Patents

The Intersection of SaaS and Patents: Protecting Your Software Innovation

Software-as-a-Service(SaaS) is a cloud computing service model in which access to software is often provided through a web application on a subscription basis. In this manner, the software, itself, is located on external or remote servers, rather than on servers located in-house. SaaS has become a dominant business model for major companies, enabling them to deliver their software products on a subscription basis rather than a one-time flat fee. This creates several advantages for the SaaS provider, by allowing the service provider to reach a broader range of clients as the entry cost is reduced. In addition, under a SaaS model, the long-term profit gains on a single piece of software has a higher ceiling, and the provider can send updates to the client and provide better control and support over their product without requiring an on-site technician or for the client to make a new purchase. As the SaaS market continues to grow, so too does the need for intellectual property protection. Patents can play a crucial role in safeguarding SaaS innovations and providing a competitive advantage.

Software Following the Wake of Alice

There is a common misconception that software and patents are incompatible with one another, or that obtaining a patent on a software-based invention is impossible following the landmark case of Alice Corp.v. CLS Bank Int’l, in which the Supreme Court decided “that the claims at issue are drawn to the abstract idea… and that merely requiring generic computer implementation fails to transform that abstract idea into a patent-eligible invention.”

The impact immediately following this case “led patent examiners to increase rejections based on patent-ineligible subject matter relative to all first office action decisions in affected technologies.” Consequently, this caused a shift away from inventors seeking to patent inventions that involve computers and software.  In an effort to provide some consistency in evaluating software-based invention, the United States Patent and Trademark Office (USPTO) has since issued the “2019 Revised Patent Subject Matter Eligibility Guidance (2019 PEG), [which], had a much larger, statistically significant effect on examination uncertainty, particularly in Alice-affected technologies…. Showing that after one year, the 2019 PEG decreased uncertainty about patent subject matter eligibility determinations in the first action stage of patent examination by 44% for Alice-affected technologies.” This is good news for those in the software industry, particularly the SaaS space.

Understanding SaaS Patents

Obtaining a patent on a SaaS-based invention can be challenging due to the complex nature and distributed architecture commonly involved in these inventions.  In this manner, SaaS patents are often directed to the underlying technology or processes that enable the delivery of the software service to the end consumer. For example, a SaaS patent application can focus on the core processes or unique or novel steps which are performed, either in the cloud or on the client’s machine, to advance the technology and drive the SaaS application. In some cases, if the SaaS product provides a unique user interface or graphical model, a design patent may be applicable to cover any unique aesthetic features that the SaaS program provides, either to the consumer or other users.

Regardless of what portion of the SaaS model or aspect of the business that is trying to be protected, there is likely something that can be considered and analyzed for patentability. A good rule of thumb when deciding whether an invention is patentable, and particularly a SaaS invention, is to ask whether the service is merely taking a known idea and performing it on a computer, or whether the invention is entirely novel or adds some new advancement to the technology or field. Of course, it is best practice to check with a patent attorney who can walk you through the difficulties and nuances of patent law in order to ensure the invention is protected and granted the broadest possible protection.

While a patent may be right for many situations involving SaaS inventions, there may be certain specific instances where treating some portions of the model as a trade secret may be an alternative form of protection. Trade secret protection requires that specific steps are taken to maintain the secrecy and status of the invention as a trade secret. If this is something that seems to better suit the particular invention, check with an intellectual property attorney to ensure the required mitigating steps have been taken to maintain secrecy and legal protection.

Conclusion

Patents can provide significant protection for SaaS inventions, helping to secure market share, deter competition, and attract investors. By understanding the key considerations for SaaS patents and developing a strategic approach, you can maximize the value of your intellectual property and drive your business forward.

Lloyd & Mousilli boasts a team of experts in patent and intellectual property law. Let us employ our extensive experience helping early-stage innovators to receive the fullest patent protection over the novel idea at the earliest date to ensure priority. We have overseen patent strategies for consumer products at some of the largest technology companies and want to share this experience with you. The different teams at our firm, led by seasoned attorneys, work in synergy to help businesses seamlessly weave their patents throughout their broader business strategy. We will ensure that any equity agreements, assignment rights, employment agreements, non-disclosures and all other relevant documents accurately reflect the scope and rights regarding your innovations. Our goal at Lloyd & Mousilli  is to help clients accomplish their long-term goals by working closely with them a teach stage and tailoring our advice in accordance with the client’s aspirations and needs.

If you are in need of legal assistance, reach out and consult with the Lloyd & Mousilli startup legal team or set-up a free consultation through our website for questions about SaaS inventions and their patentability or any of your intellectual property or business legal needs.

FOR IMMEDIATE RELEASE

Houston, TX - July 24, 2024 - Numerous patent service providers may seem appealing at first glance if thorough due diligence is not performed. A quick search for "file patent application" will produce sponsored ads for online providers promoting a quick, easy, and budget-friendly DIY approach to patent filings. However, what is marketed is often not the best option for a startup looking to optimize for long-term growth and investor appeal.

Strategic, attorney-led patent searches and applications can still be efficient. Lloyd & Mousilli, a boutique law firm specializing in intellectual property, technology law, and related litigation, designed its patent practice specifically with startups in mind.

How to Work with Us

(1) Book a free intake call at lloydmousilli.com/calendar
(2) Provide details and context about your business
(3) Electronic engagement letters and flat fee payments

Lloyd & Mousilli Patent Team

Lloyd & Mousilli's patent practice includes seasoned legal counsel with practical experience in startups and small businesses. Founded by Managing Partner, Feras Mousilli, Lloyd & Mousilli's impressive resumes feature positions at companies like Apple and Dell, and the USPTO. Equally important is their experience as small business owners. Patent strategies for startups and small businesses differ significantly from those for larger enterprises, and there is no one-size-fits-all solution. The Lloyd & Mousilli team distinguishes itself by focusing on securing strategic protection in a cost-effective manner.

• Prior Art Searches
• Provisional & Non Provisional Applications
• Office Action Responses
• Patent Licensing
• Patent Litigation

From the prior art search before your application is filed to enforcing your patent registration in court - Lloyd & Mousilli specializes in supporting startups through the entire IP life cycle.

About Lloyd & Mousilli

Lloyd & Mousilli is a boutique law firm specializing in intellectual property, technology law and related litigation. From its founding over a decade ago, headquartered in Houston, Texas, Lloyd & Mousilli has championed the strategic use of intellectual property, counseling businesses from new startups to enterprises.

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Why are Examiner Interviews beneficial?

Examiner interviews are the not-so-secret weapons of patent prosecution. If conducted strategically, an interview with your patent examiner can potentially be the driving force that leads to a successful registration. 

An examiner interview can provide several benefits, including: 

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Examiners are only human; misunderstandings in the written communication between the examiner and the applicant can often be clarified with a face-to-face discussion. Your conversation may unearth information you otherwise would not have obtained. For example, your examiner may have misunderstood your claim as you’ve written them. A verbal explanation may provide the necessary clarity that the examiner was missing. 

_{‍Cost and time reduction}

On average, each Office Action response costs about $3,000. An interview with the examiner can potentially reduce the number of refusals issued against your application, saving you money and cutting down the prosecution time. 

‍When and how can you request an interview?

Once a first refusal has been issued, patent applicants are entitled to an interview with their examiner. There are three ways to submit a request for an interview: 

(1) Fill out a PTOL-413A form 

(2) The USPTO’s online Automated Interview Request (AIR) system

(3) Call your examiner directly to request an interview

‍Tips for a successful interview:

Simply attending the interview isn’t enough; preparation is key. Some ways to prepare for your interview are:

_{‍Prepare an itinerary}

Come prepared. Examiner interviews are typically 30 minutes long - make the most of your time by being as concise and efficient as possible. Prepare an itinerary for your discussion, including all questions and arguments you have for the examiner.

_{‍Ask for input}

An interview allows you to directly request the examiner’s recommendations for improving the claims in your application. For example, making note of the claim language the examiner uses is a strategic way to improve your arguments; they are not likely to reject their own language, so take advantage of this opportunity to receive their direct input. 

‍Ready to take the plunge on a patent application?

Patent applications are tedious and complex. It can take the average person months to learn the ins and outs of patent prosecution. Applying on your own is always a risk, as one small mistake can lead to drastic consequences regarding cost and time delays. 

Lloyd & Mousilli has dedicated intellectual property attorneys who are experienced in the patent application process. We can assist with the preparation and filing of your application, as well as offer strategic guidance on your overall intellectual property protection. 

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Scale of Diffusion Within AI-Related Patent Applications

The AI algorithm’s findings confirmed the general hypothesis that inventors across various technological fields are increasingly filing AI-related patent applications. AI-related patents within the AI-based hardware, vision, machine-learning, natural language processing(NLP), speech, and evolutionary computation fields are increasing, both in number and as a percentage of the total patents filed each year. Additionally, the sophisticated and complex hardware necessary to support the growing integration of AI into these new innovations is directly contributing to the increase of applications for AI hardware patents. According to data presented by AltIndex.com, “back in 2014, there were roughly 30,800 active patent families of the global top 100 owners in the AI tech space. Since then, the total number of active patent families in the AI tech field surged by 940% in the past ten years and hit nearly 320,000.”

AI-related innovation is even being diffused within these large corporations themselves as they are finding more ways to implement AI systems specific to the various product lines, departments, and the many industries with which these corporations engage. Looking at the sheer volume of AI-related patents owned by the top players back in 2020 when the USPTO conducted its study, we see IBM (46,752), Microsoft (22,067) and Google (10,928), at the top, although these numbers have only increased since. This is a clear indication of just how integral and influential these companies view AI technology as being a major factor to their future success. While these larger players are still dominating the AI-related patent space, there is a growing trend of AI-related technology diffusing into small businesses, startups, and even individual inventors. Additional evidence of AI’s significant growth beyond just its initial niche users is the geographical diversity in patent applications. For example, several states in the Midwest have acquired AI-related patents as a part of larger image recognition and data processing technologies created to provide medical care in rural areas. This indicates the shift of accessibility to AI technology that previously saw it limited to geographical areas that were heavy producers of technology, such as Silicon Valley and Austin, Texas.

Impact on Startups & Inventors

Previously, AI was seen as accessible only by larger corporations and as exorbitantly expensive, as evidenced by the number of AI-related patents held by the traditional technology giants. This is no longer the case as AI is permeating every industry and facet of business, in that 82% of business leaders have already deployed generative AI or are intending to deploy it within the next year.  Small businesses and inventors should be mindful of the changing landscape and reflect on how AI could impact their ideas, inventions, and their industry as a whole. AI typically serves to either advance or enhance technology. Often in order to secure early-stage funding, build a successful product, and eventually exit the startup stage, an innovator would need to produce a good business plan. Within that plan, it would be wise to show a clear understanding and strategy for how any AI-related technology or patents would advance or enhance the businesses’ success. Integrating AI into an invention is one way to ensure that investors know the inventor has considered such alternatives and is planning for the future. Even companies with well-established products that currently do not rely on AI must consider the future impact of AI technology on their products and industry to avoid being left behind.

Caution: Do Not Place the Proverbial Cart Before the Patent Horse

Inventors are understandably excited about their new invention; they often feel as though they have just created the greatest thing since sliced bread and the world needs to know about this wonderful new invention right away. While their enthusiasm may be warranted, it comes with a great deal of risk. Without the robust protection that a patent offers, or even the protection a patent application offers, the invention maybe in jeopardy of being stolen or declared ineligible for patentability if the inventor fails to file an application in time. The business side of monetizing an invention can often be a tricky aspect of innovation. Businesses and innovators, be advised, always apply for the maximum patent protection that the invention is eligible for at any given time. This means considering alternative embodiments, uses, technologies, and other factors that may affect the invention now or in the future. It is important to file for patent protection prior to commercialization of the invention. The risk of working toward commercialization without a patent can be extremely risky. Furthermore, if a larger company is looking to acquire or contract with a newer startup, they often require the startup to secure all of the appropriate protection for its intellectual property, especially any patentable inventions, prior to any transaction taking place. Startups can streamline any future acquisition or licensing of their products by filing a provisional patent application to ensure protection for each novel component of their product.

Filing a patent application, or in some cases, a series of patent applications, is a highly complex and detailed process that requires attorneys with both a thorough understanding of the technology involved and the legal know-how to ensure the invention is granted the broadest protection available. A patent attorney will often conduct a prior art search (looking for known or potentially conflicting technologies), draft and amend the patent application (ensuring the broadest language and coverage possible for the invention), and lobby on the inventor’s behalf by responding to and working through any issues raised by a patent examiner at the USPTO. Integrating an AI-related technology into a patent application can make the already bizarre claim language even more complicated to navigate and adds an additional wrinkle into the complexity. This is why it is best to seek the help of a seasoned patent attorney that can efficiently and effectively articulate the underlying algorithm and technology in a manner that satisfies the USPTO’s statutory requirements for patentability.

Lloyd & Mousilli boasts a team of experts in the area of AI-related patents. Let us employ our extensive experience helping early-stage innovators to receive the fullest patent protection over the novel idea at the earliest date to ensure priority. We have overseen patent strategies for consumer products at some of the largest technology companies and want to share this experience with you. The different teams at our firm, led by seasoned attorneys, work in synergy to help businesses seamlessly weave their patents throughout their broader business strategy. We will ensure that any equity agreements, assignment rights, employment agreements, non-disclosures and all other relevant documents accurately reflect the scope and rights regarding your innovations. Our goal at Lloyd & Mousilli is to help clients accomplish their long-term goals by working closely with them at each stage and tailoring our advice in accordance with the client’s aspirations and needs.

If you are in need of legal assistance, reach out and consult with the Lloyd & Mousilli startup legal team or set-up a free consultation through our website for questions about AI-related patents or any of your patent needs.