Blog The Effect of the Bilski Case on Software and Business Methods

Under U.S. patent law, you cannot file an application for an invention that has been in public use or on sale in the U.S. for more than a year (35 U.S.C. 102(b)). A common question is whether a software invention that has been in beta testing for more than a year can be patented. A case decided August 19, 2008, In re Cygnus Telecom., seems to say no.

Experimental use is a common exception to public use of an invention, and was created by an 1878 court case about a new roadway technology. City of Elizabeth v. American Nicholson Pavement Co., 97 U.S. 126 (1878). The inventor, Nicholson, argued that he had to lay the new road down and see how it held up to daily traffic of hundreds of horse carriages to perfect the invention before filing a patent application. Neither public use or commercial sale can occur before the invention has been perfected or what is called "reduced to practice." The court in the roadway case held that the invention had not been reduced to practice until it was perfected by the testing. The testing actually went on for 10 years.

In re Cygnus is about a calling technology in which a beta was held to test calling all over the world. The court found a reduction to practice in the inventor’s own statement that the software was functional before the beta, even though it was not tested well enough to be ready for consumers. The beta test was largely to test the scalability of the software when hundreds of users were using it. Sound a lot like the roadway case? It does to me, but the court said that the use by Cygnus was not experimental because the invention already worked well enough and thus an application could have been filed within the one year deadline.

Given this decision, it is hard to see how any use of software would be considered experimental. Most software works in at least a rudimentary way by the time it leaves the developer's computer and is given to a tester for testing. By the time a beta occurs, the software is often functional even if flawed.

To be safe, it is wise for software inventors to file a patent before going to beta, or at least within one year after. If budget or other factors prevent filing at that stage, the next best alternative is to make beta testers agree to terms of use that create a duty of confidentiality. This can prevent any use from being seen as public. Another factor in Cygnus was that the inventor asked beta testers to pay for their own phone calls made with the system, which the court held to be a commercial sale even though it created no profit for the inventor. It is a good idea to avoid charging beta testers or asking them to incur any costs to prevent the beta from being treated as a commercial sale.

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By Mason Boswell

Mason Boswell - Seattle Software Patent Attorney

Mason Boswell is a patent attorney in Seattle that focuses his practice on software, semiconductor, and game companies. In this patent advice blog, you will find current thoughts on patent strategy, patent-related news, and other interesting intellectual property topics.