Still Better to be an Inventor than an Author – Comparing Copyright and Patent for Software Algorithms

With the 2014 decision in Alice, SCOTUS reiterated the two-step Mayo framework applied to method and software patents. A patent application is deemed unpatentable under 35 U.S.C. §101 if (1) the claims are directed to one of the three judicial exceptions (laws of nature, abstract idea, and natural phenomenon); (2) even if a claim falls under a judicial exception, that claim is still deemed patentable if there is an “inventive concept” that transforms that claim into an application rather than one that is directed to said exception.

During the two years after Alice, the validity of numerous software and business method patents were challenged under 35 U.S.C. §101. As of June 8^th, 2016, federal district courts invalidated 163 of the 247 patents that were considered under patentable subject matter – striking down 66% of challenged patents. The U.S. Court of Appeals for the Federal Circuit invalidated 38 of the 40 cases it heard.

Arguably, the public may benefit more from such high rates of post-issuance invalidity. The public still has access to disclosures from the patents and patent applications. By relying on granted patents, companies may have already invested in growing relative businesses, thus catering to the need of consumers. Yet the patent holder’s monopolistic rights have been curtailed as the result of litigation. Effectively, the price that the public pays to inventors in exchange for the benefits of disclosure is reduced.

Yet the high degree of invalidity raises several concerns for the software industry. Smaller entities lacking market influence nor capital may have difficulty competing against established corporations without the monopolistic rights granted through the patent system. Investors may become hesitant to infuse capital into startups for fear that the sole feasible collateral (patents) may lose worth due to invalidity. Reliance on trade secrets has its own limitations due to the disclosure dilemma—the inventor needs to disclose the secret to convince the inventors, yet loses secrecy in the process.

Such concerns raise the question of whether or not copyright law may provide adequate protection for the software industry. In other words, is it better to be an author than an inventor?

The Copyright Act defines a “computer program” as “a set of statements or instructions to be used directly or indirectly in a computer to bring about a certain result.” Though it may be counterintuitive to grant copyright protection for “useful arts” such as computer programs, Congress has explicitly mandated copyright protection for software. However, the scope of the protection under copyright is very limited.

Akin to the protection to literary work, copyright protects against literal infringement of the text of the program. Source code, which refers to the coding lines that programmers “author” via computer languages such as C++ and Pascal, are protected under copyright. In Apple v. Franklin Corp., the 3^rd circuit held that object code, which is the product of compiling the sources code, is also considered literary work. Given the nature of compiled code, this ruling seems to be an obvious extension of copyright protection. The copyright system protects the author against literal copying of both the precompiled and compiled product that the programmer has produced. Removing discrimination between source code and object code better reflects the nature of computer languages such as Perl, where the source code is not translated into object code—the source code is directly fed into the computer for execution. However, the scope of such protection also is very narrow—this would only protect identical codes. It would be relatively easy for competing entities to avoid such direct infringement by implementing the same algorithm in a slightly differing manner.

The structure or logical flow of a program may have some protection under copyright law. Equivalent to protecting the “plot” of a novel, the 2^nd Circuit ruled that certain elements of programming structure is considered as an expression (copyright) rather than idea (no copyright), extending copyright protection to non-literal infringement. The Computer Associates International v. Altai court applied a three-step test to determine whether a computer program infringes other programs—(1) map levels of abstraction of the program; (2) filter out protectable expression from non-protectable ideas; and (3) compare which parts of the protected expression are also in the infringing program. Under step 2, the merger doctrine and scène à faire concerns are utilized to limit what may be protected under copyright law.

Under merger doctrine, coding that has been implemented due to efficiency reasons is considered as merged with the underlying idea – hence not copyrightable. Effectively, the merger doctrine in copyright law serves as a wide block against copyrightability for software algorithms. Most algorithms are developed and implemented for efficiency concerns. Hence under the Altai court framework, the merger doctrine would prevent significant aspects of software algorithms from receiving copyright protection. In contrast, the Federal Circuit ruled in the 2016 case McRO Inc. v. Bandai Namco Games America Inc. that patent claims with “focus on a specific means or method that improves the relevant technology” are not directed to a judicial exception. Although preemption concerns may impede patentability, such limitations are narrow compared to those of the merger doctrine.

Scène à faire also imposes additional limitations on copyright for computer programs. Aspects of the program that have been dictated by external concerns such as memory limit, industry standard and other requirements are deemed as non-protectable elements. For software in mobile applications, it is difficult to imagine programs that are not restricted by form factors such as mobile AP computation power, battery concerns, screen size, and RAM limitations. In the field of machine learning, algorithms determine computation paths that are unlikely to be relevant to conserve computational resources. It may be argued that the nature of such algorithms is dictated by external considerations, exempting such from copyright protection.

The restrictions imposed by the merger doctrine and scène à faire constrains what may be protected under copyright law. Though copyright provides an alternative method of protecting innovation, it does little to protect software algorithms. Most of the protection under copyright lies against the literal infringement of codes, yet the key value lies within the algorithms itself. Despite the current vague state of patentability of software algorithms, innovators in computer programming may be better off seeking protection under patent law—it is still better to invent than to author codes.

Hyunjong Ryan Jin is a J.D. candidate, 2018, at NYU School of Law.