The Board of Patent Appeals and Interferences (BPAI), a key panel within the Patent Office, has tightened the rules for American software patents. The recently-released decision builds on last year's landmark ruling by the United States Court of Appeals for the Federal Circuit in the case of In Re Bilski. In that case, the Federal Circuit focused on business method patents and had left key questions about the patentability of software-related inventions unanswered.

The new ruling will give thousands of American patent examiners guidance about how to apply the holdings of Bilski in software patent cases.

Narrowing the scope

The BPAI has first crack at reviewing the work of individual patent examiners and its decisions are subject to review by the United States Court of Appeals for the Federal Circuit. The new BPAI decision was actually released in August, but the panel only recently declared it "precedential." This relatively rare step means that the nation's patent examiners are required to take it into consideration as they work through the backlog of pending software-related patent applications.

However, the decision may have a short shelf life: the Supreme Court is due to weigh in on Bilski in the Spring. If the Supreme Court overrules key provisions of the Federal Circuit's Bilski ruling, the BPAI will need to go back to the drawing board once again.

The BPAI considered a patent application submitted by two American engineers working for Philips Electronics. The patent, titled "Method and Apparatus for Generating a Stereotypical Profile for Recommending Items of Interest Using Item-based Clustering," focused on a system for recommending television content to users. But the application didn't limit itself to this application. It claimed (among other things) "a method for identifying one or more mean items for a plurality of items, each of said items having at least one symbolic attribute." If granted, the patent could have applied to a wide variety of recommendation algorithms.

The patent examiner assigned to the case rejected most of the claims in the patent, and the BPAI affirmed these rejections. But while the examiner largely rejected the patents on long-established, pre-Bilski grounds, the BPAI instead used the decision as an opportunity to announce new standards for software patentability based on the standards the Federal Circuit articulated last year.

In Bilski, the Federal Circuit said that to be patentable, inventions must involve either a particular machine or a specific transformation of matter. An important question left unanswered by the decision is whether a general-purpose computer qualifies as a "particular machine." The BPAI's new decision suggests that its answer is "no." For example, the BPAI rejected one claim by noting that "other than providing examples of memory as RAM and/or ROM and the processor as a CPU for a personal computer, the specification provides no more details about these devices."

The patent application attempted to claim its recommendation algorithm in two different ways: as a "method" for selecting items, and as a machine that performs that method. The BPAI squarely rejected the gambit, writing that because the functionality described in its "machine" claims were identical to the "methods" described in earlier claims, the claims must stand or fall together. An unpatentable algorithm doens't become patentable merely because it's implemented using off-the-shelf computer hardware.

This is important because it appears to sharply limit so-called Beauregard claims: efforts to effectively claim an algorithm by patenting the manufacture of digital media containing that algorithm. As recently as 2007, the Supreme Court heard a case involving a patent of this type, but it ducked the question of patent validity, focusing instead on the esoteric issue of how to calculate damages.

Two prongs, one test

In its decision, the BPAI announced a new two-pronged test for determining whether an invention involving a mathematical algorithm would be eligible for patent protection. First, the invention must be "limited to a tangible practical application" and result "in a real-world use." Second, it must be "limited so as to not encompass substantially all practical applications of the mathematical algorithm" in all fields or even in "only one field."

If that seems vague and convoluted, it might be because the BPAI has to work within the framework established by the Supreme Court and the Federal Circuit, neither of which have been especially clear about the precise boundaries of patentable subject matter. The Supreme Court ruled out most software patents in the 1970s, but during the 1990s, the Federal Circuit handed down a series of decisions that were far more permissive.

Since Bilski, the pendulum has been swinging back toward stricter limits on software patents, but the law remains very much in flux, and the BPAI seemed to be struggling to reconcile seemingly contradictory precedents.

Indeed, the somewhat muddled nature of the BPAI ruling underscores the importance of the Supreme Court's forthcoming Bilski decision. The Supreme Court has been silent on the question of what may be patented since 1981, leaving a vaccuum that was filled by a strongly pro-patent Federal Circuit. Because Supreme Court decisions supercede Federal Circuit rulings, Bilski gives the high court an opportunity to sweep away much of the confusion of the last quarter-century and set the law of patent eligibility on a more solid foundation.

That may be a headache for the Patent Office, which may be forced to rewrite the software patent rules yet again. But it could give the rest of us some of the clarity we so desperately need.