Understanding Software Patents: What You Need to Know to Protect Your Innovation

Today is an interesting podcast, because I read an article recently, and I’m actually going through a lot of that in this discussion about patents, copyrights, and intellectual property for digital software and digital properties that you make. It’s been something that’s come up in conversation very frequent over the past two decades at our agency. A lot of people come to us with new types of processes or their spin on a process and what makes different and better.

I personally have been through a number of journeys with intellectual property, whether that be a patent for a product, a patent for a software process, copyrights. I’ve had my hopes and dreams crushed with thinking I patented a piece of software, and it was going to be the next Google or Hulu or something like that, only to have a VC tell me that they could give two shits about it. And then, also, coming to realization on a product that we did have patented that was software and looking at licensing, because we had a open market across the world. Basically, intellectual property across the world and being able to own all of those things becomes very, very challenging, very, very costly and very costly to litigate. So these are a lot of things that a lot of people don’t just consider specifically.

More importantly, I know individuals that are out there and investment groups that are out there that do look at patents and patents for different types of software, and they have researchers that will go through and look at capabilities and what potential revenue for earnings, what it costs to redev, something like that, and potentially if they want to put something out there, and it becomes a actuary situation where they look at revenue stealing to what it’s going to cost to litigate something and what would be the lesser of both evils. There’s a lot of weird stuff that’s going on. That do happen, and people make businesses out of it, obviously, playing within the boxing ring of the law, right? That happens that way.

So software patents are more important than ever. There’s a rapid integration of software, AI, machine learning that’s increased efficiency and production in a big way. But a lot of investors want to know if their software is patentable and essentially where they should start. A software patent basically protects the processes and methods of execution on how your software performs, and it may be patent eligible. There’s certain features that you identify and describe in the application, and that is a doozy of a process as well to lay out all those specifics. It’s commonly referred to as the point of novelty, and that’s the foundation, any software project.

And so when you’re identifying a novelty in software, a strategy is to begin thinking about unique functionality of the software and work in reverse, so start at the end goal, then work backwards. You have to understand the functionality and how a number of combinations of features work, and that might be code-wise and calls to servers, API requests, different things like that, but then the desired outcome, if you can identify that functionality, then it helps to identify a specific feature that are both functional and utilized within the system, and that could end up being considered novel.

So if you want to determine whether or not your software could be patentable, there’s some considerations that are going to help to provide some guidance. So you got to ask yourself, “What is unique about my software functionality? How would my patent provide technical improvement over known systems that are out there?” So when you’re going to work with an IP attorney or a group, they’re going to actually start to do some research and start to look at comparables. You can do it yourself. You can go to USPTO online and do some searches yourself. They have a search engine, and you could start to weed through a lot of things and then read a lot of documents.

What are the software’s features that help create a novel functionality? And is there an inventive concept in your software? Basically, is it…? And have you done your research to determine like nothing out there does this? What would be an example of something like that? Oh, geez. Again, that would be for an attorney to come up with, but let’s just say you had a debit card that actually magically created money and dropped it at your feet. I’ve never heard of anything to do that. And if it was able to facilitate and create paper, realistic money out of a proof of a voice command and drop it at the feet of where you’re standing, I would have to say that is going to be inventive concept.

So they’re software-related and computer-implemented inventions, and they continue to face challenges for patentability and enforceability. And those hurdles run contrary to the recent USPTO and court data. The data indicates that software-related technologies are not only patentable but highly enforceable and can survive validity challenges at a patent trial or an appeal board in a federal court.

So with technology, any patent holder’s ability to enforce their patent rights begin the moment their patent is issued. So if an infringing party makes uses cells, imports, exports, any of the subject matter that is claimed in an issued patent that you have, the patent owner, you have legal recourse against that infringing party. The scope and the breadth of your patent rights are going to be defined by the claims granted in the patent. And if it’s too broad, then the owner’s right to exclude others as much larger than it would be in a case of the patent that has really narrow claims. So that’s a common thing you’re going to run into with patent attorneys, is their broad or narrowing of claims and how those are identified and what the differentiators are from others that are in the market.

When I did a patent, my last one on a software process, actually not the last one, but one in the 2,000, one of the researchers that was working through our application was getting our system confused with the ability for aggregation of bidders that was owned by eBay, so basically the auctioning system. There was some arguable similarities. Basically, I would compare… A boat and a car on land are both vehicles. They can be considered vehicles, but it ended right there. So it was lots of argument even to the point of sending the attorney to speak with the person in person to argue some of the aspects to it and educate them and guide them along the way and then find some different avenues that we could go down to receive our IP on it.

So you always are going to start with a provisional patent. Basically, it provides you 12-months pendency or a grace period for you as the inventor or your team to further develop and finalize the application to be considered patent pending. What you need to know is that while the provisional patent applications are sometimes a suitable for early-stage inventions, it’s only a placeholder for 12-month term. It must be converted to a non-pro provisional patent application before the expiration, including the priority date or not. It’s going to be lost. Again, it’s best to work with a IP attorney or a group of those. They’re going to be able to help you navigate those things. Basically, you got 12 times and then you have a application renewal or actually application to go to full patent. All of those dates must be met, or you’re going to screw yourself.

So a provisional patent application usually is more simple. You could have maybe just a handful, two dozen of disclosures and figures, and it doesn’t require a formal claim set. When you get into a full utility application, you’re going to get way more detailed. When you do those, you’re getting basically 20 years of patent protection from the filing date. You’re going to include the summary, detailed description, drawings, charts, and at least one claim that’s going to meet all of the requirements for filing. Provisional applications are going to include three independent claims and 20 claims total, although an applicant may purchase additional independent claims by paying appropriate fees when they do it.

So is this good for your user interface or particular type of software you’re doing? They can provide significant legal production for your software. It depends what the specifics that it is. Now, if you are going to be building some enhancement that is in an amendment to a plug-in that’s part of a licensed product or open source product, you’re going to have to look at boxing that up, and you still have an appending piece of software. It needs to connect to work to do something further. So let’s say it’s WordPress and you’re doing some type of a plug-in for it and say it’s going to be for sending forms.

And what if your plugin works with a particular company that’s a popular form sending software, Gravity Forms? You write code, and you put it in a box. And after it works with Gravity Forms, when someone submits a form, it also converts it into a text message and then a single tune that is spoken by fairies from Antarctica sent to the person’s phone. Of course, this is ridiculous, but probably very feasible, and someone’s doing it already, but that was specifically what you’re doing.

What you need to understand is it has a reliance on Gravity Forms in order to work. And by utilizing that in the connectors of it, Gravity Forms in future updates could look at you as encroaching on their license or potentially a partner for you, or they could change things completely or can be bought out by a larger competitor. And then, they don’t want integrate with your system anymore. They’re leaving you basically with nothing to use. You have to keep things like that in mind. Let’s say, your user interface, it could be patentable, but it has to meet articles of manufacturer. That’s going to be two-dimensional images that’s shown on a computer screen, your mobile device or a tablet. It may include multiple embodiments if it relates to a single gooey design.

Design patent applications should always include figures with at least one in a dash or broken lines or an outer boundary of the device, so they can show broken lines. A broken line statement is essential in defining what portions of the gooey are claimed. So if it’s something specific that you’re doing a particular design or it’s gaming that’s going to be for mobile in a vertical sense, those dash lines showing where your gooey starts and ends is going to be important for things like that. And these are things that end up without a good legal partner for IP, where you’re going to end up getting things kicked down the road.

So let’s talk about pros and cons for getting patents for software. Again, long road, a lot of things to consider, having walked this already, I’m of the opinion, just make your shit tight and rock and roll it to… You get to the point that your capital intake is becoming so large. You can throw it over to attorneys and just pay for all the smart people to really figure that shit out really, really well, but don’t waste your time on that in the beginning until you realize that you’ve got a unicorn specifically. When you get a patent, your ability to pursue legal action against other parties infringing on your patent becomes very high. And so you could take legal action against individuals or business that illegally uses your software without your authorization to collect damages. Even if it’s slightly infringed, there may be a foundation for an infringement suit that would happen in federal court.

Now, we’re talking about the United States here, right? You still have to defend that. If you are going to make a claim, you have to back it up and show how that’s going to be. So, remember, you could be going up against some big players, some bigger people that have deeper pockets, that would rather make a ton of money and kick this down the road and becomes an actuary position where they just basically want to fund the lawsuit, because they’re still making a boatload of cash on the flip side of something and string you along until you don’t have much money, and then look at potentially buying it out or just pinch you down to bankruptcy. Those types of things can happen.

Classic example is an intermediate wiper. It was made into a major motion picture. It was a gentleman from back in the ’80s, I believe, from Detroit. It’s probably 10-, 15-years-old movie, and it’s dating me obviously, but it was the gentleman that invented the intermediate wiper and how the big automakers, I want to say it was GM, but big automakers basically screwed him over and bankrupted him, and I believe it put him to a point of dying. They still didn’t get nothing or he committed suicide. It was a pretty sad case, but that’s a classic example of this.

Increased potential for profit through licensing and monetization. If you have a good patent and it’s something that other people want to connect with or utilize, you can license it out and you can make money for that. You may have to do more upkeep and more forward modifications as new products and technology changes, but that could also be quite time-consuming and cost-consuming, but it also could be very financially lucrative. You got to consider things like that. And I think lastly, knowing that it’s very time-consuming to go through a patent. It’s a lot of back and forth. There’s so many barriers that are put in place for the approval. It requires a lot of patience, and that’s why the provisional is really important to almost file the provisional and then start to put everything together for your full patent and then file, so that you have some of that runway to get your case put together, as best as possible to end up getting that.

You got to remember that the United States Patent and Trademark Office get thousands upon thousands of applications, tens of thousands per year, if not more, and there are bureaucratic aspects. Staffing, obviously with COVID, that was a big thing for the IRS and every branch of government, but all those things are going to be held back. So there could be small little specifics like an art unit or actions or lack thereof, idiosyncrasies that can extend the timeline for approval/rejection, because the reviewer of your patent application can’t grasp or thinks it’s something else when it’s not really that. It happened in my case that I talked about earlier.

And then you need to understand it’s not guaranteed. That protection is never guaranteed. Your chances of obtaining a software patent are much better when you retain a really good intellectual property firm that specializes, that’s the key word, specializes in software, patent protection and prosecution. You want to align yourself with someone that understands how to draft your application the right way, but then also knows the ins and outs and citations for cases and is following case study and case decisions that are happening and going on or that have happened, that have laid jurisdiction or groundwork that would be in your favor.

So, in conclusion here, when people come to us and say they’ve got this awesome idea, “I’m going to build this thing, and it’s going to work certain ways, and I want to patent, and I want to do other things,” we do have localized IP attorneys that we can make referrals to. We don’t get any kickbacks. We don’t do anything else. It’s actually people that I’ve used in the past that I’ve had great relationships with. It’s like a doctor or a dentist. I like to have those relationships. And as long as their word is good, it’s like a handoff, but you want to explore things like that, but it can be costly.

Let’s say, you get your application submitted, and it’s gone through and you do get your patent. What happens in Europe, in the EU? What about England? What about China? So now, you’re talking about a larger process, and that was one of the things I went through where it was going to be hundreds of thousands of dollars. I seem to want to remember like, “Oh, under $300,000 and possibly five to seven years of time to get patents that would be done worldwide,” and that’s still didn’t guarantee.

You probably have heard about conversations of a lot of fakes and counterfeits that are built over in China or Indo-Asia from those manufacturing plants that come out once they’re hired to manufacture things, and maybe the brother or another factory across the street end up making copies and fakes of those things. How are you going to go out and defend things like that? That’s bigger than my brain can handle and has ever been exposed to, and I really don’t want to walk down scenarios like this, but maybe you do. Maybe that’s something you want to take on, or maybe that’s going to self-fund itself. I don’t know, but a lot of things to take in consideration.

So at the end of the day, my advice is be aware, be knowledgeable, and know that if you do have something specific to it, make sure to get everything done on paper. Do all that research. Do all that legwork yourself before you pay an attorney to do all that research and break your heart or validate it and maybe falsely validate it, but know how yours is indistinguishable, or you have very specific applications or processes in it that is doing something nobody else has. And then, maybe, you actually have the next awesome winner and you can set up your great-great-great-grandchildren for a lifetime.