can be complicated to apply for, but a patent attorney will help
ensure your IP is properly protected. 
If you need help with a business software patent, you can post your legal
need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its
site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and
average 14 years of legal experience, including work with or on behalf of companies like
Google, Stripe, and Twilio.

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Definition - What does Software Patent mean?

A software patent is a patent that is provided to enhance computer performance by means of a
computer application.
There is no legal or conclusive definition for a software patent. This and the topic of related
intellectual property (IP) protection rights have been intensely debated at all levels in the tech
world. Different countries have different restrictions on patenting software innovations. For
example, U.S. patent law does not permit patents that involve abstract ideas. This restriction
has been used to deny software patents. In the European Union (EU), software applications,
as a whole, are excluded from patent restrictions.

Techopedia explains Software Patent

Although similar in approach, the copyrighting and patenting of software protect different IP
aspects. Copyright protection is only provided to expressions and exempt to ideas, procedures
or operational/computing methods, whereas patents may cover ideas, procedures and
operational methods. However, a software patent's cost and enforcement may be higher,
depending on the complexity of the patent's requirements. Again, like other patent categories,
software patents also need to be applied according to country or region.
The following criteria apply to patent protection:
1. The subject matter should be of patentable category.
2. The innovation should be in the nature of industrial application.
3. The patentable idea must be new and not something in existence. The change
claimed between the existing item and innovation is essential and significant for
consideration.
4. The disclosure of the innovation must meet formal patent standards.
Some concerns for a software patent are:
1. A software patent may involve the protection of abstract ideas that may have
commercial value. The legal boundaries used to define an abstract idea are not well
defined and may differ according to region and law.
2. Allowing the patenting of software may lead to reduced innovation in the
technology world, as there may be dependencies and interdependencies for different
software and discourage the same. Determining these is easy, even for software
application developers or designers.
3. Patentable and non-patentable software does not have a globally recognized
separation.
4. There may be legal and technical complications related to understanding software
innovation and associated technical requirements.
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Patenting Software

Modern society relies heavily on computer technology.  Without software, a computer cannot
operate.  Software and hardware work in tandem in today’s information society.  So it is no
wonder that intellectual property protection of software is crucial not only for the software
industry, but for other businesses as well.

The intellectual property protection of computer software has been highly debated at the
national and international level.  For example, in the European Union (EU), a draft Directive
on the Patentability of Computer-implemented Inventions has been discussed in order to
harmonize the interpretation of the national patentability requirements for computer software-
related inventions, including the business methods carried out via the computer.  These
discussions show divergent views among stakeholders in Europe.  Furthermore, the Internet
raises complex issues regarding the enforcement of patents, as patent protection is provided
on a country-by-country basis, and the patent law of each country only takes effect within its
own borders.

This article does not attempt to clarify all the questions and uncertainties surrounding
software patents but rather provide five tips or suggestions which should be kept in mind
when considering patent protection of software-related inventions.

TIP 1: Do you really need a patent for your software-related invention? Think twice
before preparing a patent application.
In many countries, computer programs, whether in source or object code, are protected under
copyright. The major advantage of copyright protection lies in its simplicity.  Copyright
protection does not depend on any formalities such as registration or the deposit of copies in
the 151 countries party to the Berne Convention for the Protection of Literary and Artistic
Works.  This means that international copyright protection is automatic - it begins as soon as
a work is created.  Also, a copyright owner enjoys a relatively long period of protection,
which lasts, in general, for the life of the author plus 50 or, in certain countries, 70 years after
the author’s death.

In contrast, a patent must be applied for, in principle, in each country in which you seek
patent protection.  In order to enjoy patent protection, an application for a patent shall comply
with both formal and substantive requirements, and a patented invention shall be disclosed to
the public. These requirements can be legally and technically complex, and their compliance
often requires a legal expert’s assistance.  Compared with copyright protection, the term of
protection is much shorter, namely, in general, 20 years from the filing date of the
application.

Then why do many people seek to patent their software-related inventions?  The answers is
manifold.  But one of the strongest reasons is that copyright protection extends only to
expressions, and not to ideas, procedures, methods of operation or mathematical concepts as
such.  Although copyright protects the “literal expression” of computer programs, it does not
protect the “ideas” underlying the computer program, which often have considerable
commercial value.

However, due to the complex requirements for the grant of patents, the costs for obtaining
and enforcing a patent may be costly.  Unless you have important financial resources, it may
be worth considering whether patenting your software-related innovation is the best way to
protect your product.  The possibility and feasibility of using other types of intellectual
property, such as trademarks, industrial designs and trade secret protection, may also be
considered.

TIP 2: What do you wish to protect from your competitors? Identify the core part of
your innovation.
Software may be incorporated in a computer or an apparatus, such as a household appliance
or a car.  But often, such software is created, reproduced and distributed on media (such as
diskettes, CD-ROMs or an online network) which are separate from the hardware.  Software
may provide technical functions, such as controlling a machine or regulating the room
temperature. It may be used to monitor communication network systems or provide interfaces
between a computer and a human being.  Or, it may be used to process scientific, financial,
economic or social data in order to, for example, explore a new scientific theory or seek the
highest possible return on an investment.

Depending on how the software is used together with the hardware, what you wish to protect
from your competitor may differ.  The core part of your software-related innovation may lie
in an apparatus, a system, an algorithm, a method, a network, the processing of data or the
software itself.  Such considerations may help you assess the possibilities to obtain a patent
for your innovation as described in TIP 3 below.

TIP 3: Is your innovation patentable? Not all types of software-related innovation can
enjoy patent protection.
To be eligible for patent protection, an invention must meet several criteria. Among those,
five are most significant in determining patentability: (i) the invention must consist of
patentable subject matter; (ii) the invention must be capable of industrial application (or, in
certain countries, be useful); (iii) it must be new (novel); (iv) it must involve an inventive
step (be non-obvious); and (v) the disclosure of the invention in the patent application must
meet certain formal and substantive standards.  Since patent law is applicable to inventions in
any field of technology without discrimination, to be patentable, software-related inventions
and business method-related inventions must also comply with those requirements.

In connection with software-related innovation, particular attention should be paid to the

requirements concerning patentable subject matter and inventive step (non-obviousness).
Firstly, a patent is granted for an “invention”, which may be described, in general, as a
solution to a technical problem.  So far, there is no international definition of “invention”, and
indeed, each national law would give you a different answer to the question as to which
subject matter falls under the term patentable “invention”. In many countries, “inventions”
are required to have a technical character, or to provide a solution using laws of nature.  Thus,
mere economic theories, methods of doing business, mathematical methods or computer
programs as such are not patentable “inventions”.  Since this requirement varies from one
country to another, as explained further in TIP 4, you should pay special attention as to
whether your software-related innovation is covered by patentable subject matter under the
relevant patent law.
Secondly, in order to obtain a patent, an invention must not be obvious to a person skilled in
the art having regard to the prior art.  It is not enough that the claimed invention is new, i. e.,
that it is different from what exists in the state of the art.  But the difference between the
claimed invention and the existing state of the art should be significant and essential to the
invention. Therefore, it is most likely that it will not be possible to obtain a patent for a
software-related innovation that simply replaces existing technical and physical solutions
with the same solutions using software and a computer, insofar as such a replacement would
be obvious to an average engineer in the relevant technical field.

Do these explanations sound complex?  Indeed, it is legally and technically complicated to

meet all the necessary requirements to obtain a patent.  That is why it is recommended that
you contact an intellectual property specialist who is familiar with both technical and legal
matters, as further described in TIP 5.

TIP 4: Do you need to protect your innovation abroad? Patentability requirements are
not always the same in each country.
If you wish to protect your innovation abroad, in principle, you need to obtain a patent in
each country in which you are interested in accordance with the law of that country.  A patent
that is granted in country X, can be enforced only in country X, and it is not possible to stop
your competitors using your invention in other countries.  In some regions, a regional patent
office, for example, the European Patent Office, accepts regional patent applications, or
grants patents, which have the same effect as applications filed, or patents granted, in the
member states of that region.  The major difficulty that you may encounter when seeking a
patent abroad is that national/regional laws and practices differ from one country/region to
another.

One example is the requirement concerning patentable subject matter.  In Europe, the
European Patent Convention (EPC) expressly excludes “computer program per se” and
“methods of doing business per se” from the patentable subject matter. Although there is no
definition of the term “invention” in the EPC, it is generally understood that inventions under
the patent law should have a technical character.  For example, methods for controlling an
industrial process, processing of data representing physical entities (temperature, size, shape
etc.) and the internal functions of the computer itself are considered to have a technical
character. A computer system used in the field of finance may have a technical character if
the process is based on technical considerations relating to how a computer works (for
example, improvement of security), rather than just on the consideration as to how the
financial system works.
On the other hand, in the United States of America (USA), there is no specific exclusion of
software or business methods from patentable subject matter.  The law states that the subject
matter, to be patentable, must be a useful process, machine, manufacture or composition of
matter. According to the US Supreme Court , the Congress intended the statutory patentable
subject matter to include “anything under the sun made by man,” but the laws of nature,
natural phenomena and abstract ideas are three specific areas which are not patentable. For
example, the Court of Appeals for the Federal Circuit (CAFC) found that a software
invention (mathematical algorithm) to create a smooth display of numeric data on an
oscilloscope was patentable subject matter , because the claimed invention as a whole was a
practical application of an abstract idea providing a “useful, concrete and tangible result.”
Therefore, it may be that certain software-related innovations are considered as patentable
subject matter in the USA, while the same innovations might fall outside of the scope of
patentable subject matter in Europe or Japan.

In order to facilitate the filing of patent applications internationally, the Patent Cooperation
Treaty (PCT) provides an international filing system, under which an applicant may file a
single international patent application having the same effect as national applications filed in
each Contracting State of the PCT.  However, under the PCT system, while the filing
procedure is a common one, it is still each single State that grants a patent for its territory in
respect of the claimed invention contained in the international application.  Nevertheless, the
PCT system simplifies the procedure and cuts down the costs of obtaining patents abroad.
Further information concerning the PCT, including fees, can be found on the WIPO web
site: http://www.wipo.int/pct/en/index.html.
TIP 5: Consult an intellectual property expert who is familiar with the relevant national
law and practice.
To come up with a good invention is one thing, to draft a good patent application is another. 
It is very important to draft a good patent application from the start, because once it is filed,
the possibilities of amending it are rather limited.  In particular, drafting “claims” in the
application is crucial, as the claims define the subject matter for which the applicant seeks
patent protection.  Once patented, the exclusive rights conferred by a patent can be enforced
to the extent the invention is defined in the claims. This is why, unless you are familiar with
both technology and intellectual property law, it is advisable to consult an intellectual
property expert to draft a patent application that meets the requirements under the patent law
of the country concerned.

In particular, with respect to software-related innovation, appropriately drafted claims may

avoid the refusal of the patent application.  For example, in some countries, claims defining a
computer program itself or a computer program embodied on a machine-readable medium
(such as diskettes or CD-ROMs) are accepted.  This is due to the fact that software products
are often marketed in the form of computer readable media or directly over the Internet,
separately from the computer hardware.  In order to prevent the unauthorized
commercialization of such software products, certain countries allow to claim the software
itself or a machine-readable medium storing the software that performs the claimed functions.
In other countries, however, such claims are not accepted.  It is in those countries that the
claims need to be drafted carefully, e.g. in the form of an apparatus, a process or a system that
encompasses the functional ideas behind the software, but that still covers the essential part
of the invention.

In addition to the drafting of a patent application, there are a number of formal and
substantive requirements that are better dealt with by intellectual property specialists. 
Although a specialist obviously has his price, the benefits you get through professional help
in seeking patent protection might be well worth it.  Indeed, a simple mistake may, in certain
cases, lead to the irreversible loss of the right to obtain a patent, and consequently, put your
competitors in a position to free-ride on your invention.