35 U.S.C. 101 Inventions patentable.
Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

Software could readily qualify as a process, independent of its structure, namely, being "computer-implemented," as so many software method claims have it, but software hasn't received such recognition, except, tentatively, by the Federal Circuit Court of Appeals (CAFC).

Building on earlier precedent, in 1998, the CAFC ruling in State Street Bank & Trust Co. v. Signature Financial Group, 149 F.3d 1368 laid to rest an exception to business methods being patentable subject matter, declaring the "transformation of data" as passing the test for utility under by producing a "useful, concrete, and tangible" result. In the Microsoft case, CAFC had found for AT&T, viewing the export of software as within the aegis of §271(f).

During oral arguments in Microsoft's Supreme Court appeal from AT&T's successful appeal at the CAFC, Justice Bryer mused: "I take it that we are operating under the assumption that software is patentable? We have never held that in this Court, have we?" The Supreme Court happily ignores any and all case law but its own. SCOTUS has never recognized software per se as patentable, nor has the patent office; at least, not without tying it to a computer-readable medium.

Microsoft had appealed its loss at the CAFC for infringing AT&T patents under 35 U.S.C. §271(f), an oddity of extra-territoriality for exporting infringing "components."

SCOTUS wanted to exclude software from §271(f).

While reading §271(f) to exclude from coverage foreign-made copies of software may create a "loophole" in favor of software makers, the Court is not persuaded that dynamic judicial interpretation of §271(f) is in order; the "loophole" is properly left for Congress to consider, and to close if it finds such action warranted.

The point being that, in the large, software patents are asserted against large software corporations, Microsoft being numero uno. Limiting patent protection for software is thus, as SCOTUS acknowledged, a "favor" to "software makers," though, actually, only really BIG software makers, not has-beens like AT&T, or small software makers struggling against the big boys by relentless innovation.

The core argument was whether software per se qualified as a statutory "component." SCOTUS ruled that it didn't. The decision was 7-1; Chief Justice Roberts having recused himself as a Microsoft stock owner.

Infringement occurs only when Windows is installed on a computer, thereby rendering it capable of performing as the patented speech processor.

Abstract software code is an idea without physical embodiment, and as such, it does not match §271(f)'s categorization: "components" amenable to "combination."

Software is certainly a unique commodity, but, legal hair-splitting aside, if you asked any software developer whether object code is an abstract idea, you'd get a look like you were ignorant or crazy, or both.

Only Justice Stevens, in his dissent, played it jake.

If a disk with software inscribed on it is a "component," I find it difficult to understand why the most important ingredient of that component is not also a component. Indeed, the master disk is the functional equivalent of a warehouse of components - components that Microsoft fully expects to be incorporated into foreign-manufactured computers.

I disagree with the Court's suggestion that because software is analogous to an abstract set of instructions, it cannot be regarded as a "component" within the meaning of §271(f). Whether attached or detached from any medium, software plainly satisfies the dictionary definition of that word. See ante, at 9, n. 11 (observing that " '[c]omponent' is commonly defined as 'a constituent part,' 'element,' or 'ingredient' "). And unlike a blueprint that merely instructs a user how to do something, software actually causes infringing conduct to occur. It is more like a roller that causes a player piano to produce sound than sheet music that tells a pianist what to do.

The SCOTUS KSR ruling came out the same day; essentially, another nail in the coffin for software and business method patents, the extraordinary excepted. Substantive innovations are made in software, products of insights overlooked by others in discovering a better solution to a problem. But software is such a well developed technology now that most inventions are combinations and extensions from earlier work. §103(a), the obviousness clause, is now a wide open exercise in hindsight: any prior art in "the field of endeavor," which would be any aspect of software that a claim touches, can be readily combined with the flimsiest reasoning into anticipation. But that's another blog entry.