Vol. 10, No. 5, Pg. 32. Software Patent Protection: State Street Puts Businesses on Easy Street.

• Author: By Mark C. Dukes, Frances Barnes Elliott and Judy Jareeki-Black

South Carolina Lawyer

1999.

Vol. 10, No. 5, Pg. 32.

Software Patent Protection: State Street Puts Businesses on Easy Street

32Software Patent Protection: State Street Puts Businesses on Easy StreetBy Mark C. Dukes, Frances Barnes Elliott and Judy Jareeki-BlackEach form of intellectual property protection available for computer-related inventions-patent, copyright, trade secret-has distinct advantages and disadvantages that serve as parameters for determining which avenue to pursue in a given circumstance.

Patent protection is the most extensive form of intellectual property protection available for software applications. A patent supplies protection for the idea or invention underlying a software application and excludes others from making, using or selling the invention covered by the patent.

34Significantly, it precludes a competitor from using the technology even if the competitor developed the technology independently and without knowledge of the patent.

However, a patent is also the most difficult form of protection to obtain. In addition to covering patentable subject matter, an invention must be novel and non-obvious, a determination that is made by the Patent Office based on the available prior art in a particular field of technology.

Copyright protection is easier to obtain than patent protection but is far less extensive. Registration is comparatively quick and simple. The work must only consist of copyrightable material and satisfy a minimum level of creativity. The disadvantages of copyright lie in its scope of protection. A copyright owner is granted certain exclusive rights in the work, such as the right to copy and distribute it or create derivative works. The protection extends only to the expression of an idea as it is contained in the work itself. It cannot extend to an idea or process.

Consequently, the law of copyright as it applies to software is infused with some uncertainty as to what elements of a software application are indeed protectable. Copyright also does not protect the owner against independent development as a patent does.

The law of trade secrets can give broad scope of protection to computer software. It can protect an idea or process even if it does not rise to the level of inventiveness required by patent law. Trade secret protection does not require the filing of any public document.

The primary disadvantage to trade secret protection is the absolute necessity of maintaining the confidentiality of the protected information. This is necessary because enforcement of a trade secret requires a misappropriation of the confidential information. Software owners sometimes incur substantial costs in maintaining secrecy.

Inventors, and others with an interest in computer-related inventions, frequently must address what type of intellectual property protection is most appropriate for developed software. Although many maintain patent law provides the greatest breadth of such protection, in the past the question of patentability has often been narrowly construed when applied to computer programs. Writing for the dissent in Diamond v. Diehr, 450 U.S. 175 (1981), Justice Stevens noted that "prior to 1968, well-established principles of patent law probably would have prevented the issuance of a valid patent on almost any conceivable computer program."

In the following decades, burgeoning technological advances in the computer industry have been accompanied by a slow expansion in the traditional thinking regarding the patentability of computer programs. Following a line of reasoning first articulated by the U.S. Supreme Court in Gottschalk v. Benson, 409 U.S. 63 (1972), patentability of the mathematical basis on which a computer software program rests appeared to depend on: whether the patent would wholly pre-empt the mathematical formula and whether the mathematical calculations were accompanied by some physical transformation of the data.

Recently, however, the U.S. Court of Appeals for the Federal Circuit effectively held that any computer-related invention is directed to patentable subject matter provided "it produces a 'useful, concrete and tangible result.'" State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998).

In the wake of this potentially landmark decision, clients and their lawyers have new considerations regarding what form of intellectual property protection is most appropriate for their software. This article offers a brief overview of the development of case law as it pertains to the patentability of software inventions and suggests some factors to consider when deciding what type of intellectual property protection is most advantageous.

COMPUTER-RELATED INVENTIONS AS PATENTABLE SUBJECT MATTER

Early Decisions. The Constitution grants Congress broad power to legislate to "promote the Progress of Science and useful Arts." U.S. Constitution, article I, § 8. The patent laws help achieve this goal by offering inventors exclusive rights for a limited period as an...