For many businesses investing in software development, patents have often felt out of reach. This in turn can limit the ability to access the UK patent box regime. The UK Supreme Court’s recent decision in Emotional Perception AI Ltd v Comptroller General of Patents, Designs and Trade Marks challenges beliefs around the patentability of software.

The judgment marks a significant shift in how UK patent law approaches computer-implemented inventions and artificial intelligence (AI). For businesses developing software, AI, automation or data-driven tools, the decision could open fresh opportunities to protect intellectual property (IP) and, in turn, access the UK patent box regime.

What the Supreme Court ruling means for software patents

UK patent law has historically been challenging for software-related inventions, with applications often rejected at an early stage on the basis that they related to a “program for a computer … as such”. The Supreme Court has moved the UK approach closer to that of the European Patent Office and away from the long-standing UK test that had often made software patentability more difficult to establish.

What does this mean in principle?

• The mere involvement of software or AI should no longer automatically prevent an invention from moving beyond the initial excluded subject matter hurdle.
• More applications are likely to proceed to full examination involving novelty, inventive step and technical contribution.

In practical terms, this decision creates a more favourable environment for the initial patentability of software and AI-related inventions.

Why this matters for software businesses

Innovations that were previously assumed to fall outside the UK patent system should be revisited.
The question is no longer simply whether something is ‘just software’. Instead, businesses should consider if the underlying invention meets the patentability requirements under the European-style approach.

This is not a green light for routine software functionality to be patented. But it may be a meaningful development for companies that have invested, or are investing in, innovative technology and have not yet explored whether that innovation can be protected.

The decision is likely to be relevant across a wide range of software-based technologies, including:

• Cloud and enterprise software platforms: such as SaaS solutions that solve technical challenges relating to scalability, security, data integrity, interoperability or performance across complex computing environments.
• AI and machine learning technologies: such as AI orchestration platforms, predictive analytics engines, intelligent automation tools and machine learning systems developed to improve the processing, interpretation or utilisation of data.
• Data-intensive and real-time processing solutions: including high-volume transaction engines, large-scale analytics platforms, real-time decision systems and architectures designed to manage complex data flows efficiently and reliably.
• Automation and workflow technologies: where software coordinates complex processes, integrates disparate systems or applies novel techniques to improve accuracy, efficiency and scalability.
• Cyber security and digital infrastructure technologies: including solutions that enhance system resilience, secure communications, fraud detection, authentication, monitoring or threat identification.

The patent box angle: why the tax impact could be significant

The UK Patent Box regime allows qualifying companies to apply an effective 10% rate of corporation tax to relevant profits derived from qualifying patents, rather than the standard main rate of corporation tax of 25%. Whether value is generated through the sale or licence of patented software, hardware incorporating the software or through use in the business, for profitable businesses with valuable, patented technology, the tax savings can be significant.

Software and IT-reliant businesses have always been under-represented in patent box claims. If more computer-implemented inventions can now progress through the UK patent system, more technology businesses may be eligible to explore patent box relief.

While the speed at which software evolves may still raise questions about the practical value of patent protection, the potential patent box savings may be sufficient to justify exploring an application, even where the legal protection itself is not the primary driver.

Actions businesses should take now

Reassess IP portfolios

• Identify software, AI, automation or data-led features that provide a technical or commercial advantage.
• Revisit innovations previously dismissed as ‘non-patentable’. Consider whether future development roadmaps include features that support patent protection.

Perform a patent box feasibility exercise

• Map potential patents to products or services and identify revenue streams or cost savings.
• Prepare supporting calculations to identify and quantify potential tax savings.

Early identification is important as the tax benefit will depend on more than simply obtaining a patent. Companies will need to consider the IP ownership structure, whether the relevant development conditions are met, how IP profits should be calculated, and how the patent box calculation interacts with their wider corporation tax position. Taking these factors into account early can help maximise tax benefits.

Could your business benefit from Patent Box relief?

The Supreme Court’s decision challenges a long-standing assumption that software and AI businesses are unlikely to benefit from UK patent protection or tax savings through the patent box regime.

For businesses investing heavily in software, AI or data-driven innovations, now may be the right time to review whether valuable IP is being overlooked. We work alongside legal and patent advisers to help businesses assess patent box feasibility and identify potential tax value in a practical and commercially focused way.

For more information about patent box relief and how this could apply to your business, please contact Graham Steele, Amy Forbes or your usual RSM representative.

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