Patent Eligibility Restoration Act (PERA) – Clarity for Software Patents?

At our firm, we work with Section 101 issues in software patents every day, and we know firsthand how frustrating and unpredictable this area of law has become. We hear it from clients every day, and we often share their frustration.  Talking to Examiners, it seems like they also share some of this frustration.  Since the Alice decision in 2014, the Patent Office (and, later, courts) have been rejecting software-related inventions as claiming “abstract ideas” that are ineligible for patent protection.  This has made it incredibly difficult for companies and people who focus on software to secure patents, even when their software is actually a “real” invention.

The Problem with Section 101 for Software Patents

At the bottom, the issue is how the Patent Office and the courts have applied judicial exceptions to patent eligibility.  Under current law, inventions that are categorized as abstract ideas, laws of nature, or natural phenomena are generally ineligible for patent protection. For software specifically, this means that many useful inventions—like algorithms, data processing methods, or systems that improve computing or computing performance—are deemed patent-ineligible and, therefore, denied patents because they are seen as abstract.

We loosely refer to the test used to determine patent-eligibility as the Alice test. The Alice test itself is tricky: first, patent examiners/courts determine if the invention is directed to an abstract idea, and if it is, they have to decide then whether the claim includes additional elements that integrate the exception into a practical application or whether the claim as a whole amounts to significantly more than the judicial exception.  If this sounds confusing, that’s because it is.  This confusion has led to inconsistent decisions across cases.

What is PERA?

The Patent Eligibility Restoration Act (PERA) is a proposed piece of U.S. legislation designed to reform Section 101 of the U.S. Patent Act, particularly to address the challenges mentioned above. Introduced in 2023 by Senators Thom Tillis and Chris Coons, PERA targets the judicial exceptions that have made it difficult for software-based inventions to qualify as patent eligible.  PERA aims to eliminate these judicial exceptions and restore patent eligibility (thus, the name…) for software inventions that meet the basic statutory requirements of being a process, machine, manufacture, or composition of matter. PERA’s primary goal is to create clearer, more predictable rules around patent eligibility for software, bringing the U.S. in line with global standards and making it easier for innovators in software-based fields, such as AI, cybersecurity, and cloud computing, to protect their inventions​.

How PERA Could Change the Game

The Patent Eligibility Restoration Act (PERA) aims to fix this problem by eliminating the judicial exceptions that have made patenting software inventions so difficult. Here’s how PERA would directly benefit the software industry:

1. Broader Patent Eligibility: PERA wipes away the confusing exceptions for abstract ideas, laws of nature, and natural phenomena. This means that, under PERA, software inventions will be patentable as long as they meet the basic requirements of being a useful process, machine, manufacture, or composition of matter. This is a huge shift from the current system, where software-related patents are frequently rejected.
2. Defined Exclusions: While PERA opens up broader patent eligibility, it’s still smart about drawing some lines. Things like pure mathematical formulas and mental processes that can be performed entirely in your head will still be excluded from patentability. However, for software that solves real-world technical problems—like improving computer efficiency or securing data—PERA will make it clear that these inventions are patentable​.
3. Aligning with Global Standards: One of the big advantages of PERA is that it would bring U.S. patent law back in line with the rest of the world. In Europe, Japan, and China, software patents are generally granted as long as they provide a technical solution to a problem. The U.S., on the other hand, has been much stricter since Alice, leaving American software developers at a global disadvantage. PERA would correct that and make the U.S. more competitive in key technology fields.

Why the Current System Holds Back Software Innovation

The Alice test has made patent eligibility for software inventions unpredictable. Even when an invention clearly improves a computer’s functionality or solves a real problem, it can still be rejected as abstract. For software startups, for example, this can be a significant obstacle. Without clear patent protection, it can be difficult to find funding or to protect their market differentiation.  Investors want to know that their investment is safe, and patents provide a key part of that security.

Startups and smaller software developers often lack the resources to navigate this uncertainty. They need clear, predictable rules around patent eligibility, and that’s exactly what PERA promises to deliver​.

The Bottom Line

The Patent Eligibility Restoration Act (PERA) appears to be the reform that patent attorneys and the software industry have been waiting for. By eliminating the confusing and inconsistent judicial exceptions, PERA would hopefully provide the clarity and predictability that software developers, patent attorneys, and businesses need. With more certainty around what is or is not patentable, we would expect to see an increase in innovation, investment, and growth in key fields like AI, cybersecurity, and cloud computing.

While PERA is still making its way through Congress, the fact that it has bipartisan support is a good sign. If passed, it would have the opportunity to restore confidence in the U.S. patent system and ensure that software innovations get the protection they deserve. This is a welcome and much-needed change for those of us in the patent world.

About NK Patent Law

NK Patent Law is an intellectual property boutique serving clients throughout the United States and abroad.  We focus on patent preparation and prosecution, trademark preparation and prosecution, and general IP counseling to help businesses navigate complex IP issues and potential disputes. We help startups, established companies, and universities protect their intellectual property and navigate the competitive landscape to protect their valuable intellectual property assets. Visit us at www.nkpatentlaw.com to learn more.