For technology startups relying on novel algorithms, platforms, or AI architectures, patent protection remains a powerful tool for long-term valuation and defensibility of intellectual property rights. But since the Supreme Court’s landmark 2014 decision in Alice Corp. v. CLS Bank International, the bar for software patent eligibility has shifted dramatically—and many applications that might have been greenlit a decade ago now risk being rejected under 35 U.S.C. §101 for claiming nothing more than abstract ideas.
Effect of Alice Decision on Software Patents
The Alice decision didn’t eliminate software patents altogether, but it changed the game. Under Alice, software inventions must do more than recite a clever process or logic sequence. To be eligible for patent protection, the invention must deliver a concrete technical improvement—ideally something that enhances the performance of the underlying computing hardware, improves memory usage, reduces processing load, or solves a previously unresolved technological problem in a novel way.
What doesn’t work? Pure automation of a human task without a technical innovation, or a general-purpose computer executing familiar steps—even if the workflow is framed as “innovative.” For example, a patent claim for using an AI model to summarize articles, without more, may be deemed an abstract idea. But a claim for a novel AI-based compression algorithm that reduces data transmission bandwidth in a distributed computing environment is more likely to satisfy software patent eligibility under §101, because it presents a real technical benefit.
Startup Software Patent Strategy
Startups frequently encounter problems when patent applications focus on the business or functional layer of their technology, rather than the structural or technical impact. It’s not enough to describe what the software does—you have to show how it does it in a way that improves system performance, reliability, or efficiency. For founders and product teams, this means working closely with patent counsel to align claims with hardware-level improvements, even if the product operates in a cloud or API context.
At L.A. Tech and Media Law Firm, we advise technology companies on precisely this issue—how to draft software patent applications that survive Alice scrutiny, avoid rejections under §101, and maintain enforceability in future litigation or licensing discussions. It’s especially critical for AI startups, fintech tools, healthtech platforms, and any product operating in a high-IP-risk sector. (See more on our technology and IP services here.)
Recent case law continues to underscore the need for technical substance. In Yu v. Apple Inc. (Fed. Cir. 2021), for example, the court invalidated a patent for a dual-camera smartphone image processing method because it lacked a meaningful technical innovation. Conversely, decisions like DDR Holdings v. Hotels.com and McRO v. Bandai Namco upheld software patents that improved how computers functioned, not merely how tasks were organized.
So where does that leave software-focused startups in 2025? The answer is that software patent eligibility is still very much achievable—but only with thoughtful planning, technical specificity, and an intentional approach to claim drafting. A founder who tries to patent a software-driven business idea without technical depth will likely see their application stalled or rejected. A founder who works with legal counsel to articulate the system architecture, data flow improvements, or performance gains stands a far better chance.
AI Software Patent Attorney
This is particularly important for startups looking to raise capital or pursue M&A. Investors increasingly understand the implications of the Alice decision, and they look for IP portfolios that aren’t just filled with paper—but with patents that can withstand legal challenges. If your core value is tied to a proprietary system, algorithm, or technical stack, a strong §101-compliant patent can be a game-changer.
At the same time, founders must be cautious of overpromising or filing patents too early. If your product is still in flux or lacks technical detail, a provisional patent may be appropriate, but it still needs to capture the critical technical effect. Broad ideas around “using AI for X” or “automating Y with blockchain” are no longer persuasive. The USPTO is looking for inventions that alter computing behavior, not just task assignment.
To succeed, startups should document how their system improves latency, reduces storage load, enhances fault tolerance, or performs a function not possible before. These metrics are not just engineering wins—they are the very foundation of software patent eligibility post-Alice.
David Nima Sharifi, Esq., founder of L.A. Tech and Media Law Firm, advises startups and innovators on software patent strategy, AI-driven IP protection, and legal planning for product commercialization. Featured in the Wall Street Journal and recognized among the Top 30 New Media and E-Commerce Attorneys by the Los Angeles Business Journal, David helps founders draft, position, and defend software patents that align with today’s legal standards and tomorrow’s market realities.
Schedule your confidential consultation now by visiting L.A. Tech and Media Law Firm or using our secure contact form.
