business method patents

The long-awaited decision by the United States Supreme Court on business method patents was issued on June 19, 2014.  Unfortunately, the decision raised more questions than it answered.  The expectation was that the Supreme Court would clearly explain the difference between unpatentable abstract ideas and patentable software, including business methods.  Instead, the Court issued a very narrow decision with broad, but uncertain ramifications.  The Court applied a test it has previously relied upon, striking down all of the patents in the case and expressly stating that it was not opining on the patentability of software or business methods in general.

The case is Alice Corporation Pty. Ltd. v. CLS Bank International, 2014 U.S. Lexis 4303 (U.S. Supreme Court, June 19, 2014). Alice Corporation’s patents were directed to a computer-implemented process of minimizing “settlement risk” – the risk to a party in a financial transaction that the other party would not perform the transaction, by creating an intermediary using “shadow” financial records of both parties.  The claims covered the computer system to perform the process, the computerized method itself, and a computer-readable medium with the instructions to perform the method.

Alice Corporation had sued CLS Bank for patent infringement.  The district court had granted summary judgment for CLS Bank on the grounds that all of the claims were not eligible for patent protection as they were directed to an abstract idea.  A panel of the Federal Circuit Court of Appeals had reversed the district court, but then, in an en banc hearing, affirmed the district court in a set of multiple opinions.  A plurality of the Federal Circuit found all of Alice Corporation’s claims patent-ineligible, relying on the Supreme Court’s 2012 decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S.Ct. 1289 (2012).

Continue Reading Business Method Patents: Murkier Water

By: Audrey A. Millemann

Over the last 15 years, the United States Patent and Trademark Office has issued many business method patents.  Many of these patents seem overly broad or obvious, and the tech industry has been strongly critical of the PTO for issuing these patents.

Congress has been listening.  Under a new program enacted as part of the America Invents Act (“AIA”), business method patents can be challenged in a specific procedure in the PTO.  The program, called the “Transitional Program for Covered Business Method Patents” and referred to as CBM Review, is set forth in section 18 of the AIA.  CBM Review went into effect in September 2012 and has a sunset provision of September 2020.

Under the CBM Review program, a defendant accused of infringement of a patent covering a business method may challenge the validity of the patent in the PTO.  CBM Review is conducted before a new administrative law board, the Patent Trial and Appeal Board (“PTAB”).     Section 18 (d)(i) of the AIA defines a covered business method to be a method or apparatus directed to data processing or other activities used in financial products or services.  The statute excludes patents covering “technological inventions,” which the PTO has defined as inventions that solve a technical problem using a technical solution.

The purpose of CBM Review is to provide a quick and less costly alternative to federal court litigation for determining the validity of business methods patents.  Under the CBM Review program, a patent may be challenged as invalid on any number of grounds, including that the claims are directed to unpatentable subject matter under 35 U.S.C. section 101, in particular, abstract ideas.  Business method patents can also be challenged on the basis or prior art. 
Continue Reading Challenging Business Method Patents