The meteoric rise of cryptocurrency has fueled a related uptick in blockchain patent filings. A recent search of the U.S. Patent & Trademark Office’s patent application database revealed 176 blockchain related U.S. patent applications published in the first and second quarters of 2018. What began as a trickle of blockchain related filings in 2014, has transformed into a deluge, indicative of the impending race for blockchain patent supremacy. Organizations ranging from financial institutions such as MasterCard and PayPal, to traditional technology companies such as Intel and IBM, and even automotive companies such as Ford Motors are vying for a piece of the pie.
The challenge facing patent practitioners attempting to obtain patent coverage for their clients in the blockchain space, is subject matter eligibility under 35 U.S.C. 101, especially in light of the 2014 Alice v. CLS Bank decision by the U.S. Supreme Court. The “Alice” decision established a two-part test for finding patent claims ineligible. The test has proven difficult to navigate, particularly for software related technologies.
After the Alice decision was handed down, many expected that patents directed to computer-implemented financial methods would be “dead on arrival” given their reliance on software. This, however, has turned out not to be the case. Although numerous patents have been invalidated in the last several years, the tide may be turning.
Post-Alice, the Court of Appeals for the Federal Circuit (CAFC) has, in several cases, found claims directed to software with an “algorithmic” emphasis patent eligible. For example, the court in Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1335 (Fed. Cir. 2016) held claims for a “self-referential data table” eligible and discussed how the Enfish approach improved the functioning of the computer itself. The court in Finjan, Inc. v. Blue Coat Systems, Inc., Appeal no. 2016-2520 (Fed. Cir. Jan. 10, 2018), held claims covering a computer virus scan for generating a security profile identifying both hostile and potentially hostile operations patent eligible. In addition, the court in DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014), found claims to the “look and feel” of a website eligible, and the court in Trading Tech v. CQG, No. 2016-1616 (Fed. Cir. 2017), found claims eligible for a graphical user interface that prevents an order entry at a revised price. These are but a few of the decisions since 2014 where software related patents have been found patent eligible.
What these decisions mean from a practical standpoint is that care should be taken in drafting blockchain related patent applications to ensure that the claims contain subject matter in line with such decisions. These cases (and others now winding their way through the courts) offer guidance to practitioners on the kind of language and features that should be included in claims to improve the chances of surviving an “Alice” rejection during prosecution and/or, litigation.
In the case of blockchain technology, the blockchain ledger itself (e.g., an improved blockchain ledger) may be patent eligible in a manner similar to the “self-referential data table” in Enfish. The specification should include language describing how the claimed blockchain subject matter actually improves the functioning of the computer, or network, (e.g., by improving processing time, etc.). Unique graphical user interfaces and GUI features that facilitate a blockchain transaction may also be patent eligible, in line with the decision in DDR Holdings.
Despite the holding in Alice, the decisions applying the Alice test suggest the chances of both obtaining blockchain related patents and successfully enforcing them in years to come is improving.