When the Supreme Court declined to speak to software patenting in the Bilski case, there was wailing and gnashing of teeth in the open source software world. The new Bilski test for patentable subject matter looked at first like the status quo for software patentability. But, being the sort of person who tries to check clouds for a possible silver lining, I noted a possibility that courts and the Board of Patent Appeals and Interferences would read the test to invalidate some software patents. Later I noted that there were a number of early decisions finding software unpatentable.

That trend is continuing in a good direction. A new study of the first full year of decisions applying Bilski to software confirms that the direction of the case law is toward finding software is not patentable subject matter. The study by Robert Greene Sterne and Michelle K. Holoubek is titled The Practical Side of §101 : One year post-Bilski: How the decision is being interpreted by the BPAI, District Courts, and Federal Circuit. [PDF] It contains brief summaries of 182 decisions of the BPAI, 6 federal district court decisions, and 3 Federal Circuit decisions. The majority of the BPAI and district court decisions concern software. And many of those software decisions apply Bilski to find that the subject matter is too abstract to be patented.

Sterne and Holoubek found that before the BPAI, in the 182 cases involving challenges on the grounds of non-statutory subject matter, the decisions rejecting patentability outnumbered those finding statutory subject matter by 2.5 to 1. Of the four district court decisions addressing software, all found the patents non-statutory. None of the Federal Circuit decisions plainly addressed a pure software claim.

The market for software patents is hardly dead. Indeed, as shown by recent transactions, including the princely sum ($4.5 billion) bid for Nortel's portfolio by Microsoft, Apple, and others, it's acting very healthy. But it could be coming down with something serious. Stay tuned.