If your software business is based more upon your patent portfolio than your ability to execute, your reality is about to change. The US Patent and Trademark Office (USPTO) has just added two important new tests for patentable subject matter will invalidate many if not most software patents.

With a recent (June 2008) decision, the USPTO has taken the position that process inventions generally are unpatentable unless they “result in a physical transformation of an article” or are “tied to a particular machine.” Most software patents are process inventions but can meet neither of these requirements: they do not generally physically transform anything, and they are usually defined broadly so that they can protect the invention while running on any general purpose computer. Very specifically, the USPTO has categorically stated that a general purpose computer is not a "particular machine."

The Patent Law Blog has a lot more information on this important ruling.