Can I – and Should I – Patent My Smartphone App?

One of the most common types of enquiry we receive in our day-to-day practice is about patenting of smartphone (i.e. iOS or Android) apps.  Indeed, if we had a dollar for every prospective new client who had rung up or emailed to ask how to protect their ‘million dollar app’ idea, we would have… well… probably more money than we have made from actually preparing and filing patent applications based on these enquiries!  Because most of them end up going nowhere, once we have had a conversation about the pros and cons of patenting.

This post will explain why.  And it is not because smartphone apps cannot be patented – many of them most probably can be.  However, for most inventors the appropriate question is not ‘can I patent my smartphone app?’ but ‘should I patent my smartphone app?’  This second question is difficult to answer without having a solid business plan, which is something that has rarely been considered by people calling a patent attorney because a friend or relative told them: ‘that is a great idea, you should patent it!’

These days, the Apple iTunes App Store and Google Play (the Android equivalent) are incredibly competitive marketplaces.  According to recent data from app analytics specialists Flurry, there are over 600,000 apps now available from each of these markets.  Wikipedia entries for the two stores place these figures for September 2012 at 700,000 apps in the Apple App Store and 675,000 apps on Google Play.  Whichever figures are most accurate, this is an awfully large number of apps!

If you are going to make any money in these markets – whether by app sales, through in-app revenue and/or via advertising – you are going to have to get noticed first.  And clearly there is much more to this than just having a great idea.  (In fact, this may be the least important element, unless you are the sort of person who thinks that flinging kamikaze birds at green pigs with a slingshot is a ‘great’ idea!)

Ask not, therefore, whether your app idea can be patented.  Ask instead whether it is worth patenting.  This is as much a business question as an IP issue, and for many – perhaps the majority – of app inventors, the answer may well be ‘no’.

CAN APPS BE PATENTED?

The short answer to the question ‘can I patent my smartphone app idea’ will, in many cases, be ‘yes’ – at least in those jurisdictions which are not too antipathetic to software patents.

To understand whether, and how, an app can be patented, it is useful to try to think of it in purely technical terms.  Ask what it is that the app does, in terms of processing, communications and other functions, that is new and useful, i.e. has never been done before. 

In practice, many mobile device apps exist in two parts, i.e. there is an app which runs on the user’s device, and a remote server which may retain persistent user information and/or other data, or act as a processing centre or a conduit for communications between end-users.  Any of the interactions and processing occurring at the mobile device(s), or at a server, or indeed any unique client/server transactions which take place, may form the basis for a patentable claim.

In any of these cases, the requirements for patentability of smartphone apps are no different from any other computer-implemented inventions.  These include the general criteria of novelty and inventive step, along with the obligation to provide a description of one or more embodiments of the invention which is sufficient to enable a non-inventive person skilled in the relevant field of technology to put it into operation.

In the case of computer-implemented inventions it is also necessary to take care to ensure that the patent claims are not so broad as to encompass purely abstract ideas, mathematical equations, laws of nature or mere discoveries.  In jurisdictions, such as Europe, in which stricter limits are placed on the patenting of software-based inventions, it is also necessary that the claimed invention provide a technical solution to a technical problem.  By way of example, route-planning and tracking device location on a map is a primarily technical activity, whereas figuring out the best way to use a slingshot to fling kamikaze birds at green pigs is primarily of entertainment value.

All of these issues are very much specific to the particular invention under consideration, but generally it will be possible to work through the relevant questions in a given case – perhaps with the assistance of a professional advisor – to determine whether or not there is something patentable in a new app idea.  And often the answer will be affirmative.

IS IT WORTH PATENTING AN APP?

In many respects, the patent system is not well-suited for protection of individual apps.

We should clear up one common misconception from the outset – having your own patent on a product does not, in itself, protect you from accusations of infringement by other patent holders.  It is quite possible for a patented product to include features or components that infringe the rights of others.  Even if you apply for your own patent, you can still become a victim of a company such as Lodsys.  When people speak of the ‘defensive value’ of patents, they are referring to the potential for patent-holding companies to threaten counter-infringement actions against their competitors, and a means to negotiate a deal to resolve patent disputes.

The primary purpose of a patent, particularly for a small company, is to protect its own product against copying by a competitor.

Cost and timeframe issues

Consider that most apps sell for less than ten dollars, so if you are planning on making money from premium sales substantial profits necessarily rely on accessing a global market.  For Australian inventors, patent protection in Australia alone is thus commercially inadequate, and at the very least you need to be looking at US patent protection.

With patent application preparation, filing, examination and issue fees and attorney services, a US patent is quite likely to cost A$15,000-A$30,000 to obtain (even assuming things go reasonably smoothly), and the process could easily take three or four years.  You need to ask where you see your great idea going over that period of time, and whether its projected revenues are likely to justify the cost.

Nowadays, there are programs and procedures that can be used to speed up this process, reducing pendency to 12-18 months.  But one way or another, you can expect that employing these mechanisms will add at least A$2500-A$5000 to your up-front costs.

If your business plan is to develop an app which captures the zeitgeist, makes a lot of money quickly, and then fades back into obscurity, a patent is going to be of little assistance.  There will be insufficient time for it to be granted, and insufficient time for a competitor to copy the concept and capture some of that small-term market anyway.

Market issues

Even if you expect your app to have a longer lifespan, a patent may still add little value to your business.  If you consider the different types of apps available in the online stores, they can broadly be divided into two categories.  Firstly, there are ‘general-interest’ apps, such as web browsers, social media clients, camera and image processing apps, notepads and so forth, of which almost everybody has at least one on their device, and where there are a number of competing choices.  But these tend not to include many patentably new features, because by definition they are targeted at providing well-known functionality, albeit that they generally try to do so ‘better’ than their competitors.

Then there are what we might call ‘special interest’ apps, which perhaps do something genuinely new and original, but which are only ever going to be of interest to a more-limited group of users.  Some of these groups may be quite large, e.g. all professionals who actually use their mobile devices to improve productivity, or all children under 12, but nonetheless the more limited market means that there are fewer directly-competing products than there are for the general interest apps.

It is clear that most of the competition in the app stores is not between directly-competing applications, but simply to get any user attention at all, regardless of the purpose of an app.  Flurry estimates that, in 2012, the top 32% of revenue from premium and in-app sales will be earned by the top 100 apps.  That leaves the other hundreds of thousands of apps to share the remaining 68%! 

Somewhat misleadingly, Flurry suggests that this is an improvement (for the ‘little guys’) over 2010, when the top 100 apps garnered 55% of the revenue.  However, this is not an improvement at all.  In mid-2010 there were only about 225,000 apps in the iTunes App Store, and 80,000 apps on the Android Market (as Google Play was then called).  So, taking the iTunes App Store as an example, there are now nearly three times as many apps sharing 68% of revenue in 2012 as were sharing 45% in 2010.  On these figures, each individual app has, on average, lost about half of its market share.  (However, since Flurry’s figures also suggest that total revenues may have doubled over this same period, app developers may just about be breaking even over time.)

It is clearly harder than ever to get any consumer attention in an app store.  Thus, competing with an existing ‘specialist’ app – even a successful one – is likely to be a mug’s game.  If someone has come up with a new, innovative and engaging app, which has grabbed the market’s attention, and made it onto tens or thousands of devices (or more), the chances of anybody noticing a copycat app are pretty slim.  And app prices are so low already, and so easily adjusted in response to market forces, that competing on price is a losing proposition also.

The odds are, then, that even a successful app is unlikely to attract a copycat competitor which captures enough of the available market to justify launching a patent infringement lawsuit which could cost millions of dollars to run.  In this case, applying for a patent is an additional expense which is unlikely to add a corresponding value to the business.

SO WHEN MIGHT YOU PATENT AN APP?

Despite the issues discussed above, there are circumstances in which it might make very good sense to apply for patent protection on a smartphone app – or at least on some of the technology embodied in your application.

Clearly, a patent is likely to provide the greatest commercial benefit where:

1. the expected lifespan of the technology substantially exceeds three years;
2. the technology is of broad general interest, appeal or application; and
3. there is scope for competitors to use the technology in their own apps, either to compete directly, or to develop new variations and applications of their own.

The wonderful thing about modern smartphones, and other mobile devices – for developers and users alike – is the amount of technology typically squeezed into a small, portable, package.  Multiple wireless communications technologies, such as cellular, Wi-Fi and Bluetooth, are combined with geolocation technologies (e.g. GPS), audio (microphones and speakers), high resolution colour displays, touch screens, significant memory capacity and increasingly high-performance computing power.  Combine this with so-called ‘cloud’ technologies (essentially highly-scalable remote processing and storage servers) providing high-availability back-end support for mobile applications, and inventors are really limited only by their imaginations.

While there may be cases in which features of an individual app may be worth protecting, it is far more likely that there will be value in pursuing patents on new technical innovations which underlie an app, in both the mobile device and the remote server. 

For example, improved methods of mapping, tracking, route-planning, data synchronisation, scalable computing, data interchange, user profiling, securing sensitive information, performing financial transactions, or interacting with users to work out what they want to do, are all technologies which can be used to develop better apps, and which can be employed across a range of different applications.  A patent on one of these technologies might be used not only to keep competitors at bay, but could also be licensed for use by other developers for use in their own apps, as a further means of income generation.

CONCLUSION

The point of this article is not to say that apps cannot, or should not, be protected by patents, or that underlying technologies should.  In every individual case, the questions a prospective patent applicant should be asking are essentially the same ones as for any invention:

1. Why do you want a patent?
2. What commercial benefit would having a patent provide?
3. How does the cost and timeline for obtaining patent protection in countries of interest align with the business plan for developing, launching and monetising the app?
4. Would a patent add value to the business and/or the product?
5. How would a patent complement other forms of intellectual assets associated with the product, e.g. copyright, trade marks, know how, reputation, market positioning, brand image, trade secrets, and so forth?
6. Which of your business strategies and objectives will be supported by obtaining a patent?

We would always advocate aligning a business’ intellectual property protection strategy – or, more broadly, its intellectual asset management strategy – with its business plan.  If the two do not support and complement each other, you will find it much harder to achieve your business goals, whatever these may be.

In this sense, apps are no different from any other technical product, and if you cannot (yet) answer the questions listed above, then you may not be ready for prime time in an increasingly IP-aware marketplace.

Tags: Android, Computer programs, Intellectual Asset Management, iOS, Strategy