An opinion in a recent circuit court decision may signal a fundamental shift on software patents.

From the dawn of the age of electronic computing through the first decade of the personal computer revolution, software was protected under copyright law. Then, a series of court decisions in the 1970s and 1980s began redefining software as a patentable form of intellectual property. These court decisions paved the way for hundreds of court battles over thousands of software patents through the mid 1990s to the present.

Many of these court cases were between largest companies in the computer industry, and smaller companies or individuals who held or acquired patents to basic concepts, or to code for key software elements like email, hardware drivers acting through abstraction layers, or windows and menus. Some groups and individuals suing over patent violations were called “Patent Trolls” because it appeared they were using basic software patents as the basis of a business strategy to extract money from the software industry in the form of settlements and license fees via the court system.

With the increase in suits, a counter-reaction occurred in which the biggest technology companies began filing for large numbers of patents per year, buying part or all of smaller companies solely for the purpose of acquiring patents, and seeking out licensing arrangements with patent holders before court cases could be filed. There were also a number of extremely high-profile cases between major companies over patents, most notably between Apple and Samsung. As a whole, these actions represented an expensive preemptive legal strategy to avoid being Patent Trolled, but also represented a fundamental shift in what it meant to be a major player in high technology, in and out of the computing and information technology sectors. Specifically, the actual, and estimated, market value of the portfolios of patented IP held by technology companies became a leading part of the fundamental valuation of those companies, and a key component of product development, business development, and marketing strategies.

On September 30, 2016, a circuit court decision in Delaware on a case involving alleged software patent violations was handed down with a concurring opinion that suggested that software did not qualify for protection under patent law. The opinion included the statement, “Because generically-implemented software is an ‘idea’ insufficiently linked to any defining physical structure other than a standard computer, it is a precursor to technology rather than technology itself.” The full text of the court ruling can be found here.

The opinion itself is non-binding, and does not present a court decision per se, but does enter the body of case law as the possible starting point for a subsequent court decision. In addition, the opinion reflects, and coincides with, increased frustration in the business, political, and legal communities over Patent Trolling, and may represent a fundamental sea change on the entire matter of software intellectual property. To every stakeholder in the software industry, this is a development that bears watching.