BUSINESS METHOD PATENT
BUSINESS FUNCTIONS, ELECTRONIC COMMERCE AND FINANCIAL INSTITUTION DATA PROCESSING
Patentable Business Methods. Business methods have been explicitly patentable in the United States since the 1998 Court of Appeals decision in State Street Bank & Trust Co. v. Signature Financial Group, Inc. 47 USPQ2d 1596, 1604 (Fed. Cir. 1998).
The U.S. Supreme Court on 19-JUN-2014 issued a decision in Alice Corp. v. CLS Bank International, 134 S. Ct. 2347 (2014) (No. 13–298) that effectively makes it very difficult to obtain any patent on a business method or on a software application.
Since the Alice decision and through 08-JUN-2016, about 66% of 559 patents subject to Federal Court decisions have been invalidated on patentability issues under section 101 of title 35 the U.S. Code. In addition, the monthly patent application rejection rates on §101 patentability for the U.S. Patent and Trademark Office’s (USPTO) Technical Centers 3620, 3680, and 3690 were over 85% for most of the year 2015.
In addition, as of 31-MAY-2016, the USPTO Patent Trial and Appeal Board (PTAB) has invalidated some or all of the claims in 119 of 122 patents having a final written decision under Covered Business Methods review; and of 988 patents reaching a final written decision under Inter Partes Review, 846 had some or all of the claims invalidated.
DEFINITION OF BUSINESS METHOD
Defining Business Methods. Business methods are loosely defined. Generally they may be categorized as methods for performing data processing or calculation operations in the–
- practice, administration or management of an enterprise;
- processing of financial data; or
- determination of the charge for goods or services.
CONDITIONS FOR PATENTABILITY & EXPECTATIONS
Rigorous Reviews. Partly because of the criticism of allowing too many questionable business method patents and partly because of the tendency of applicants to seek broad claims in their applications, the United States Patent and Trademark Office subjects business method patent applications to two reviews before allowing an application: the first by the examiner who scrutinizes the prior art (secret U.S. patents, patent applications (domestic and foreign), and non-patent literature); and the second by a select group of reviewers (composed of management, quality review examiners, special program examiners, and others).
Rejection Rate and How Long It Takes. As a result of rigorous reviews, about 84% of electronic commerce business method applications and about 43% of the business method patent applications overall, are rejected by the Patent Office. This compares to a rejection rate of about 35% of other patent applications. Additionally, the processing time for a business method application is about three-and-a-half years compared with about two years for others.
Rest of the World. Business method patents in most of the rest of the world face even more significant hurdles than in the United States. Generally, these relate to an invention having a “technical” component.
The European Patent Office, acting for 32 member states, rejects patent applications which do not have a “technical character.” An invention must relate to a “technical” problem and have “technical” features. While “technical” is not defined in the law, it has been interpreted to require a physical feature that is useful to solve an industrial problem. Article 52 of the European Patent Convention contains an explicit bar to patenting “methods of doing business.”
Perhaps a bit more liberal is Australia, where a process claim on a business method must have “A physical effect in the sense of a concrete effect or phenomenon or manifestation or transformation,” according to Federal Court of Australia – Full Court in Grant v Commissioner of Patents (FCAFC 120, July 18, 2006).
However, the Australian Patent Office issued an opinion on 21-OCT-2010 in a case titled “Iowa Lottery” that cast doubt on the treatment of business method claims unless carefully crafted to avoid simple business methods and include operability of a machine, such as a computer. The Deputy Commissioner of Patents concludes (at para 17) that: “As I indicated in my decision in Invention Pathways Pty Ltd  APO 10[,] I do not believe there is any authority in Australian law for the proposition that the mere identification of a physical effect is sufficient for patentability.”
In Japan, patentable subject matter involves “a technical idea utilizing a law of nature.” Business methods are generally regarded as software related inventions and are considered to have a technical nature.
TYPICAL BUSINESS METHOD CATEGORIES
Patentable Business Methods. The four largest groupings of business method inventions are directed to the general business operations–
1. Determining Who Your Customers Are, and The Products/Services They Need/Want
- Operations Research – Market Analysis
2. Informing Customers You Exist, Showing Them Your Products & Services, and Getting Them to Purchase
- Advertising Management;
- Catalog Systems;
- Incentive Programs; and,
- Redemption of Coupon
3. Exchanging Money and Credit Before, During, and After the Business Transaction
- Credit and Loan Processing;
- Point of Sale Systems;
- Funds Transfer;
- Tax Processing; and,
- Investment Planning
4. Tracking Resources, Money, And Products
- Human Resource Management;
- Accounting; and,
- Inventory Monitoring
SOFTWARE RELATED PATENT
Software. Most business method patents today involve a software implementation. See the Software Patent page for more information on computer program patentability. Visit the page on utility patent applications to understand the costs and next steps.
Get In Touch
LOUIS VENTRE JR
REGISTERED PATENT ATTORNEY
2483 OAKTON HILLS DR
OAKTON VA 22124-1530