Financial impact of legal practice on software patent subject matter eligibility: Effectiveness of a workable standard

This article examines the financial impact of software patent subject matter eligibility by analyzing divergent legal practices by courts and administrative bodies. We illustrate these effects by empirical evidence relating to case-law decisions, notably Alice Corp. Pty. v. CLS Bank International (hereafter, Alice v. CLS Bank or Alice). In order to eliminate the ambiguity of legal practice of these two systems in relation to patent law, the patent office has been inspired by and aligned with the work of the judicial system and developed an analytical model concerning the application of the law. The effectiveness of this workable standard is then evaluated on the basis of its influence on firm value. The results suggest that the publication of the workable standard, the United States Patent and Trademark Office (USPTO) Interim Guidance, has had a significant positive impact on companies which have completely modified their patent strategies in line with the new USPTO policy. We conclude that the uniformity of legal approach by the judicial and administrative systems decreases legal uncertainty and contributes to financial performance. Consequently, a workable standard with clear and precise legal approaches enables the patent system to develop efficiently.