International Intellectual Property Profs. Atik and Manheim Fall, 2006 Business Method Patents

Fall, 2006IIP2 Subject Matter  35 USC § USC § 101  any “process, machine, manufacture, or composition of matter ”  TRIPs Art. 27 TRIPs Art. 27  patents shall be available for any inventions, whether products or processes, in all fields of technology  EPC Art. 52(1) EPC Art. 52(1)  European patents shall be granted for any inventions which are susceptible of industrial application, which are new and which involve an inventive step  EPC Art. 52(2) – not regarded as inventions: EPC Art. 52(2)  (c) schemes, rules and methods for performing mental acts, playing games or doing business, and programs for computers

Fall, 2006IIP3 Before State Street Bank  Software-embodied business methods  Recognized along with other software patents  E.g., "Remote [Internet] Ordering System"  "Interactive [Real Estate] Computer System ”  Pure business methods  Unpatentable subject matter  “mathematical algorithms” were simply ideas  Lacked novelty and non-obviousness  In nature of social, not technological, innovation  Unnecessary to incentivize business innovation  Might actually impede it (ex. Amazon’s “one click” patent)

Fall, 2006IIP4 State Street Bank v. Signature Fin. (1998)  U.S. Patent 5,193,056 (1993) U.S. Patent 5,193,056  “ Data Processing System for Financial Services ”  Computer processing of data relating to a mutual fund instrument (pooled assets in a central “hub”) to maximize efficiency and tax advantages  Not tied to dedicated software  Holding:  “the transformation of data... by a machine through a series of mathematical calculations … constitutes a practical application of a mathematical algorithm”  § 101 extends to “"anything under the sun that is made by man." Chakrabarty

Fall, 2006IIP5 After State Street Bank  Patent Rush  Huge increase in BMP apps, mostly for e-commerce  Controversy  Stifle competition (w/o corresponding public benefit)  BMPs are low quality; don’t really advance knowledge  First Inventor Defense Act (1999)  BMP unenforceable against one who began commercial use of BM 1 year before effective filing date of patent  Business Method Patent Improvement Act (2000)  Would raise the bar on non-obviousness  Would allow opposition proceedings

Fall, 2006IIP6 US Rules following State Street  General Principles  Must satisfy subject matter: process or product  Excluded: abstract ideas (mathematical algorithms), natural phenomena, laws of nature  Utility: Capable of practical application  Human mental steps?  Technology (e.g. computer) req’d  Rule abandoned Oct  USPTO Business Methods Website USPTO Business Methods Website  Class 705: apparatus and corresponding methods for performing data processing [or calculating] operations Socratic method? New tax strategy?

Fall, 2006IIP7 Hitachi (2004)  Examining Division  Rejected for improper disclosure – Art. 83, 123(2)  Main Request Claim 1 – “An automatic auction method executed in a server computer”  First Auxiliary Request Claims 1/2 – “an auction method [& apparatus] additionally comprising means for receiving and storing "an amount condition" and "a product quantity status"  Rejected as business method – Art. 52(2)(c)  Second Auxiliary Request Claims 1/3 – “an auction method [& apparatus] which, in addition to the above, uses "rules" for determining the successful bidder” Dutch Auction

Fall, 2006IIP8 Hitachi (2004)  Technical Board of Appeal  “Invention” under Art. 52(1) must have “technical character”  Mixed technical/non-technical inventions qualify  Novelty & inventive step (non-obviousness) are examined after subject matter; not part of it  Rejects (overrules) reading of 52(1) that invention must make a “technical contribution to the [prior] art”  To be patentable, an invention  Must use technical component (e.g., run on computer)  Method (process) need not itself be technical

Fall, 2006IIP9 Hitachi (2004)  Technical Board of Appeal  Guidelines for Examination in the EPO  “specifying technical means for purely non-technical purpose and/or for processing purely non-technical information does not necessarily confer technical character; without a prima facie technical character, application should be rejected”  Guidelines rejected insofar as patentability depends on the content of the information being processed  Claim 3 satisfies 52(1) subject matter  Apparatus (server computer) is a “technical feature”

Fall, 2006IIP10 Hitachi (2004)  Inventive step EPC Art. 56Art. 56  Also must have technical character  Non-technical elements qualify if mixed w/ techn.  Methods particularly designed for computer are ok  Employ a technical element (the computer)  General application methods not patentable (are in US)  Must be non-obvious  Successive raising of bids (subject matter of this patent) is obvious to one skilled in art; fails Art. 56  Holding  Business methods are patentable if involve a technical component (and meet other criteria)

Fall, 2006IIP11 BMPs In Europe After Hitachi  Board decision not uniformly received  Patentability ultimately decided by local law  Directive on Patentability of Computer- Implemented Inventions (2002/47/COD)  Would harmonize Art. 52(2)(c) and Hitachi  Exclude pure information processing (permitted by State Street Bank, if it has a practical application)  BMPs ok if included specific technical processing  Rejected (648-14) by Parliament, 6 July 2005  Disharmony still reigns in EU More on 2002/47/COD

Fall, 2006IIP12 Software/BM Patents Recap  SW designed for specific computer process  Patentable both in US and EU  SW designed for generic computer process  Patentable in US  Patentable in EPO, but might not survive suit  BM not requiring technical implementation  Patentable in US  Not patentable in EU  Don’t forget novelty, non-obviousness, utility More on EU software patents

Fall, 2006IIP13 Software/BM Patents Elsewhere  Australia  Similar to US  Japan (Examination Guidelines for Specific Fields)Examination Guidelines for Specific Fields  Information processing using hardware  Excluded: economic laws, arbitrary arrangements, mathematical methods, mental activity; or mere presentation of information  Included: control of an apparatus, info processing based on the technical properties of an object  UK  Patent law based on EPC More on UK software patents