“7.8% of issued US utility patents ‘related’ to software were ‘related to artificial intelligence’.”
As an update to my previous posts from 2017, 2019, 2020, March 2021, August 2021, 2022 and 2023, it has been almost a decade since the 2014 US Supreme Court. Alice Corp. against CLS Bank decision. Yet the debate still rages over when a software (or computer-implemented) claim is patentable or simply an abstract idea “free to all men and reserved exclusively for none” (as 76 years ago then-Supreme Court Justice Douglas eloquently put it Funk Bros. Seed Co. v. Kalo Inoculant Co.).
Furthermore, it has been 13 years since famed venture capitalist Marc Andreessen wrote an influential and oft-quoted op-ed in The Wall Street Journal entitled “Why software is eating the world”. Today, the digital transformation in which software “eats the world” is undeniable. Every core survey on the top tech trends for 2024 will produce results focused on artificial intelligence (AI), quantum computing, cybersecurity and information technology (IT) [Technology Magazine] [Washington Post] [Gartner] – basically, software! It’s no wonder that according to US News and World Report, four of the top 10 jobs based on salary potential and demand in 2024 were software developers, IT managers, information security analysts and data scientists.
Some other relevant observations:
- Software developer is the top tech job in 2024, with a median salary of $127,260 and the US Bureau of Labor Statistics predicts 25.7% growth in this profession over the next 10 years [S. News & World Report].
- In the American academic year 2021/22. 34,758 associate’s degrees, 108,503 bachelor’s degrees, 51,388 master’s degrees and 2,790 doctorates in computer and information sciences were awarded. [National Center of Educational Statistics].
- In 2023, global software and Internet services M&A activity will reach $370 billion, representing more than 5,603 jobs [IMAA].
- Gartner estimates that total global IT spending will reach US$4.9 trillion in 2024, an overall increase of 6.8% over 2023, with the software and IT services segment expected to grow by 12.7%. or 8.7% in 2024, but the device segment is predicted to grow by only 4.6% [Gartner].
So, with the above in mind, we again tried to determine what percentage of patents issued by the US Patent and Trademark Office (USPTO), the European Patent Office (EPO) and the China National Intellectual Property Administration (CNIPA) are “software-related” ?
To define which patents are “software-related,” we used the same methodology applied by the United States Government Accountability Office in a 2013 report to Congress. That report relied on certain classes and subclasses of United States Patent Classification (USPC) applications that most likely include software-related claims as selected by the USPTO’s expert advisors. Now, with the help of IP services company Clairvolex (and after converting from the USPC system to the Cooperative Patent Classification (CPC) system), the data has been extracted from the PatSeer Global Patent Database.
New this year, we also attempted to capture the percentage of software-related patents granted by the USPTO, EPO, and CNIPA focused on AI and similar concepts such as machine learning, neural networks, fuzzy logic, supervised learning, unsupervised learning, and the like, in the Title fields , Abstract, Patent Claims and Patent Invention Summary. The results?
IN 2023:
- 62.7% of those issued OUR. service patents were “software-related” (a slight decrease from 63.5% in 2022)
- 7.8% of those issued OUR patents “related to software” were “related to artificial intelligence”
- 50.1% granted EPO patents were “software-related” (small increase from 49.6% in 2022)
- 2.9% granted EPO patents “related to software” were “related to artificial intelligence”
- 42.4% granted Chinese patents were “software related” (down from 43.5% in 2022)
- 7.4% granted Chinese patents “related to software” were “related to artificial intelligence”
- Top 15 Software Approved OUR the patent holders for service activities were:
Despite the significance of the above numbers, the entirety of the patent bar can agree that Alice decision, along with the 2008 US Court of Appeals for the Federal Circuit on the bench decision in In re Bilski (concluding that the “machine or transformation” test is the relevant test for determining the eligibility of a process patent under Section 101 of the Patent Act) and a host of cases since, have left things unclear. Are the following guidelines from Chapter 2100 Manual on patent examination procedure (MPEP) (9th ed., February 2023) the best we can?
Legislative help is still not on the way. In August 2022, US Senator Thom Tillis (R-NC) released a bill entitled Patent Restoration Act of 2022 to solve the problem of Article 101. The bill went nowhere during 117th Congress. More recently, Senator Tillis reintroduced the same bill, now co-sponsored by Senator Chris Coons (D-DE) in June 2023, and renamed Patent Restoration Act of 2023 [S.2140]. In the accompanying press release, they stated succinctly and precisely:
“Unfortunately, our current Supreme Court’s case law on patent eligibility undermines American innovation and allows foreign adversaries like China to overtake us in key technological innovations. … Unfortunately, due to a series of Supreme Court decisions, patent eligibility law in the United States has become confusing, narrow, and unclear in recent years. … As of 2021, all 12 judges of the United States Court of Appeals for the Federal Circuit have appealed the state of the law. … [R]eforms are necessary to restore the United States to a position of global power and leadership in key areas of technology and innovation, such as medical diagnostics, biotechnology, personalized medicine, artificial intelligence, 5G and blockchain.”
Given that this is an election year and there are many party squabbles, the 118thth Congress is unlikely to act. Maybe 119th Congress to act in January 2025? We’ll keep our fingers crossed for a patent!
