PTAB Gone Rogue on Covered Business Methods

By Gene Quinn
February 23, 2016

rogue-judge-nasty-grimIn CBM2015-00161, the Patent Trial and Appeal Board (PTAB) at the United States Patent & Trademark Office (USPTO) recently instituted a Covered Business Method (CBM) review on a non-business method patent with a clear and unambiguous technological aspect. This institution decision is in direct contravention of the statute, which is by its express terms prevents CBM review from anything with a technical aspect. In short, only covered business methods, which are financial related business method patents without a technological aspect, are supposed to be subject to this special form of post grant review. Even more troubling, the patent in question has been found to be directed to technological improvements by both the European Patent Office and the United States Federal District Court for the Northern District of Illinois. Nevertheless, the PTAB still instituted a CBM.

U.S. Patent No. 6,766,304 is the patent in question. The ‘304 patent claims the structure, makeup, and features of an improved graphical user interface (“GUI”) tool that can be used for electronic trading. The claims of the patent are in no way directed to a business method or to a method for data processing. The institution decision is troubling because the patent is clearly not a CBM.

The decision implicates an important technological field of innovation – GUIs. A GUI “is an interface through which a user interacts with electronic devices such as computers, hand-held devices and other appliances.” For all practical purposes, GUIs transform computing devices into different tools. For example, depending upon what GUI is being run, an iPhone can be a phone, a calculator, a compass, a flashlight, a game, a carpenter’s level or virtually any other tool.

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PTAB Overreach

According to Section 18 of the America Invents Act (AIA), the USPTO may institute a transitional proceeding only for a patent that is a covered business method patent. A covered business method patent is defined as a patent that claims a method for performing data processing or other operations used in the practice, administration, or management of a financial product or service. Specifically excluded from the definition of a covered business method patents are those that relate to technological inventions. See 37 C.F.R. 42.301(a). To determine whether a patent is for a technological invention the PTAB is supposed to consider whether the claimed subject matter recites a technological feature that is novel and unobvious over the prior art; and solves a technical problem using a technical solution. See 37 C.F.R. 42.301(b).

While it is true that not all graphical user interfaces are considered to embrace a technological invention, the evidence that the ‘304 patent is directed to a technological improvement is overwhelming.

Classification in 705 is Irrelevant

First, ordinarily graphical user interfaces are placed by the USPTO in Class 345, which covers computer graphics processing and selective visual display systems. For reasons that seem completely arbitrary, if the GUI relates in any way to financial services it is not placed in Class 345, but rather is placed in Class 705. This arbitrary reclassification may seem harmless, but classification in 705 is really a USPTO kiss of death for a variety of reasons. Not only is Class 705 known to have a low allowance rate, but the PTAB relied to at least some extent on classification in 705 as justification for finding the invention claimed in the ‘304 patent to be a covered business method. Clearly, there is no rhyme or reason to the USPTO classification system that warrants any deference, particularly when patent applications that should otherwise be classified in Class 345 are arbitrarily assigned to Class 705 when they relate to financial services.

“Using class 705 as a justification for a finding of a finance service or product under Section 18 is inappropriate,” explains Robert Sachs, author of the widely read Bilski Blog and a partner at Fenwick & West. “Class 705 is much broader than that, and includes many subclasses that may be business related, without being specifically financial products or services.   For example, there are subclasses that deal with scales and meters used in generating fees or prices, such as parking meters, postage meters, taxi meters.  Congress did not likely intend taxi meters and butcher’s scales to be subject to CBM review.”

The lack of deference that should be paid to classification into Class 705 is further bolstered by how the USPTO moves cases from other Art Units into and out of Class 705 to more evenly distribute examination duties. The USPTO has always redistributed cases to different Art Units for a variety of reasons, some having nothing to do with the underlying characteristics of the claimed inventions. For example, Sachs recently did an analysis of over 29,000 applications having Office Actions in December and found that 65 applications that had been primarily classified into Class 705 at the time of publication were moved out of Class 705 by the time of the First Office Action. Similarly, some 45 applications that had been previously classified outside of Class 705 were moved into Class 705.

Obviously, classification in Class 705 is not at all probative. Therefore, the PTAB relying in any way on classification of an application into Class 705 is misplaced.

Legislative History Shows GUIs were not for CBM

Second, the legislative history confirms that the entire point of the law was to provide an extraordinary post-grant review proceeding for business method patents because Congress believed that the USPTO was ill equipped to examine this type of patent application in the late 1990s and early 2000s. Every example of a CBM provided in the legislative history claims at some level a business method or data processing technique. Moreover, the legislative history specifically states that patents claiming GUIs for trading, as opposed to patents claiming a trading strategy, are not CBMs. In particular, the bill’s sponsor Senator Schumer agreed with Senator Durbin that a patent claiming “software tools and graphical user interfaces that have been widely commercialized and used within the electronic trading industry to implement trading and asset allocation strategies” was not a CBM.

Judge Coleman says ‘304 Patent is Technical and Not Abstract

Third, on February 24, 2015, in concurrent federal district court litigation, Judge Sharon Johnson Coleman concluded that the ‘304 patent is “directed to a technological improvement of GUIs,” and “is not directed to an abstract idea…” Judge Coleman further specifically concluded: “the claims recite an inventive concept.” See Trading Technologies International, Inc., v. CQG, Inc. (Case No. 05-cv-4811) Memorandum Opinion Order. The institution decision ignores the substance of the opinion and makes no attempt to explain what is wrong or at all unpersuasive about Judge Coleman’s reasoning.

Europe Thinks there is a Technical Effect

Finally, in Europe there is a strict prohibition against the patentability of business methods. Ordinarily, graphical user interfaces are not patentable in Europe because such interfaces do not ordinarily have a technical effect. Notwithstanding, patent examiners at the European Patent Office are still instructed to consider whether there are features of a graphical user interface that contribute to achieving a particular technical effect. See Guidelines for Examination: User Interfaces. If there is a technical effect then even a graphical user interface can be patented in Europe. Significantly, the same technological innovation now being reviewed by the PTAB because it is nothing more than a business method patent has been patented in Europe. See here, here and here.

 

Conclusion

How can the PTAB ignore a decision of a federal court and still find that the ‘304 patent is nothing more than a business method without any technological aspect? How can the PTAB ignore the 101 guidelines the bind the examiners that issued the patent? How can the PTAB ignore the United Kingdom and European Patent Office? The answer is easy. Decisions whether to institute a CBM are not appealable, see 35 U.S.C. 324(e), so the PTAB can do whatever the PTAB wants to do with virtual impunity.

Simply stated, the ‘304 patent is not a business method patent, let alone a covered business method patent, as defined by the America Invents Act (AIA). Still, the CBM continues.

Anyone with GUI related patents, whether in the financial, medical, gaming, or consumer electronics sectors, should be concerned and follow how this matter unfolds. If this case can continues, patent owners really must ask themselves how safe their patent portfolio is from the death grip of CBM at the hands of the PTAB? If a patent that has been adjudged to be related to a technological invention both in federal district court and in Europe can be reeled into a CBM proceeding meant only for pure business methods of a financial nature it seems that no patent is truly safe.

 

Updated February 26, 2016, to add quote from Robert Sachs.

The Author

Gene Quinn

Gene Quinn is a patent attorney and the founder and Editor of IPWatchdog.com. He is also a principal lecturer in the PLI Patent Bar Review Course and an attorney with Widerman Malek. Gene has worked with independent inventors and start-up businesses in a variety of different technology fields, but specializes in software, systems and electronics. is admitted to practice law in New Hampshire, is a Registered Patent Attorney licensed to practice before the United States Patent Office and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 64 Comments comments.

  1. Chris Carter February 23, 2016 9:46 am

    Gene,
    The patent includes 40 method claims directed to improving a method of day trading. Only one of which has to qualify for a CBM to be appropriate. Not only is this patent a business method. It is the poster child. C’mon man.

  2. topce February 23, 2016 11:01 am

    A GUI tool for trading is not a business method?

    Wouldn’t it be more of an overreach if the PTAB relied on the EPO’s analysis of technical effect (not a feature of US law) in making a determination of CBM eligibility?

    W/r/t legislative history: here is the section in question

    Mr. DURBIN. I thank the Senator. I
    want to point out that there are a
    number of examples of companies that
    employ hundreds or thousands of
    American workers in developing and
    commercializing financial sector products
    that are based on business method
    patents. For example, some companies
    that possess patents categorized by the
    PTO as class 705 business method patents
    have used the patents to develop
    novel software tools and graphical user
    interfaces that have been widely commercialized
    and used within the electronic
    trading industry to implement
    trading and asset allocation strategies.
    Additionally, there are companies that
    possess class 705 patents which have
    used the patents to manufacture and
    commercialize novel machinery to
    count, sort, and authenticate currency
    and paper instruments. Are these the
    types of patents that are the target of
    Section 18?
    Mr. SCHUMER. No. Patent holders
    who have generated productive inventions
    and have provided large numbers
    of American workers with good jobs
    through the development and commercialization
    of those patents are not the
    ones that have created the business
    method patent problem. While merely
    having employees and conducting business
    would not disqualify a patentholder
    from Section 18 review, generally
    speaking, it is not the understanding
    of Congress that such patents
    would be reviewed and invalidated
    under Section 18.

    How much interpretive weight should be put into this dialogue? It seems like Senator Schumer is just trying to ease Senator Durbin’s concerns so the bill can get passed.

  3. Anon February 23, 2016 11:41 am

    One caveat that I implore you to recognize:

    Europe may have their “technical effect,” but U.S. jurisprudence has long recognized that the words of Congress do not constrain the Useful Arts to a merely “Technical Arts” equivalent.

    It would be a mistake to lose sight of that underlying difference.

  4. step back February 23, 2016 1:17 pm

    How can the PTAB ignore a decision of a federal court and still find that the ‘304 patent is nothing more than a business method without any technological aspect?

    Gene,

    Apparently you fail to grasp the PTO “a hole” doctrine:

    First, assume a hole.
    Now assume yourself deep down in that hole.
    To get out, you must show true effort.
    Something “significantly more” than normal or routine effort.

    http://patentu.blogspot.com/2016/02/first-assume-hole.html

  5. Gene Quinn February 23, 2016 1:17 pm

    Anon-

    Agreed on the “technical effect.” I think it is wise for practitioners drafting patent applications to satisfy the “technical effect” requirement as if the U.S. does have a technical effect requirement because clearly some examiners, some district court judges, some Federal Circuit judges and apparently most of the PTAB apply a technical effect requirement despite the fact that there is no such requirement found anywhere in U.S. law.

    I point out the fact that three European patents have been issued because Europe has a bright line rule against business methods and they require a technical effect. So a business method without a technical effect couldn’t be patented in Europe. So in the mind of those involved in issuing these patents in Europe the invention in question clearly would not qualify under the CBM standard. So many decision makers seem to want America to be more like Europe. If that standard were applied here institution would have been denied. Of course, there are a variety of other substantive reasons why institution should have been denied also.

    -Gene

  6. Gene Quinn February 23, 2016 1:37 pm

    Chris Carter-

    Clearly you should stick with football. You are a tremendous receiver and I love the C’mon man segments and your time on Mike & Mike during the NFL season, but you obviously know nothing about patents.

    All kidding aside, we know that whoever you are you must be a shill for the infringer lobby. Too bad you are afraid to use your real name and let us know who you really are.

    Obvioulsy, you didn’t read the 40 claims instituted, or if you did you didn’t understand what you read. Each of the claims is specifically directed to a graphical user interface, which for the reasons explained in the article couldn’t possibly be a covered business method. I’d encourage you to reread the article, actually read the claims, and take a look at the statute. If you do you will have to come to the conclusion that the PTAB has made a terrible mistake.

    -Gene

  7. Gene Quinn February 23, 2016 1:43 pm

    topce-

    A graphical user interface is no more a business method than any other form of software. The fact that it is used in business or the for purpose of making money can’t mean that it is a business method. That would make every method a business method.

    Of course, we really don’t have to have a conversation about whether this is a business method or not. Clearly the invention in question is not a covered business method, which has a very specific meaning. Not all business methods (whatever they may be) are susceptible to challenge in a CBM review. Only financial business methods that do not have a technological aspect can be subject to CBM review. In other words, by the express terms of the statute only pure or naked financial business methods can be instituted for CBM review. Whatever you think of these claims it is clear that they do not qualify as a covered business method by the explicit terms of the statute.

    As for the dialogue between Senator Durbin and Schumer, who knows how much weight will be given. It is telling that even Schumer, the most vocal supporter of CBM, didn’t think GUIs would be covered. In a world where Justice Scalia is no longer on the Supreme Court legislative history can only become more relevant. How much more relevant is impossible to know at this point.

    -Gene

  8. Anon February 23, 2016 2:34 pm

    Gene @ 5,

    Sadly, it is indeed most prudent to advise clients to have the best possible protection even – as here – that advice seems to diminish a difference that should not be diminished but should be proudly championed.

    In a very real sense, the sound byte battle is lost because it is prudent to protect the client and fall back to the “technical,” when there is no legal support for such a reduced scope of patent protection.

    Further, I am NOT a big fan of nation to nation comparisons because often those comparisons simply do not take into full effect the differences between sovereigns and at the same time it is commonly the large multinational corporations** that attempt to put in place such a trans-national “ease” that such comparisons engender.

    **that lack any sense of personal nexus with any ONE particular sovereign – and thus tend to not have any ONE sovereign’s interests at heart – with all the included vices of such a lack of touching brings – is something that I has been recently shared on the topics of Citizen United and other concerns that the Founding Fathers had for such juristic persons.

  9. Edward Heller February 23, 2016 3:22 pm

    1. A method of placing a trade order for a commodity on an electronic exchange having an inside market with a highest bid price and a lowest ask price, using a graphical user interface and a user input device, said method comprising:
    setting a preset parameter for the trade order displaying market depth of the commodity, through a dynamic display of a plurality of bids and a plurality of asks in the market for the commodity, including at least a portion of the bid and ask quantities of the commodity, the dynamic display being aligned with a static display of prices corresponding thereto, wherein the static display of prices does not move in response to a change in the inside market;
    displaying an order entry region aligned with the static display prices comprising a plurality of areas for receiving commands from the user input devices to send trade orders, each area corresponding to a price of the static display of prices; and
    selecting a particular area in the order entry region through single action of the user input device with a pointer of the user input device positioned over the particular area to set a plurality of additional parameters for the trade order and send the trade order to the electronic exchange.

  10. Edward Heller February 23, 2016 3:38 pm

    Gene, I agree with you, a GUI, an improvement to a computer system. Clearly eligible.

    You do know that it is position of the government that their institution decisions are beyond review. One cannot even seek mandamus. So the patentee here has to go through the entire CBM where his claims will be held eligible under 101 for the same reasons that they CBM should never have been instituted.

    Clearly, the courts are equally prepared as the patent office to determine whether a claim is eligible under 101, and they have been doing so repeatedly at the very start of a case before major expenses of law and motion and discovery are incurred. I believe that CBM’s were thought necessary in order to prevent excessive litigation expenses before the issue of patent eligibility was even determined. But since the courts are doing that now anyway, deciding 101 at the start of a case, I think the reason for CBM’s is gone.

    CBM’s no longer save litigation expenses. Instead they allow accused infringers to take the matter of subject matter eligibility to the PTO, which is now demonstrably hostile. That angry wind may blow differently in the future, but the validity of a patent should not depend upon the winds of politics. Every patent owner should have a right to his day in court before his patent is revoked.

    I think it is high time that we call for a repeal of the CBM procedure. You already know what i think about IPRs.

  11. Gene Quinn February 23, 2016 4:11 pm

    Anon-

    You say: ” I am NOT a big fan of nation to nation comparisons because often those comparisons…”

    I agree 100%. I always find it amusing, and sad, when Ginsburg asks how other countries handle a particular issue. As if that is at all relevant!?!? They have their laws, we have our laws. Of course, with so many of the elite in the patent world seemingly hell bent on making US patent law like Europe I find it ironic and amusing when they simply ignore what Europe does when it suits their predetermined narrative. The hypocrisy is astonishing… and all too commonplace at the same time.

  12. Edward Heller February 23, 2016 5:07 pm

    Gene, anon, for a very long time, and even in recent cases, the Supreme Court looked to the English common law for what the words in our own statute meant. See, Pennock v. Dialogue, at 18. Why? Because our original statutes were crafted on the Statute of Monopolies as interpreted by English common law.

  13. Curious February 23, 2016 6:19 pm

    Gene, anon, for a very long time, and even in recent cases, the Supreme Court looked to the English common law for what the words in our own statute meant.
    I can see the need 200 or even 100 years ago as our body of law was being developed. However, I think it is about time we can cut the cord.

    I am NOT a big fan of nation to nation comparisons
    Ultimately, the law should based upon what is in 35 U.S.C. (note the U.S. part). While what other nations do (or don’t do) may provide some guidance upon the world’s philosophy as to certain issues, its relevance is very minor. US are not them (pun intended).

  14. Anon February 23, 2016 6:33 pm

    Mr. Heller @ 12,

    May I simply remind you of a recent post where your clear error of view of taking things lock, stock and barrel, from the English was critically panned?

  15. Night Writer February 23, 2016 6:38 pm

    This problem of the expanded CBM has been going on for a long time. I never quite understood why they expanded the CBM. I thought at the time a couple of years ago that it was clear indication that the PTAB was anti-patent.

  16. Edward Heller February 23, 2016 6:46 pm

    anon, that you pen a pan does not mean that your pan is proper.

    I stand by what the Supreme Court actually said.

  17. Edward Heller February 23, 2016 6:52 pm

    Curious, but the controversy still rages over what 101 means. The Supreme Court still cites the English cases on this. And, even though Scalia is no longer on the court, his thinking about the construction of statutes and the constitution must be correct. They means what the drafters meant at the time.

    But more than this. As explained in Pennock, statutes carry with them their common law interpretation when enacted in the US. That applies specifically to the Patent Acts of 1790 and 1793. And those acts continue in 101, and in “known and used,” because the language has remained unchanged since.

  18. Anon February 23, 2016 7:14 pm

    Mr. Heller – I will point out that your own pen is in part what panned your view here.

    On that other thread I pointed out your conflicting and contradictory positions.

    You may want to stand by what you imagine the Supreme Court has stated (giving full possibility of the error in your interpretation), but how do you stand against your own posts divided?

  19. step back February 23, 2016 8:22 pm

    I always find it amusing, and sad, when [Justice] Ginsburg asks …”

    Gene,

    I hope you know that most of these questions are not “originalist” ones but rather come from the trust-able “friend” of court papers that lobbyist love to file for sheer love of country and steering straight of the thoughts of our Mount Olympus 9 (minus one).

    For example, that pluck of the leaf off the tree in Myriad did not come out of the blue sky. It was proposed in an amici curie brief. I bet the ‘what do other countries do?’ question came from similar trust-able sources. We all need “friends”.

  20. Curious February 24, 2016 9:46 am

    Curious, but the controversy still rages over what 101 means.
    101 is quite plain on its face — “invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” The meanings of “process, machine, manufacture, or composition of matter” are pretty well defined. Everything else about the statute is also quite clear on its face.

    The controversy lies in the Supreme Court deciding usurp the role of Congress by rewriting the plain language of the statute. The controversy lies in the Supreme Court choosing to make policy decisions based upon factually-unsupported findings (e.g., “monopolization of those tools through the grant of a patent might tend to impede innovation more than it would tend to promote it”) — findings that should be made and acted upon by Congress. The controversy lies in the Supreme Court using language that they refuse to define (e.g., what is the difference between a claim “directed to” an abstract idea and the notion that “all inventions at some level embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas”?). The controversy lies in the Supreme Court pandering to the infringer lobby.

    If we are to fix the problems that are associated with the application of 35 USC 101, we need to identify where the real controversy lies. However, if we accept that controversy involves the meaning of 35 USC 101, then the infringers have already won. What then follows, as we have recently seen, is large chunks of technology in both the computer and medical fields (two fields that the United States currently leads in and for which plenty of growth opportunities still exist) are being denied patent protection. This may be great for consumers (in the short term) and infringers, but in the long term, consumers will likely start to wonder why new products/services in these fields aren’t being introduced as fast as they used to do. We’ll also see a reduction in job growth in those fields as well.

  21. Matt Levy February 24, 2016 10:17 am

    Gene,

    I have to disagree with you on this specific patent. I agree that GUI patents can be technological, but this one isn’t. The instituted claims just describe how certain business data is to be laid out in a display. That isn’t remotely technological.

    True GUI patents are for new ways of interacting with a device. This one uses completely known techniques; the claims are just about which data is presented in what order. That’s a business method, not a GUI patent.

    The fact that some data might be changed in response to clicks doesn’t make it technical; there is no technical invention or improvement. I think the PTAB clearly got this one right.

  22. Edward Heller February 24, 2016 11:18 am

    In 1790, Art meant the process of making a manufacture.

  23. A Rational Person February 24, 2016 11:19 am

    Curious@24

    Well said.

    I would only add that for decades there had been a general consensus as to what 35 USC 101 meant, as evidenced by the fact that for decades 35 USC 101 had rarely been used to reject claims.

    As you state, “[t]he controversy lies in the Supreme Court deciding usurp the role of Congress by rewriting the plain language of the statute.”

  24. Anon February 24, 2016 11:40 am

    Mr. Heller, your view is false. Your view forces the “method” category to be a mere subset of the hard goods categories.

    You also (conveniently) ignore 35 USC 100(b). See https://www.law.cornell.edu/uscode/text/35/100

    These things are known to you. Yet, you persist in painting a false picture.

  25. John White February 24, 2016 11:58 am

    Sue the PTO using mandamus in the Eastern District of Va. Obtain a TRO then an injunction. This CBM is outside all of the lines of any reasonable interpretation of the statute. The PTO flatly has no authority to do what is doing.

  26. Edward Heller February 24, 2016 11:58 am

    Anon, there is a difference between what you say is the intent of 101 and what I say. You want to make 101 standardless — any process comprising a series of steps is eligible provided it is useful. I instead rely on the intent of Congress in 1790, a Congress working of the basis of English law that allowed patents on Manufactures, but where case law had extended this to the processes of making manufactures.

    Now we also have extended manufactures to specifically include machines and compositions. But this does not change the essence of the meaning of Art.

    When is the last time the Federal Circuit even attempted to look at the law of 1790 to determine the meaning of Art? Name the case?

  27. step back February 24, 2016 12:06 pm

    Edward @21

    The 1952 Patent Act was passed in 1952 (by Congress)
    The 2013 AIA was passed in 2013 (by Congress)

    How does the meaning of “art” in 1790 AD or 2001 BC have any relevance?

  28. Edward Heller February 24, 2016 12:35 pm

    Step, Art and process mean the same thing by statute. The legislative history of the ’52 Act makes it clear that Art and process are the same thing. Thus, one looks to the meaning of Art in 1790 to determine what Congress meant.

    Also, Congress intended that any new manufacture under the sun was the subject of patents. That is entirely consistent with Art being any way of making new manufactures.

    You might want to read Curtis on the origin and meaning of the 1790 statute. That might help.

  29. Curious February 24, 2016 12:48 pm

    You want to make 101 standardless — any process comprising a series of steps is eligible provided it is [new and] useful
    Yes. Those are the words of Congress (in 1952 and 2013 as step back noted @25). 35 USC 101 was not intended to be part of the “conditions and requirements of this title.”

    If you want to invoke English law, you’ll know that the “plain meaning rule” of statutory construction goes back to English law. There is no ambiguity in the statute — hence, there is no reason for the Supreme Court to legislate from the bench to create these (poorly defined) standards.

  30. A Rational Person February 24, 2016 12:57 pm

    Edward@24,

    The following claim, directed to a “business method” and directed to “financial transactions” was allowed by the USPTO, without public controversy as far as I can tell, in 1982 as part of U.S. Patent No. 4,321,671 in 1982:

    1. A bank note dispensing method comprising the steps of: keying a key input unit to feed as an input the sum of money requested; classifying the input sum into the sum to be manually dispensed and into the remaining sum which is the remainder of the subtraction of the manually payable sum from said input sum; discharging said remaining sum with the bank notes either in preset denominations or in such denominations as are specified by the keying step of said key input unit; temporarily storing the discharged remaining sum of the bank notes automatically in a temporary storing place; and keying said key input unit to feed said manually payable sum as an input so that said remaining sum of the bank notes stored can be taken out.

    Why was there no outrage back in 1982 that such method claim was determined to be patent eligible?

    This claim was part of of 4460965 issued in 1984:

    1. A method for recording financial transactions in a cash-less payment system having a portable device, which includes a main memory and plural accounting memories, and a terminal by which information relating to financial transactions is transferred into at least one of the memories in the portable device, comprising the steps of:
    upon the payment of a fee, loading the main memory of the portable device, via the terminal, with units of information corresponding to the amount of the fee;
    upon the occurrance of a financial transaction, allocating a number of information units, corresponding to the amount of the transaction, that are stored in the main memory to an accounting memory assigned to the creditor with whom the transaction is made; and
    reading the contents of the accounting memories, via the terminal, and providing an indication of the creditors with whom transactions were carried out and the respective amounts of the transactions.

    Do you think that somehow the Examiner missed the term “financial transaction(s)” in the claim and should have found this claimed method patent ineligible?

    There have also been numerous claims for adding machines and cash registers allowed by the USPTO for decades now. Are you suggesting that a “method of use” claim for one of these patentable adding machines and cash registers would have been found patent ineligible under 35 USC 101 had it been filed?

  31. Edward Heller February 24, 2016 12:57 pm

    Let me add, Step, that the Supreme Court extended process to include the making of physical signals in the Bell Telephone case.

  32. Edward Heller February 24, 2016 1:02 pm

    @28, Machine processes were always a problem. But, if machines are eligible, why not the way the operate as well?

    Rich did a good analysis of the Supreme Court cases on this topic in Tarczy-Hornock and concluded that the Supreme Court had authorized patents on machine processes.

  33. Anon February 24, 2016 1:02 pm

    Ned, your post at 26 ignores the plain words that are actually IN the statute.

  34. Anon February 24, 2016 1:04 pm

    that the Supreme Court had authorized patents on machine processes.

    Once again, Ned, your own words betray you.

    It is simply NOT up to the judicial branch, no matter how high you go (and what pedestal you place them upon) to set the statutory law that is patent law.

  35. Paul F. Morgan February 24, 2016 1:08 pm

    Ned, not to get into the other issues here, but to simply address the allegation that “CBM’s no longer save litigation expenses.” That is ignoring the fact that a CBM petition can only be filed by someone already being sued, as here, or clearly threatened by, the patent owner, and the expenses of a CBM are far less for both parties than parallel full blown patent litigation conducted through discovery and trial. In particular it is not clear from any of the discussion here if this CBM petition is merely raising a 101 issue or if it this CBM petition raises a strong 103 issue, which can be decided much less expensively in the CBM than in the litigation, because 103 is rarely decided on S.J. There is a lot of prior art, including design patents, on GUIs, GUIs on various public commercial websites, etc.

  36. Gene Quinn February 24, 2016 1:43 pm

    Matt-

    It is not surprising that we disagree.

    Notwithstanding our disagreement, nothing you wrote calls into question the bulk of what I wrote. (1) It is inappropriate to rely on any level on classification into 705; (2) even Senator Schumer, the biggest proponent of CBM, argued that GUIs did not fit the definition; (3) Judge Coleman says the claims are not abstract and are directed to a technological advance; and (4) three separate patents on the same innovation were issued in Europe where there is an express prohibition against naked business methods and an explicit technical effect requirement that is not present in U.S. law. So if the PTAB is right that would mean that others that have considered these patents and Senators Schumer and Durbin who considered GUIs generically, are wrong.

    The real tragedy is that the institution decision is not appealable (at least for now) so the PTAB can do whatever they want.

  37. Edward Heller February 24, 2016 2:25 pm

    Paul, assuming prior art was the only issued raised, you have a point about cost. But that is not the only issue. Preponderance of the evidence. BRI. The lack of a jury trial, but a decision made by a clearly hostile PTAB, all this tells anyone with a patent they will not get a fair hearing.

  38. Edward Heller February 24, 2016 2:37 pm

    anon, the ’52 Act did not intend to change the law regarding 101. The words were the same. 100(b) was intended to put into the statute the extensions the Supreme Court had recognized to ways of making things that was the original meaning of Art. This included the use of machines to produce signals. I am not certain Congress even contemplated that machines could produce numbers.

    Thus we have the struggle concerning computers for the last 50 years.

  39. Edward Heller February 24, 2016 2:58 pm

    @Matt, you say, “I have to disagree with you on this specific patent. I agree that GUI patents can be technological, but this one isn’t. The instituted claims just describe how certain business data is to be laid out in a display. That isn’t remotely technological.”

    Certainly organizing a display for better understanding/access by human (see the claim at #9 above) is an improvement in a computer system. This has nothing to do with computing the improved price, balancing risk, or producing the improved number from a number.

    What I see here is that the answer to the question of whether the claim is technological is also the same answer to whether it is eligible. If the PTO declares it not to be technological, it has all but sealed the deal on 101.

  40. Curious February 24, 2016 3:11 pm

    Certainly [creating software used by a computer system] is an improvement in a computer system.
    Thus, software fall neatly into the “new and useful improvement thereof” portion of 35 USC 101.

    Certainly organizing a display for better understanding/access by human
    Hmmm? How does that square with In re Russell, 48 F.2d 668 (CCPA 1931) or your most beloved Hotel Security Checking Co v Lorraine Co, 160 F 467 (2d Cir 1908)?

  41. Anon February 24, 2016 3:28 pm

    Mr. Heller @ 88,

    You are clearly not correct. The words are NOT the same. What was prior to 1952 a single paragraph was transformed into multiple sections. You make the mistake of attempting to match some words of that single paragraph into the words in 101 and do not take into account (for example) how 103 was carved out from those prior words that you want to map. In another example, you have failed to properly recognize the action of Congress (I do recall you instead trying to blame Rich as a judge) to strip the courts of the ability to set the meaning of the word “invention”** through the power of common law rule making.

    I am well aware that you have not only been informed of this, but that such being informed included sources such as the congressional record, as reflected at the Cornell Law website, and the commentary of the architects of the 1952 Act – both Federico and Rich.

    Your rather glib treatment here of 35 USC 100(b) simply does not give justice to the actual words that Congress did use.

    Your view of why there is a struggle “concerning computers” is likewise intentionally limited, given your lack of coherence with terms of art in the computer field.

    Lastly, your reply @ 89 last paragraph is simply wrong. U.S. jurisprudence is NOT limited to any type of “technological arts” limit. In this country, the explicit words are Useful Arts.

    ** The word invention or its legion of counterparts such as “gist,” gist of the invention,” spirit of the invention” were ALL excised by Congress who expressly put in place the concept of “obviousness” as opposed to “invention.”

    It is abundantly clear that “the struggle” has been reflected in that the Court has refused to bow to the proper authority and stripping of its power and continues to this day to attempt to write law AS IF all the sections of that former fonly paragraph were NOT changed by the Act of 1952. This is precisely why there is such conflation in the Court’s writing of 101 with the new sections of 102/103/112.

    Your belief that Congress did not intend to change the law regarding 101 simply cannot be true. You have to apply far too much selective parsing of the entire event of that Act, and you have to ignore far too much of how that single paragraph was changed, and you have to ignore the historical context of a Court that was actively anti-patent (or have you forgotten the famous attribution of “The only valid patent is one that has not yet appeared before us“…?

    You simply do not do yourself (or your credibility) any favors with attempting to hold such a biased view of history and the law.

  42. Anon February 24, 2016 3:35 pm

    Gene @ 86,

    When you say “The real tragedy is that the institution decision is not appealable (at least for now) …” are you implying that Congress will rewrite their very clear words that the institution decision is not appealable?

    I just do not see any way that those clear words can be changed by the courts.

  43. A Rational Person February 24, 2016 3:51 pm

    Anon@41

    “This is precisely why there is such conflation in the Court’s writing of 101 with the new sections of 102/103/112.”

    Further to your point, the Alice opinion is literally written as if Section 102, 103 and 112 do not exist. There is no mention of these three sections anywhere in the Alice opinion, much less an explanation of why these three sections do not address the alleged public policy concerns the Court believes it needs to address by rewriting 35 USC 101.

  44. Curious February 24, 2016 4:01 pm

    I just do not see any way that those clear words can be changed by the courts.
    The problem ultimately lies in the drafters’ of the statute failure to appreciate how the USPTO/PTAB could s c r e w (spam filter precaution) it up. I can see why the drafters didn’t want an institution decision (i.e., a rough cut that the prior art and proposed rejection was ‘close enough’ — my words, not the statute’s words) should be appealable when the issues would be subsequently looked at much more closely during the proceeding. The record had not yet been fully developed to provide for an adequate review.

    The problem is that the drafter’s didn’t contemplate the USPTO overstepping their authority in instituting a covered business method review as to a non-business method. I’m not sure how they would go about doing it (or even if they are inclined to do so), but I have little doubt that the Federal Circuit could distinguish between an (impermissible) appeal directed to the merits of the rejection and a (permissible) appeal directed to whether the USPTO overstepped its authority.

    If I’ve learned anything from practicing law is that, when so inclined, a Court can create whatever distinction they see fit.

  45. Edward Heller February 24, 2016 4:28 pm

    @40 Curious, it appears I have a fan since you mention Hotel Security.

    Hotel Security was about business methods, where the means was known. But a GUI — an new method of displaying information that is useful, where the claim is specific to the means and how it is new, I am sure that Hotel Security provides no conflict. In fact, that case said that if the way of displaying information was new, that it might have been eligible.

    There is nothing in Alice/Mayo that is different from Hotel Security but clarity. You know which one is unclear.

  46. Edward Heller February 24, 2016 4:45 pm

    A Rationale @43, you will note the way printed matter is handled. The printed matter is ignored unless functional wrt to the underlying subject matter. Novelty thus is either in the underlying subject matter or in that matter as modified by the printed matter.

    That is what Alice does — but only to an extent. If there is novelty in the underlying subject matter or as modified by the abstract, the issue should move on to 102/103. If and only if there is no allegation whatsoever that there is novelty in the means or the application of the abstract, should the issue be resolvable under 101.

    The cases that have been decided to date have made no attempt to assert invention in the means. These elements, if present, simply recited generic computers or the like, such as “do it on the internet.” No claim to any novelty at all in the means is even alleged.

  47. Edward Heller February 24, 2016 4:49 pm

    @44, Curious, you should know that our(MCM v. HP) petition for cert will raise the point you discuss about a decision by the PTAB exceeding its authority on an issue collateral to the merits.

  48. Curious February 24, 2016 5:48 pm

    I have a fan since you mention Hotel Security
    Hardly, Hotel Security should be discarded into dustbin of history. I’ve read it multiple times (trying to figure it why you refer to it so often), and doing so pains me each time. Legal writing has come a long way since then. I’m much less concerned as to what some second circuit judges wrote in 1908 than I am in what Congress wrote in 1952.

    Hotel Security was about business methods
    Hotel Security was about “a sheet provided with separate spaces, having suitable headings, substantially as described, said headings being designatory of the several waiters to whom the several spaces on the sheet are individually appropriated, in conjunction with separate slips, each so marked as to indicate the waiter using it, whereby the selling price of all the articles sold may be entered in duplicate, once upon the slip of the waiter making the sale, and once upon his allotted space upon the main sheet, substantially as and for the purpose specified.” In short, it was about information displayed, on a piece of paper, in a particular manner for a particular purpose — not so different from a GUI that displays information, on a computer display, in a particular manner for a particular purpose.

    you should know that our(MCM v. HP) petition for cert will raise the point you discuss about a decision by the PTAB exceeding its authority on an issue collateral to the merits
    I’m well aware of your petition.

  49. Edward Heller February 24, 2016 7:24 pm

    Curious, the GUI aspects of the Hotel Security claims were found to be old. The newness was in their use: waiters, etc.

    Now others may disagree, but the claims in this case seem to be address to novel presentation of information, not just a known presentation that varied only by it use for type of information.

    That said, I am glad you read that case. It does tell one the method for analyzing claims mixing the patentable means with the unpatentable use. The novelty must be in the means.

    Alice is no different in principle. But it is less clear that the analysis should be under a mixture of 101 and 102/103.

  50. Anon February 24, 2016 7:24 pm

    Mr. Heller,

    Your view on printed matter is notoriously wrong.

  51. Curious February 24, 2016 11:25 pm

    It does tell one the method for analyzing claims mixing the patentable means with the unpatentable use. The novelty must be in the means.
    Hmmm … I do recall the Federal Circuit stating “[d]ifferences between an invention and the prior art cited against it cannot be ignored merely because those differences reside in the content of the printed matter. Under section 103, the board cannot dissect a claim, excise the printed matter from it, and declare the remaining portion of the mutilated claim to be unpatentable. The claim must be read as a whole.”

    So much for your “[t]he novelty must be in the means” assertion …

  52. Anon February 25, 2016 9:18 am

    Curious @ 51,

    Mr. Heller is doing nothing but recycling old arguments that have been shown to be false.

    It is simply standard fare for him, and falls along the lines of “Repeat a lie often enough, and it may gain the semblance of truth.”

    Or to attempt a new play on words, “Smash a clock often enough, and you might break it, and then you can be “correct” at least twice a day.”

  53. Edward Heller February 25, 2016 12:29 pm

    Curious, one cannot ignore the printed matter if it is functional wrt to the underlying subject matter. Clearly in this GUI case, the printed matter is functional.

    However, there are cases decided just in last several weeks where entire elements are ignored in cases not involving printed matter: e.g., process limitations in an apparatus claim.

  54. Anon February 25, 2016 2:42 pm

    Mr. Heller @ 53,

    ALL software is functional with respect to the underlying subject matter.

    That is why it “works,” and why it is called software.

  55. Edward Heller February 25, 2016 3:52 pm

    anon, @53. Indeed. And so the printing in a book.

    What really is important is what the programmed computer does.

  56. Anon February 25, 2016 5:45 pm

    Clearly, Mr. Heller, printing in a book does NOT have the same type of being functionally related as does software.

    What the programmed computer does is the very point that your attempt to bring in a bogus (and plainly, intellectually dishonest) “book” argument simply fails to account for: adding a book to a computer does nothing – adding the component of software and changing the machine by configuring it with that software does in fact change the machine. The only way that happens is because software is functional with respect to the underlying subject matter and that functionality is transferred in a way that no book could ever do.

    When you are ready to accept the truth of what I post at 54, and not engage in your charlatan attempts at not accepting reality, then we can continue.

  57. Edward Heller February 25, 2016 6:18 pm

    anon, your missing the point is to be expected.

  58. Anon February 25, 2016 6:47 pm

    Mr. Heller,

    Maybe you want to be more direct about your point.

    As it is, your comments run the risk of painting you insincere (at best) and a charlatan (if you are posting with any sense of seriousness) by attempting to equate software with a book.

  59. Edward Heller February 25, 2016 7:34 pm

    The relation of printed matter to a book is the same and is unchanged by the meaning of the words they may form when considered in sequence.

    The relationship of an instruction to an ALU is unchanged by what the programmed computer does by executing a sequence of instructions on inputs and outputs. Each instruction of a type (add, subtract, etc.) does exactly what it did before.

  60. Anon February 25, 2016 7:54 pm

    You are most certainly not correct regarding the relation of printed matter in a book as to software.

    One is a machine component, the other requires a human mind.

    As I thought, your “point” is not a point at all, but merely more evidence that you are not treating software properly.

  61. Edward Heller February 25, 2016 8:04 pm

    Anon, talking to you about anything stretches one patience.

    Well, I tried.

  62. Curious February 25, 2016 9:52 pm

    The relation of printed matter to a book is the same and is unchanged by the meaning of the words they may form when considered in sequence.
    Please. Re-read Gulack and Lowry. DiStefano is OK, but doesn’t really do the printed matter doctrine justice. Printed matter is printed characters and indicia useful and intelligible only to the human mind. This is a threshold test that must be met before you ask about any functional relationship to the “substrate.” Computer instructions don’t pass that threshold test, and thus, the printed matter doctrine doesn’t apply — period — end of inquiry.

  63. Anon February 25, 2016 10:10 pm

    Mr. Heller,

    You are not talking with me, and your attempts of talking to me are going to fail because you are just not treating the subject matter appropriately.

    You want to have your errant conclusion simply be controlling, and it is not.

    Perhaps you should try less “talking to” and more “talking with,” which will include you listening to what others have to say.

  64. Night Writer February 26, 2016 9:30 am

    If it hasn’t become clear to people by now–Edward is an anti-patent judicial activist.

    Hotel Security? Really? A case that pre-dates the information age? Seriously.

    Again, what people do not get is that business methods + technology means that technology and business methods will (and have very much so) develop together. There is no way to separate them. Only the very ignorant like Ginsburg would think there is a way to separate them.

    Please Edward be intellectually honest and actually respond to Anon. Why you want to present Richard Stern’s arguments is beyond me.