The Supreme Court's June 28th, 2010, decision on the Bilski case was an affirmation of the viability of patent protection for innovation implemented in software. However, uncertainty still exists as a clear test for patentable subject matter was not established. The Bilski patent was found to claim an abstract idea and as such was determined not to be patentable. Demonstrating the tangible nature of a patented innovation will likely be a key to successfully defending patent rights in the software space. Similar to Bilski's business process, one of the fundamental challenges to patenting software has been the rejection of the innovation due to it being an 'abstract idea' or an 'abstract intellectual concept' which is un-patentable. Unfortunately, as you read through the court documents in the Bilski case they seem to beat around the bush w.r.t. what is an abstract idea and avoid trying to define 'abstraction' at all. In the case of software, UBM TechInsights believes that it is becoming easier to concretely establish the evidence of the innovation in the end product, making algorithms (or 'processes' as preferred by the courts) implemented in software anything but abstract.
UBM TechInsights has seen a growing trend towards implementing innovative products in a hybrid of hardware and software. In fact, many clients following a holistic IP lifecycle management program implement a comprehensive filing strategy whereby software patents, in addition to hardware patents, comprise key elements of their patent portfolios. There are several market advantages for technology products manufactured as a hybrid of software and hardware, not the least of which are time-to-market, enhanced features, flexibility, benefits and key differentiators, as well as the overall product cost. Modern technology-based products would be strongly affected were it to become necessary to implement an innovative algorithm or process in a specific piece of hardware to become 'patentable'. A commonly touted issue with software patents is the supposed difficulty and expense of determining if a particular piece of software infringes, but as we will see below, the tools and techniques have evolved and the difficulty of a software infringement analysis is likely substantially less than a typical sophisticated sub-micron integrated circuit project.
