Software Patents Still Valuable After Alice

The 2014 United States Supreme Court decision in Alice Corp. Prop. Ltd. v. CLS Bank Int’l imposed a heightened standard for patent eligibility — a two-part test that has led many software patents to be held invalid. In the past several months, however, the pendulum has noticeably swung, with several favorable CAFC holdings, some sharp dissents, and patent bar associations’ call for legislative reform. The future promises more clarity for United States patents involving software innovations, which should improve depressed patent valuations, increase patent licensing activity and raise shareholder value.

In 2013, Finjan, Inc. sued Blue Coat Systems, Inc. in the United States District Court for the Northern District of California for infringement of four of its United States patents, including one (the ‘844 patent) directed to identifying and protecting against malware. After losing at the district court, Blue Coat appealed to the CAFC, arguing that the patent was invalid under the two-part Alice test. However, Finjan successfully defended its eligibility in January 2018. The CAFC Finjan decision provides useful guidance for identifying patent eligibility for software-related inventions, including cybersecurity software. Moreover, the USPTO bolstered the effectiveness of Finjan by releasing a memorandum dated April 2, 2018, that reiterated this guidance to its United States patent examiners and patent practitioners.

Cybersecurity companies — and technology companies, generally — should feel encouraged by the Finjan decision.