Posts Tagged: "business method patents"

These polar opposite decisions in CyberSource and Ultramercial illustrate how fractured the Federal Circuit’s patent-eligibility landscape has now become for business methods and systems. The most recent split decision in CLS Bank International v. Alice Corp. Pty. Ltd. where a claimed trading platform for exchanging business obligations survived a validity challenge under 35 U.S.C. § 101 epitomizes this problem. As CLS Bank International unfortunately shows, an objective standard for judging the patent-eligibility of business methods and systems remains elusive, subject to an ever growing “tug-of-war” between the “inclusive” and “restrictive” patent-eligibility factions of the Federal Circuit. In particular, after CLS Bank International, we are no closer to having a judicially accepted definition of what is (or is not) an “abstract idea” when it comes to claiming business methods and systems.

Contrary to popular belief, things are getting much better in business methods. Applications filed in 1999 had prosecution times of over 10 years (lower green arrow). These and subsequent applications jammed up the system leading to excessive delays to first office actions. Applications filed in 2004, for example, had delays to first office action of 6 years (middle red arrow). Sometime around 2010, however, things started to improve. A lot more patents started issuing and the delays to first office action dropped to around 2 years (upper red arrow). That’s not to say that it’s easy to get a patent in business methods, but at least examiners and applicants are making much better progress in reaching agreement on allowable claims in a reasonable amount of time.

After my presentation, as you might expect, I was approached by a number of patent attorneys. Story after story it was the same thing I have heard from so many others — depressing tales of not being able to get a patent. One particularly egregious thing I heard was from a patent attorney who told me about a conversation he recently had with a SPE from one of the business method art units. I don’t know which Art Unit, and frankly I didn’t ask, although it is probably easy enough to narrow down the Art Unit. This patent attorney told me that the SPE said: “we just don’t issue patents unless the Board orders us to.” If that is in fact what was said and is in fact what is happening then there is a systematic denial of due process at the United States Patent and Trademark Office, and that is wholly unacceptable.

The data clearly suggests that that inquiry should be made into what is going on in Art Unit 3689. If there is nothing odd after evaluation then I will be the first to report that and say that after further evaluation the patent examiners in Art Unit 3689 are doing a fantastic job. In the meantime, however, one way that we can get a more complete glimpse of what is going on in Art Unit 3689 is to take a look at the patents granted only after a decision from the Board of Patent Appeals and Interferences. Currently, according to the data available in the PatentCore system, 13 of the 24 patents granted have been granted after a decision from the BPAI, and 3 others were granted only after the applicant filed an appeal brief. That rate seems extraordinarily high to me, as does the 76.5% reversal rate at the BPAI. A look at some of the appeals themselves is elucidating.

What these numbers tell you is if your application is in Art Unit 3622 or 3689 you are in for a long wait to obtain a patent. The numbers also show that if you carry the case all the way through appeal there is quite a high success rate for applicants; 66.7% when in Art Unit 3622 and 71.4% when in Art Unit 3689. It is hard to know for sure what is going on in Art Units 3622 and 3689, but one number jumps out at me as particularly alarming. In Art Unit 3689 nearly 4 out of 5 of the applications they allow require the applicant to hop on the appeal track.

Yesterday The Hartford announced via press release that it had invented a faster way to deliver life insurance, which is now patent pending. Can you that be true? As with many things associated with the law, particularly patent law, a simple, straightforward answer is not possible. In a nutshell, it is possible that one could patent a method of more quickly delivering life insurance if the process is new and non-obvious. However, given the law that the United States Patent and Trademark Office is required to apply there will need to be much more than a real world business method, or “pure business method” as they are sometimes referred to.

Some will undoubtedly view the Chief Judge’s basis in Ultramercial for distinguishing the ruling in CyberSource as being “slight of hand” and using “mirrors,” but it certainly illustrates the wide gulf of views between the various members on the Federal Circuit on the patent-eligibility question. I wouldn’t be surprised (and frankly it needs to happen) if both Ultramercial and CyberSource ended up before the en banc Federal Circuit. As I’ve noted previously, we’ve currently got what appear to be irreconcilable decisions in the Classen, Prometheus, and AMP cases in determining the patent-eligibility of certain medical (e.g., diagnostic) methods. With what appears to be similarly conflicting decisions in Ultramercial and CyberSource, the gauntlet has truly been thrown down. An en banc Federal Circuit needs to step in soon, or the conflagration that currently exists in the patent-eligibility “war” might soon consume us all.

I was surprised about how wrong my own intuition was, which is why I focus on the myths about patent trolls. Just about everything we thought we knew – good or bad – does not appear to be true. The article may not change too many minds about patent trolls. Those who believe NPEs are bad for society won’t care much about where they came from. However, I think that NPEs are a reflection of inventive society — their patents come from all sorts of sources, and how we feel about NPEs should depend on how we feel about the people who invested in the research that create the patents and the role patent law played in innovation.

The conundrum created by the Federal Circuit’s joint infringement doctrine and its impact on protecting interactive computer-based technologies got worse last week with McKesson Technologies, Inc. v. Epic Systems Corp. McKesson Technologies involved a patented interactive electronic method for communicating between healthcare providers and patients about personalized web pages for doctors. Judge Linn’s majority opinion (and a “thin” at majority at that) ruled that, because the initial step of the patented method was performed by the patient while the remaining steps were performed by the software provided by the healthcare provider, there was no infringement, direct, indirect, joint or otherwise of the patented method.

Class matters. Technology class, that is. In some of the more rapidly growing areas of our economy, like Social Networking and Mobile Phone Apps, it looks like you can almost double patent allowance rate by making sure your patent application is classified in the more technological patent office art units. For entrepreneurs, a faster allowance rate and earlier acquisition of patents can directly translate into better fund raising, more secure commercialization and more profitable licensing. For large corporations, it means substantially reduced patent costs. And with some forethought you can probably influence which class your application is placed in while at the same time creating a more comprehensive patent application.

With a powerful vote of 87 to 3 on a motion to bring debate to a close, the Senate is on the cusp of passing comprehensive patent reform legislation. S.23, “The America Invents Act,” is expected to pass with a strong vote as early as Wednesday of this week. In the end, the full House and Senate will need to pass the same version of any patent reform bill before it can become law. Assuming House Judiciary Committee Chairman Smith passes a bill of note through the House; the House and Senate bills will need to be reconciled. While civics books teach that the differences in the bills will be resolved via a formal Conference Committee, the Senate and House have not conferenced on a Judiciary Committee bill since 2005. A formal conference for patent reform is considered very unlikely.

In New Zealand, patents (equivalent to utility patents in the USA), registered designs (viz. US design patent) and trademarks are subject to normal substantive examination processes. Fortunately, due to smaller backlogs and a less bureaucratic system, overseas applications filed into NZ are often examined within a year of filing. Accelerated examination may also be requested with no official fee where applicants need a quicker indication as to the validity of their rights. Further, if you have a corresponding patent right granted in another major patent office, the NZ process can be accelerated assuming the NZ claims are similar to that in the corresponding right.

Amazon.com has figured out a way to prevent the sending and receiving of unwanted gifts, converting them into a gift that you really do want or a gift certificate. The invention even allows a gift recipient to place a standing conversion order. For example, let’s say you have a particular family member that always sends lame gifts. The patent refers to this person as “Aunt Mildred.” You could have a standing conversion order to change out any gift sent to you by Aunt Mildred, thereby allowing her to send you something, you to receive something you like and want, and the retailer not to have to process an exchange. Now if they could only do with with holiday fruitcakes, but I suppose something things are beyond the capabilities of modern technology.

In order to have a patentable business method it is necessary for the invention to accomplish some practical application. In other words, in order for a business method to be patentable it must produce a “useful, concrete and tangible result.” Although the United States Supreme Court did away with that test when it issued its decision in Bilski v. Kappos, it is still nevertheless illustrative and the best test that is out there. If you really understand what Judge Rich meant by “useful, concrete and tangible result” you come to the inescapable conclusion that it is the appropriate test and if you really target the description of the invention to satisfy the test you will have something that is patentable under the Supreme Court Bilski v. Kappos test and the USPTO guidelines that have followed.