The U.S. Court of Appeals for the Federal Circuit issued an important decision today, strengthening the law related to software patent eligibility under Section 101 of the Patent Act. Software technologies are at the center of our economy and playing a role in helping to transform industries in so many fields, including manufacturing, retail and health care. Recently, the federal courts have been grappling with the issue of which software innovations are eligible for protection under U.S. patent laws in the wake of the Alice v. CLS Bank decision. Today, in McRO (d.b.a. Planet Blue) v. Bandai Namco Games, the court issued a significant decision that gives us useful guidance for determining which software innovations qualify for protection and helping provide greater stability to the U.S. patent system, a foundation for our digital economy.
In short, the ruling today offered guidance in three key ways. First the court made clear that patent claims need to be considered as a whole, offering “We have previously cautioned that courts ‘must be careful to avoid oversimplifying the claims’ by looking at them generally and failing to account for the specific requirements of the claims.”
Second, the court emphasized that claims may be patent eligible if they represent a technological improvement. Per the opinion, “we therefore look to whether the claims in these patents focus on a specific means or method that improves the relevant technology or are instead directed to a result or effect that itself is the abstract idea …”
Third, the court made clear that data processing claims may be eligible even if they produce information rather than a physical product or result. In other words, today’s decision confirmed that there is no requirement of “tangibility.” As stated by the court, “While the result may not be tangible, there is nothing that requires a method “be tied to a machine or transform an article” to be patentable…. The concern underlying the exceptions to § 101 is not tangibility, but preemption.”
Of course, eligibility is only one aspect of patent protection, and whether the invention in this case is actually valid and infringed remains to be determined by lower courts, where important safeguards in the patent law may apply.
Overall, today’s major ruling will provide additional certainty to industries that generate more than $5 trillion in U.S. economic activity and 40 million American jobs.