The Evolving Paradigm of Software Patentability
(or, the Printed Matter Doctrine at the PTO)

By David Suhl
Suffolk Law Class ‘97
Digital Equipment Corp.


TABLE OF AUTHORITIES

In re Abele, 684 F.2d 902 (CCPA 1982)
In re Alappat, 33 F.3d 1526 (CAFC 1995)
Arrhythmia Research Technology, Inc. v. Corazonix Corp, 958 F.2d 1053 CAFC 1992)
In re Beauregard, 53 F.3d 1583 (CAFC 1995)
In re Bernhart, 417 F.2d 1395 (CCPA 1969)
Cincinnati Traction Co. v. Pope, 210 F.443 (1913)
Diamond v. Chakrabarty, 447 U.S. 303 (1980)
Diamond v. Diehr, 450 U.S. 175 (1981)
In re Dixon, 44 F.2d 881 (CCPA 1930)
Flood v. Coe, 31 F.Supp. 348 (D.C. 1940)
Application of Freeman, 573 F.2d 1237 (CCPA 1978)
In re Gulack, 703 F.2d 1381 (CAFC 1983)
In re Jones, 373 F.2d 1007 (CCPA 1967)
In re Lowry, 32 F.3d 1579 (CAFC 1994)
In re Russell 48 F.2d 668 (CCPA 1931)
In re Schrader, 22 F.3d 290 (CAFC 1994)
In re Trovato, 42 F.3d 1376 (CAFC 1995)
Application of Walter, 618 F.2d 758 (CCPA 1980)
In re Warmerdam, 33 F.3d 1354 (CAFC 1994)



TABLE OF CONTENTS


Introduction

The US Patent and Trademark Office controls the patentability of software inventions, otherwise known as computer implemented inventions. Many companies and individuals who have expended a great deal of inventive time and effort in the development of software inventions would like to have their investments protected by means of a patent. The history of the US courts in regard to the patentability of software inventions has undergone a great number of changes over the years. The fate in court of a computer implemented invention has depended in large part on the interpretation of the courts of the application of what is known as the Printed Matter Docrine.

What is the Printed Matter Doctrine? The Corpus Juris Secundum, Vol. 69, page 178 states "Printed Matter, or the mere arrangement of printed matter, is not patentable, but patentability may reside in some physical structure of printed matter". In other words, simply adding words to a previously existing object does not create a novel and patentable new object. This seems to be a relatively obvious result and the question arises as to why anyone would have a problem with this rule.

The problem that the Printed Matter Doctrine causes is in the field of computer implemented inventions, i.e., software. People who invest a great deal of time and money in creating a useful and novel method of performing a particular function on a computer would like to have their investment protected in the same way that any other inventor of a useful and novel manufacture is protected. Unfortunately, the Printed Matter Doctrine has been used by the courts and the PTO to make software unpatentable subject matter. The analogy that the courts drew was that since software is just words written on some medium (i.e., usually something other than paper) that therefore software was no more protectable than words written on a piece of glass.


The Printed Matter Doctrine

The Printed Matter Doctrine is a judicially created doctrine that holds that an invention consisting of "The mere arrangement of printed matter on a sheet or sheets of paper, in book form or otherwise, does not constitute "any new and useful art, machine, manufacture, or composition of matter," or "any new and useful improvements thereof," as provided in section 4886 of the Revised Statutes, 35 USCA 31". In re Russell, 48 F.2d 668 (CCPA 1931). Also see In re Dixon, 44 F.2d 881 (CCPA 1930).

What is the basis for this rule? A review of the patent law, 35 U.S.C. §1011, shows that the law allows the patenting of "an article of manufacture". Clearly, an object containing printed matter satisfies this definition of a patentable manufacture so long as the object of manufacture also meets the additional patentability requirements of the law, such as novelty, 35 U.S.C. §1022, and non-obviousness, 35 U.S.C. §1033, as well as being fully disclosed, 35 U.S.C. §1124. Thus it would appear that the basic patent law, 35 U.S.C., would allow printed matter.

However, it has been held in Diamond v. Diehr, 450 U.S. 175 (1981) and other cases that "excluded from such patent protection are laws of nature, natural phenomena, and abstract ideas". Printed matter, since it does not interact with the 'real' world of machines, processes and manufactures, can be considered to be an abstract idea, and therefore not patentable subject matter.


In the Beginning - The Early Cases

Some early case law did support the patentable subject matter of printed materials. See Cincinnati Traction Co. v. Pope, 210 F.443 (6th Cir. 1913). In Cincinnati the court ruled that "transfer tickets for use by street railway" companies involved patentable subject matter. Here a novel design for time limit transfer tickets for use by street railways included limitations directed to printed text consisting of "conventional indications" and instructions for use of the tickets. The court held the ticket design patentable, finding that the claimed invention involved the physical structure of the ticket, and that the presence of printed matter such as "conventional indications" and legends did not rob the structure of patentability.

Thus printed material were thought to be patentable subject matter at that time, but later cases changed the view of the courts. A possible reason for the change in policy eliminating mere printed matter as patentable subject matter are some of the 'inventions' that were sought to be patented. Many of these 'inventions' do not intuitively meet most peoples requirements for inventiveness, and the courts may have been searching for a way to eliminate obvious cases of abuse.

The Printed Matter Doctrine came into its current form in In re Russell, 48 F.2d 668 (CCPA 1931). Russell is about a method of making names easier to look up in phone directories. The method consisted of arranging the names in both alphabetical and phonetical listings, with a cross reference. This invention clearly seems to lack something of the significance that the writers of the Constitution probably intended to protect and promote. The court said that "the mere arrangement of printed matter on a sheet or sheets of paper, in book form or otherwise, does not constitute a manufacture" Russell at 669. Therefore, since it was not a 'manufacture', the invention did not fall within one of the categories of patentable subject matter defined in 35 U.S.C. §101 and was unpatentable subject matter.

Russell bases its findings in part on cases such as In re Dixon, 44 F.2d 881 (CCPA 1930). In Dixon a lawyer's agreement form which contained a lawyer fee clause was found to not be patentable subject matter. Again not the sort of significant advance in the public good and welfare that the founders felt was important enough to grant a limited time monopoly to.

Further cases on this topic from the period around the middle of this century include Kieferle v. Kingsland, 79 F.Supp. 700 (D.C. 1948) and Wier v. Coe, 33 F.Supp. 142 (D.C. 1940), where notation methods for improving the reading of sheet music were held nonpatentable subject matter; In re Lockert, 65 F.2d 159, where a chart for weight scales was rejected; In re Reeves, 62 F.2d 199, where a valuation chart for house appraisal was rejected; and In re Sterling, 70 F.2d 910, where bank checks with perforated stubs was rejected as non patentable subject matter. All of the above noted inventions were novel over the prior art and were not obvious to ordinary folks who worked in the areas involved, and the invention were useful, but none of them were of such great significance to the public weal that they were deserving of a government protected monopoly.

The courts were saying that they were unpatentable because they were not manufactures, just printed matter. In other words the courts were saying that information on any form of substrate, however new and useful, is not patentable subject matter in and of itself. There must be a novel or "distinctive physical structure" as well. In re Russell, 48 F.2d 668 (CCPA 1931). This emphasis of 'physical structure' shows up again and again in later cases.

Thus the basis of the Printed Matter Doctrine can be found in the cases listed from the 1920 to 1950 period. The roots of the basic idea behind the Printed Matter Doctrine however, go further back than the beginning of this century. The case of Baker v. Selden, 101 U.S. 99 (1879), although a copyright case and not a patentability case, shows the same basic premise as the later cases, namely that the Constitutional power to allow a limited time monopoly to inventors and authors to encourage their efforts should not extend to non physical structures. Referring to the proper subject matter of Constitutional protections the court in Baker v. Selden said "it would certainly be a pretty extraordinary view of the science to consider a daily or weekly publication of the state of the market as falling within any class of them. They are of a more fixed, permanent, and durable character. The term 'science' cannot, with any propriety, be applied to a work of so fluctuating and fugitive a form as that of a newspaper or price-current, the subject-matter of which is daily changing, and is of mere temporary use". The quoted section shows the general hostility of the court for the protection (either copyright or patent) of things that are not "of a more fixed, permanent, and durable character".

At the time of Baker v. Selden there was not a major industry involved in the extremely costly and time consuming development of software. Many 'man-years' of engineering time can be invested in a single program, not to mention larger works such as compilers or operating systems. Thus the potential problem was not apparent at that early date to the court.

Thus we can see the general policy decisions regarding protection (or lack thereof) of 'mere' printed matter forming as far back as 1879. These policies are primarily that protection, such as a patent, may not be obtained on an abstract idea or thought, and also that the mere addition of words or text to something already existing does not constitute a patentable invention. The second listed proposition is clearly in line with the general perception of what constitutes a patentable invention. The first proposition leads to the current problem in receiving patent protection for software inventions. This was later stated by saying that 'algorithms' are merely methods of performing a series of steps in a particular order,(i.e., similar to the concept of Baker v. Selden) and are therefore not patentable.

This is not to say that no patent containing printed matter was allowed in this period. If there was sufficient physical structure the invention would be allowed. Flood v. Coe, 31 F.Supp. 348 (D. C. 1940) is an example of an early case allowing a patent on printed matter. In Flood there is analysis of whether there is a sufficient structural or functional relationship between the printed matter and the underlying substrate. The claimed invention was a ticket design, like in Cincinnati, intended for tagging in retail stores. There were perforations in the ticket, means for fastening the ticket to the garment, and an arrangement of pricing information on the ticket, as well as the inter-relationships of these elements. The court held the claims to be patentable subject matter, finding:

The invention here is more than an arrangement of printed matter on a piece of paper. There is a definite and decided relationship between the physical structure and the printed matter. The one depends upon the other . . . There is cooperative relationship between the printed indicia and the structural features of the ticket . . . By virtue of this unique relationship between the physical structure and the printed matter great savings of time and money are effected . . . and as a consequence the sales of these tags have rapidly mounted during the few years they have been on the market.
Flood at 349.

Here the printed matter is not simply words, therefore the courts are more careful to not call it simply printed matter. Note that an element intended to appeal directly to a human being, with no interaction with the other elements of the claims is deemed to be printed matter. In the case of In re Jones, 373 F.2d 1007 (CCPA 1967), an analog to digital encoder in which light passes through a rotating disc with a pattern of transparent areas onto a photocell and related reading means for converting the light into a digital signal. This "code disc" had sectors divided into a combination of transparent and opaque areas. The court held that the claimed indicia on the code disc was not printed matter, because its primary purpose was not to convey intelligence to a human reader. The court stated:

what we find on the disc we would not characterize as indicia or printing but as structure, albeit the "pattern areas" of claim 1 are not necessarily transparent and opaque, respectively, and might be produced by some sort of printing technique. A dark area on a light base can be an element of structure.
Jones at 1012. Thus you derive a very strange result or rule from Jones, namely that if a human can not understand it, it is then not printed matter, it is structure. This is true in Jones even though the "indica" could in fact, admittedly "be produced by some sort of printing technique". The court apparently hung it's hat on the fact that to be printed matter it had to be human readable.

Note that while the origins of the Printed matter Doctrine are as a judicially created exception to statutory subject matter under §101, it has in fact been also used to reject patent applications under §102 and §103 as well. In these cases, the Patent and Trademark office has refused to give patentable weight to claim elements considered by the Examiner to be printed matter. See for example In re Lowry, 32 F.3d 1579 (CAFC 1994).

Thus in summary, the Printed Matter Doctrine is a judicially created exception to the patentability of a manufacture. Even though a printed form does clearly constitute a manufacture, in most cases a printed form does not meet normal expectations of what a proper invention is, and thus does not deserve the protection of the limited time monopoly that is a patent. The public policy reasons underlying the doctrine are that a patent may not be obtained on an abstract idea or thought, and that the mere addition of words or text to something present in the prior art does not constitute a patentable invention.


Intermediate Period Cases

After the early period mentioned above, where there was a noted hostility toward protecting anything that sounded like printed matter, there came a line of cases in the 70s, 80s and early 90s. These cases include Application of Freeman, 573 F.2d 1237 (CCPA 1978), Application of Walter, 618 F.2d 758 (CCPA 1980), In re Abele, 684 F.2d 902 (CCPA 1982). These cases held that software that is separate from an almost physical connection to an actual process of creating something was not patentable subject matter. This was by analogy to the Printed Matter Doctrine, and the more recent cases which over turned the law on software, have then referred to the Printed Matter Doctrine not applying to software.

These cases ruled against the patentability of mathematical algorithms and developed a test that was used until quite recently to deny patentable subject matter to software inventions. The so called Freeman-Walter-Abele test holds that "if the claim would be "otherwise statutory", albeit inoperative or less useful without the algorithm" then it is patentable. Thus a 'pure' algorithm would be unpatentable, and software not connected to a physical structure in the claim is also unpatentable. The court quoted from Diamond v. Diehr, 450 U.S. 175 (1981) to further clarify that the underlying process, in this case curing rubber, "would still be a process for curing rubber, although it might not work as well since the in-mold time would not be as accurately controlled". Thus again the algorithm had to be somewhat physically connected to an otherwise patentable process in order to be patentable.

Restated, the Freeman-Walter-Abele test is that an application of an algorithm is patentable, but the algorithm or method is not. Thus there must be an almost physical connection between the algorithm and the final product to be patentable subject matter. Perhaps the clearest statement of the Freeman-Walter-Abele test was given in a later period case, Arrhythmia Research Technology, Inc. v. Corazonix Corp, 958 F.2d 1053 CAFC 1992). In Arrhythmia the court presented a clear idea of how to implement the Freeman-Walter-Abele test.

It is first determined whether a mathematical algorithm is recited directly or indirectly in the claim. If so, it is next determined whether the claimed invention as a whole is no more than the algorithm itself; that is, whether the claim is directed to a mathematical algorithm that is not applied to or limited by physical elements or process steps.
Arrhythmia at 1058. Thus there is a simple two part test that again, as in the past, eliminates simple software from patentability. Only the 'physical' connection toward which the software acts, or software that 'physically transforms' data that represents physical activity, is patentable. The software is only an appendix to the physical manufacture that actually does the work. By analogy the brain is unimportant since it only controls the legs which actually do the work of taking you where you want to go. Of course the analogy really fails because the brain is an actual physical element. It is the thoughts and thought processes that are similar to the software in a computer implemented invention. All the above assumes that the courts actually understood what a algorithm is, which is not at all clear.

In summary, the intermediate period applied the Printed Matter Doctrine to software, and found that the software itself was simply Printed Matter, and thus unimportant and undeserving of patent protection. Therefore, the idea and principle behind the software method was unprotectable, unless it was directly tied to a machine. You could get copyright protection for your particular "expression" (i.e., your specific list of program commands or steps) of the software, but the principle of operation was not protectable in any way. This state of affairs allows all software developments to be pirated (I mean reverse engineered) by business rivals by the simple expedient of rewriting the code to circumvent the copyright. The basic principle of operation is available to the public. Probably not the best way to encourage investment in software development.


More Recent Cases

The above noted sorry state of affairs continued throughout the entire first three decades of the computer revolution. This is not to imply that the recent cases have unambiguously overturned the Printed Matter Doctrine with respect to computer implemented inventions or software. The most recent cases are not entirely in agreement, but there is a strong trend apparent in the last two years toward at least exempting software from the Printed Matter Doctrine. The pertinent recent cases in chronological order are In re Schrader, 22 F.3d 290 (CAFC 1994), In re Alappat, 33 F.3d 1526 (CAFC 1994), In re Warmerdam, 33 F.3d 1354 (CAFC 1994), In re Lowry, 32 F.3d 1579 (CAFC 1994), In re Trovato, 42 F.3d 1376 (CAFC 1995), and In re Beauregard, 53 F.3d 1583 (CAFC 1995).

The recent cases show an evolution of ideas regarding software. These new concepts have changed the court's view that computer implemented inventions require that the software be connected to a manufacture, or to a process of manufacture, or to manipulation of data that represents a physical object or process, in order to be patentable subject matter. This shift in the courts view is in accord with the wishes of Congress as noted by the Supreme Court. Diamond v. Chakrabarty, 447 U.S. 303 (1980), in which the Supreme Court provided guidance on what congress intended for the law, and the proper interpretation of the patent statute of 1952:

In choosing such expansive terms as "manufacture" and "composition of matter," modified by the comprehensive "any," Congress plainly contemplated that the patent laws would be given wide scope. The relevant legislative history also supports a broad construction . . . . The Committee Reports accompanying the 1952 act inform us that Congress intended statutory subject matter to "include anything under the sun that is made by man".....
Diamond v. Chakrabarty at 308-309. "Anything under the sun" certainly sounds like the Congress intended the act of 1952 to include manufactures such as software, but little changed in the outcome of software patent cases throughout the 1980s. The situation began to evolve in court cases during the early part of this decade.

First, in In re Schrader, on April 13, 1994, a case about a algorithm that decided how to best divide land to maximize the return to the seller, the court held to the old notion that the algorithm failed the Freeman-Walter-Abele test, and quoted the same part of Arrhythmia as noted above.

It is first determined whether a mathematical algorithm is recited directly or indirectly in the claim. If so, it is next determined whether the claimed invention as a whole is no more than the algorithm itself; that is, whether the claim is directed to a mathematical algorithm that is not applied to or limited by physical elements or process steps.
Arrhythmia at 1058.

The court ruled that the algorithm was not sufficiently connected to something 'real', and was thus unpatentable. That the program "describes the solving of a mathematical problem: determining the optimal combination of bids", was reason enough to reject the subject matter as unpatentable. And this despite an admitted ambiguous understanding by the court of what an algorithm really is. The court quotes In re Tanner, 681 F.2d 787 (CCPA 1982) in stating that "even simple summing may be an algorithm". Under this logic there is no way ANY program could possibly qualify as a non algorithm since, when you 'decompose' the higher level language statements into the machine code, a large number of the machine code statements will be add commands. Add commands are the summing of the contents of two register memories, and hence are algorithms under this definition.

The court further noted that "there is nothing physical about bids per se", in rejecting the claimed algorithm. This logic is in agreement with the analysis of the intermediate line of cases noted in the previous section, requiring again that there be something physical to warrant a patent. Also in agreement with the early and intermediate line of cases is the comment in Schrader about "physical changes to a display" not being involved with any 'real' "kind of data transformation", and therefore unpatentable, regardless of utility, novelty or inventiveness.

Then four months later, in the same court, in In re Alappat, July 29, 1994, it was held that although algorithms were still not patentable subject matter in the absence of something physical, never-the-less the "mathematical algorithm", which in this case was a "rasterizer" which was used "to transform one set of data to another", was still patentable subject matter. This was because the court held that even though the data did not represent a physical object, the transformation from one form to another was "a machine". This result is at odds with the prior decisions in which there had to either be a physical process controlled by the data transformation, or the manipulated data had to represent a physical object or process. Here the act of transforming the data was considered to be a machine. A logical conclusion, but surprising when taken in view of the previous decisions. A small but significant change had occurred in the understanding of the court as to what a computer implemented invention really constitutes. Alappat was a qualified success for software patentability since the software itself was now seen as a machine.

Third, two weeks after Alappat, in In re Warmerdam, on August 11, 1994 the older logical process of Schrader was continued, but only in part. Here the same court ruled that a system for controlling the motion of objects and machines to avoid collisions with other moving or fixed objects, was not patentable because it "involved no more than manipulation of abstract ideas" and "did not imply physical arrangement of content of the memory". What happened to the algorithm as a machine?

On the other hand the Warmerdam court did say that software, such as "data structures", would be patentable if they "were well known mathematical constructs and lend themselves to manipulation through computer technology". A data structure is defined in the 1991 IEEE Standard Computer Dictionary as a physical or logical relationship among data elements, designed to support specific data manipulation function. Thus the Warmerdam court found that a data structure with no clear connection to the computer was non statutory subject matter, but that well known useful data structures would be patentable. Thus another small change in the courts understanding of the properties of computer implemented inventions had occurred.

Also there is a statement in Warmerdam that "the fact that the claim covers methods which are essentially mathematical in nature, as discussed infra, is not dispositive". Thus there appears to be at least a partial retreat from the holdings in the previous line of cases, i.e., Schrader, and in all prior case law, that there needs to be an almost physical connection to something real from the algorithm, in order to be patentable subject matter. Thus, even though Warmerdam was a loss for software patentability, a chink appears in the armor of the Printed matter Doctrine. That chink is that the algorithm only must go "beyond simply manipulating "abstract ideas" or "natural phenomena"". Perhaps a small difference, but now well known mathematical constructs were patentable if they merely lent themselves to computer manipulation. Further, mathematical constructs were allowable to explain and make the disclosure definite under 35 U.S.C. §112, with regard to the rest of the invention.

The situation changed even more abruptly in In re Lowry, on August 26, 1994, just two weeks after Warmerdam. Here the same court, the Court of Appeals for the Federal Circuit, directly addressed the issue of whether the Printed Matter Doctrine removes "data structure" limitations from consideration in determining whether a claimed invention is patentable subject matter, and then whether data structures can be used to determine if the invention is new and non-obvious, as compared to the prior art, under 35 U.S.C. §102 and §103. Now the data structure itself is no longer in question as to patentable subject matter, but whether or not the limitations of the claim involving the data structure are 'real' limitations. Further, the Lowry court no longer required that the algorithm had to do anything to something outside the computer or to affect anything physical or representing something physical. The Lowry data structure just increases computer efficiency. This is a sharp difference from previous holding that would have determined that such an increase in efficiency was simply too abstract to have patentable weight.

The Lowry court held that data structures are not analogous to printed matter and that the Printed Matter Doctrine had no factual relevance to the claims at issue. Thus a breach in the armor of the Printed Matter Doctrine was created out of the chink in the armor of the Warmerdam case, and at least certain types of software become clearly patentable subject matter, and are additionally useful as limitations on the invention to help differentiate the subject patent from the prior art.

There is still a requirement by the Lowry court that the data structure "imparts a physical organization on information stored in memory", but very significantly there is no longer a requirement that there be a physical structure, nor that the data must represent a physical object or process.

Four months after Lowry, in In re Trovato, December 19, 1994, the same court again reversed its position with regard to software patentability and held that a data structure failed the Freeman-Walter-Abele test, and again quoted the same part of Arrhythmia as noted above in Schrader and previously. The Trovato case held that "mere post solution display does not render patentable mathematical algorithms", and stated that a program to calculate the optimal path between two points "did not describe how computed values were implemented through physical processes". Once again the need for physical connection between the software and something 'real' in our physical world was required by the court.

Finally, in In re Beauregard, May 12, 1995, five months after Trovato, the same court once again reversed direction and affirmed the Lowry position that data structures are patentable subject matter. Beauregard, it is hoped, will be the final death knell of the Printed Matter Doctrine with respect to software. Beauregard held that "computer programs embodied in a tangible medium, such as floppy diskettes, are patentable subject matter under 35 U.S.C. §101 and must be examined under 35 U.S.C. § §102 and 103". Here it appears that the fact that the data is not in human readable form renders that data less Printed Matter like. This was also discussed previously with regard to the In re Jones case with the rotating disc containing clear and opaque areas.

The case concludes that "the parties are in agreement". The PTO appears to have finally given in, and software will have to be considered as patentable as long as the computer implemented invention meets the other patentability requirements of 35 U.S.C. § §102, 103 and 112.


Analysis of the Cases

The recent cases mentioned above tend to show an irregular but ongoing evolution of the court toward considering software to be a machine, and therefore not subject to the Printed Matter Doctrine. Several of the cases held hints of what was to come, but the most important case overall is the case of In re Lowry. In re Lowry clearly set forth the policy now being followed by the PTO, as expressed in the January 18, 1996 release of the provisional Examination Guidelines for Computer-Related Inventions, and because In re Lowry marks the PTO itself admitting that software is patentable subject matter. The 50 page Guidelines are intended to assist PTO examiners looking at software type inventions, and is currently under review by the Executive branch. At some point in the future these guidelines may be made permanent and will then have the force and effect of law. At this point the guidelines are the response of the PTO to the CAFC court decisions in Lowry and Beauregard. The PTO did not want to allow software type inventions partly because they do not have sufficient numbers of Examiners who are experts in the field. The PTO has even required software engineers to prove sufficient levels of competence in Physics, Chemistry and mathematics in order to qualify to take the Patent Agent Examination.

Lowry

Lowry argued before the PTO appeal board that his data structure was contained in "a memory", and thus was clearly within the category of a manufacture as set forth in §101, when analogized with the cases of Ex parte Carver, 227 U.S.P.Q. 465 (Bd. Pat. App. & Int. 1985) and In re Gulack, 703 F.2d 1381 (CAFC 1983), which were both found to be statutory subject matter. In Lowry the data structure was stored in a memory "for access by an application program being executed on a data processing system". This is similar to the use of information on crossing left and right speaker outputs stored on a stereo record in Carver for use when the recording was played on a stereo player. Note that in Carver the information that was stored actually controlled something physical, namely which speaker the information (i.e., music) was directed towards. Lowry did not control anything physical with it's data structure, merely controlling an application program.

Noted also that in Gulack, the PTO had found that a numeric sequence was functionally related to an underlying physical band because the band supported the digits, and because each digit resided in a unique physical position with respect to every other digit. Lowry's data structure, by analogy, also has a relationship to the underlying memory, first because the data structure is stored in the memory, and second because there is a specifically defined relationship among the various data objects included in the data structure, i.e., each is in a unique position with respect to each other. Of course the relationship is not a physical relationship as it is in Gulack.

In addition to the 35 U.S.C. §101 attack on patentable subject matter, the Lowry case also showed that the PTO was required to give patentable weight to the data structure limitations of the claim under 35 U.S.C. §102 and §103 to show novelty and unobviousness over the prior art. In other words, the Examiner may not simply ignore claim limitations that distinguish the invention over the prior art just because they were considered to be Printed Matter.

The PTO agreed with Lowry's analogy to the claims in Carver, and concluded that the claims were directed to statutory subject matter. Victory? Not really a complete victory, because the PTO felt that Lowry's invention was obvious over the prior art, based on the Printed Matter Doctrine. The PTO argument was that data structure limitations need not be considered in determining patentability, because they were analogous to printed matter, and that the data structures should fall within the printed matter exception despite the fact that they were only in "machine-legible" form rather than being intended for humans.

The public policy behind the PTO position is that data structure limitations were abstract limitations and therefore not entitled to patentable weight. Otherwise the PTO would be forced to examine literary works and abstract concepts for novelty and non-obviousness simply because they were stored in a computer readable memory. The Commissioner suggested that if data structure limitations were given patentable weight, then such works as the movie Jurassic Park would become patentable subject matter, because the 'data' is clearly held in very specific locations with respect to the rest of the data (i.e., the data is in a particular sequence), and because the data is not in human readable form (remember the Jones case with the light and dark bands on a disk?).

The CAFC reversed the finding of the PTO appeals board, finding that the Board erred by denying patentable weight to Lowry's data structure limitations. The court stated that the PTO must consider all claim limitations when determining patentability of an invention over the prior art, even data structures. Accordingly, the PTO may not disregard claim limitations, even where the limitations are believed to consist of printed matter. Lowry at 1582, citing Gulack and Diamond v. Diehr. The court also pointed out that Gulack contains explicit cautioning against a "liberal use" of "printed matter rejections under section 103.

The court found a clear distinction between Lowry and those barred by the printed matter cases. Specifically, the court noted that the printed matter cases "dealt with claims defining as the invention certain novel arrangements of printed lines or characters, useful and intelligible only to the human mind." Lowry at 1583, citing In re Bernhart, 417 F.2d 1395 at 1399 (CCPA 1969). Thus the printed matter cases had no factual relevance to claims such as Lowry's, where "the invention as defined by the claims requires that the information be processed not by the mind but by a machine, the computer." The court noted that the data structures in Lowry's claims were only accessible through sophisticated software systems. Stated differently, the court found that data structures were not analogous to printed matter. The court found that data structures impart physical organization on the information which they contain, and that this physical organization defined the functional characteristics of the memory. The court recognized that Lowry's claims were not directed to the underlying data which the data structures could contain, but to the structure itself.

While the information content affects the exact sequence of bits stored in accordance with Lowry's data structures, the claims require specific electronic structural elements which impart a physical organization on the information stored in memory. Lowry's invention manages information. . . . does not seek to patent the content of information resident in a data base. Rather, Lowry's data structures impose a physical organization on the data.
Lowry at 1583. The court also said that the data structures presence in the memory created a new "machine". The relations between the attribute data objects were found to be "the essence of electronic structure", thus modifying the machine itself by their presence in the memory.

There is one further rationale used by both the board and the examiner, namely, that the provision of new signals to be stored by the computer does not make it a new machine, i.e. it is structurally the same, no matter how new, useful and unobvious the result . . . . To this question we say that if a machine is programmed in a certain new and unobvious way, it is physically different from the machine without that program; its memory elements are differently arranged. The fact that these physical changes are invisible to the eye should not tempt us to conclude that the machine has not been changed.
Lowry at 1583 citing Bernhart. Being "physically different from the machine without the program" is an important new concept, since it is the data stored in the machine that makes it different.

The court went further to show why the Gulack case made the data structures patentable.

The ADOs follow a particular sequence that enables more efficient data processing operations on stored data. The ADOs facilitate addition, deletion, and modification of information stored in the memory. In sum, the ADOs perform a function. Gulack requires no more.
Lowry at 1584. ADOs are a type of data structure in Lowry called Attribute Data Objects. Note that the court says that the data structure performs a function even though it is not a physical thing.

Thus the CAFC limited use of the Printed Matter Doctrine in rejecting patent applications for software type inventions under §102 and §103. The court essentially held that Printed Matter is only found in arrangements of lines and characters that are intelligible to the human mind alone. The court also found that even where printed matter is present it must be given patentable weight unless it performs no function in the context of the entire claim. Lowry at 1583.

Most importantly, the court now also appears to understand that data structures are not merely the data which they contain, but are truly structures. Therefore data structures are not printed matter and accordingly the Printed Matter Doctrine has no application to them.


Composition of the Court

The above analysis of Schrader, Alappat, Warmerdam, Trovato, Beauregard cases, and the more detailed summary of the Lowry case of course does not explain why five cases within a year and a half came out with such irregular decisions. A look at which judges were in the majority in each of the noted cases may be helpful in this regard.

Schrader was a loss for software. Judge Newman was pro software and judges Plager and Mayer were against software patentability.

Alappat was victory for software. Judges Newman, Rich and Rader were pro software, judges Mayer, Schall and Michel were against software. Judges Archer and Nies had mixed opinions.

Warmerdam was a loss. Judges Plager, Lourie and Clevenger were all against software patentability.

Lowry was a victory, with judges Rader, Rich and Skelton all for software patentability.

Trovato was a loss, with judges Schall and Michel against software patentability.

Beauregard was a victory, with Archer for software patentability. Archer was of a mixed opinion in the Alappat case.

What conclusion can we reach? That there is a split in opinion on the CAFC, not exactly an unprecedented situation. Judges Rich, Rader, Newman, Archer, Skelton and probably Nies appear to be in favor of software patentability under certain circumstances, while Judges Plager, Mayer, Lourie, Schall and Clevenger appear to be opposed. A five to five split with one uncertain, but appearing to favor software. This is not great news for companies spending large amounts of time and money developing new software since it appears to depend on which judge you get reviewing your case as to the likely outcome.

However, the actual outlook may not be as grim as the above analysis might indicate, because the PTO has now issued new preliminary guidelines which indicate that the above decisions have changed some of the policies at the PTO regarding the patentability of software, or computer assisted inventions. The PTO does not appear to be quite as resistant to the consideration of software inventions as previously was the case.

This is not to say that the PTO Guidelines are all that patent lawyers think they should be with reference to the above noted cases. Stephen G. Kunin, the PTO deputy assistant commissioner for patent policy, says that the Guidelines follow the CAFC rulings, and that "you must look at functionality" and that "if you create a specific machine that employs math processes" it would be patentable subject matter. See The Law Works, page 27, Vol. 3 No. 4, April 1996. Note the emphasis on "function" and "machine". Thus it appears that the PTO has not entirely given up on requiring something physical.

The PTO has lost the majority of the software cases brought before the CAFC, and the trend of the decisions appears to favor easier patentability for software. Therefore, it is to be hoped that future software inventions may not have to suffer the pain and cost of having to appear before the CAFC on appeal of a PTO denial of patentable subject matter, and thus have the patentability of the invention depend to some degree on which of the justices happen to be on the panel.


The New PTO Guidelines

On January 18, 1996 the PTO released, for discussion purposes only, the Examination Guidelines for Computer-Related Inventions, noting that these guidelines were preliminary, under review by the Executive branch, and did not have the force or effect of law. The guidelines were only to help Examiners comply with the rulings in Lowry etc. These guidelines represent a partial victory for Computer Implemented Inventions such as software.

The guidelines give a check list for Examiners to follow. For example, the guidelines state that the Freeman-Walter-Abele test is still to be used, but only if the claims are "directed solely to a process for solving a mathematical algorithm". This is a clear improvement over the past practice of eliminating any claim that use an algorithm, unless the invention without the algorithm is itself patentable.

The guidelines state that what the applicant has invented should be determined, and how any "rejections may be overcome" should be disclosed in the first office action by the Examiner. The guidelines further state that 'an invention that has a practical application in technological arts satisfies the utility requirement" and that "a practical application of a computer-related invention is statutory subject matter". Another clear improvement over the past practice of denying patentable subject matter to software, unless directly tied to a physical process.

The guidelines state that what the applicant describes as the functionality and utility of the program is to be used when determining "how the computer is to be configured to provide that functionality".

To determine if an invention complies with section 101 (i.e., subject matter), the guidelines state that the extent of controlling law is "so as to include anything under the sun that is made by man". Clearly a major retreat from past practice.

Controlling law is held to state that only "abstract ideas, laws of nature and natural phenomena" are outside of the statutory limits, and that "non-functional descriptive material" is limited to "mere arrangement of data". Examples of mere arrangement of data include recorded music and non alterable data. More importantly, while there is still a requirement that be a "physical thing" or "acts being performed", never the less "a claimed computer readable medium encoded with a computer program defines structural and functional interrelationships between the computer program and the medium which permit the computer program's functionality to be realized, and is thus statutory". (Emphasis added). In other words any functional program is now statutory subject matter. This in effect exempts all useful computer programs from the Printed Matter Doctrine exception, and constitutes a victory for software developers. Even non software inventions are not patentable if they were not useful, so a limit requiring some functionality to a software program is no difficulty.


Safe Harbors

The guidelines explicitly spell out three "safe harbors" which will be patentable subject matter. The first safe harbor is the old physical acts, or post computer process activity situation. Examples are the old rubber curing process discussed in Diamond v. Diehr, 450 U.S. 175 (1981), and calculations for controlling the motion of a robot.

The second safe harbor is the old representation of a physical object situation from the older law. Examples given here are an analysis of human cardiac activity with a readout, Cat Scanning calculations, and seismic wave analysis. This would appear to be a reversal of the holding in the Trovato case discussed above, in which Trovato was calculating how to find the optimal path between two points. It would be a strained analogy to argue that optimal low energy or fastest time paths are somehow less 'physical' than a seismic wave analysis.

The third safe harbor is what is held in the recent cases discussed previously, namely that practical applications of computer related processes are statutory subject matter. Examples given by the PTO are that modeling noise is not statutory subject matter, but using the model to filter noise is statutory subject matter. The difference is practical application. This sounds like the Trovato case is reversed under this safe harbor as well as the second safe harbor. Other examples of practical computer programs are optimally controlling transfer, storage and retrieval of data (sounds like Lowry) and a method of controlling parallel processors to accomplish multi-tasking of several computing tasks to maximize computing efficiency, again sounding exactly like the Lowry case.

Examples of non statutory inventions also include some old friends, such as simply manipulating abstract ideas, e.g., a bid (sounds like Schrader is still going to be unpatentable), and a bubble hierarchy (sounds like Warmerdam). The PTO compares these functions to "laws of nature" and to E=MC2. These are to be considered unstatutory despite their relationship and representation of an external object because the external object is not sufficiently physical.

In summary, the PTO Guidelines now make clear what types of software will be considered statutory subject matter, and have removed a lot of confusion and uncertainty from software developers. The software simply must have some utility to something physical, even the structure of the data within the computer itself is sufficient.

If the PTO Guidelines had been in effect during the CAFC cases noted above most outcomes would have remained the same. Schrader and Warmerdam would still have lost their cases before the PTO since they were manipulating abstract ideas and representing non physical external objects.

However, the Trovato case would appear under the Guidelines to be patentable subject matter under the second and third safe harbors, thus reversing the court decision. The major change would have been that Lowry and Alappat would never have made it to court, since the PTO would have allowed the cases and there would have been no appeal to the CAFC. This is because they were clearly cases of a programmed computer, the third safe harbor.

Clearly, the major legal effect of the Guidelines will be to keep many software cases from ever having to go to court to prove their patentability. The courts will also use the Guidelines in combination with the wording of the patent act, 35 U.S.C. § 101, and prior decisions to determine patentability. PTO rules of practice such as the guidelines have long possessed the force of statute. See United States v. Marble, 22 O.G. 1365 (1882). Thus the courts (specifically the CAFC) now have a new tool to use in crafting their decisions. The guidelines may even have an effect on the decisions made by those justices who currently seem to oppose software patentability.


Conclusion

The PTO and the federal courts have been hostile towards computer implemented inventions for many years and for many reasons, not least an apparent lack of understanding of how software works. The PTO now appears to understand why computer implemented inventions are patentable, will hire examiners trained to work in software, and change their requirements for admission to the Patent Agents Examination.

Lowry, Alappat and the other recent cases noted above have removed one of the roadblocks computer implemented inventions, such as software, face in seeking to obtain patent protection for their investments of time and money. A new computer program development can be the key to opening a whole new field of business, witness spreadsheet programs and Object Oriented programming. Investment in software research and development should be afforded the protections and incentives provided by the patent laws and received by other inventors.

Inventors in the field of computer implemented inventions can maximize their chances of obtaining appropriate patent protection by following the three safe harbors defined in the PTO Guidelines. These safe harbors are controlling physical acts, representing a physical object and practical applications of computer processes.


APPENDIX

1. 35 U.S.C. §101.
"Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title."

2. 35 U.S.C. §102 states in significant part:
"A person shall be entitled to a patent unless --
(a) the invention was known or used by others in this country, or patented or described in a printed publication in this or a foreign country, before the invention thereof by the applicant for a patent, or

(b) the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of application for patent in the United States, or

. . .

(e) the invention was described in a patent granted on an application for patent by another filed in the United States before the invention thereof by the applicant for patent, or on an international application by another who has fulfilled the requirements of paragraphs (1), (2), and (4) of section 371(c) of this title before the invention thereof by the applicant for patent. . ."

3. 35 U.S.C. §103 states in significant part:
"A patent may not be obtained though the invention is not identically disclosed or described as set forth in section 102 of this title, if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains. Patentability shall not be negatived by the manner in which the invention was made."

4. 35 U.S.C. §112 states in significant part:
"The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor for carrying out his invention."