Expanding Patentability: Business Method and Software Patents By Dana Greene

What is a patent? A right of control over an idea that usually lasts between 14 and 20 years depending on the type of invention A right of control over an idea that usually lasts between 14 and 20 years depending on the type of invention A patent is a document issued by the U.S. Patent and Trademark Office (PTO) that grants a monopoly for a limited period of time on the use and development of an invention which the PTO finds to qualify for patent protection A patent is a document issued by the U.S. Patent and Trademark Office (PTO) that grants a monopoly for a limited period of time on the use and development of an invention which the PTO finds to qualify for patent protection

What does it take to qualify for patent protection The invention must: The invention must: Fit within the five statutory categories of patentable subject matter Fit within the five statutory categories of patentable subject matter Useful Useful Novel = New Novel = New Non-obvious = Clever Non-obvious = Clever Would someone skilled in the particular field as of the invention date consider the invention to be an unexpected or surprising development Would someone skilled in the particular field as of the invention date consider the invention to be an unexpected or surprising development

Business Method Patents Defined Subset of utility patents whose inventions combine software programs and methods of doing business, most of which relate to Internet uses Subset of utility patents whose inventions combine software programs and methods of doing business, most of which relate to Internet uses Resulted in PTO’s creation of new classifications for these applications Resulted in PTO’s creation of new classifications for these applications “Data processing: financial, business practice, management or cost/price determination” “Data processing: financial, business practice, management or cost/price determination”

Traditional approach of PTO toward granting business method or software patents Rarely granted business method patents, claiming that a process could not be patented if it was simply an abstract idea Rarely granted business method patents, claiming that a process could not be patented if it was simply an abstract idea How did this affect software patents How did this affect software patents State Street changed tradition State Street changed tradition

State Street’s Take Patent laws were intended to protect any method, whether or not it required the aid of a computer, so long as it produced a “useful, concrete, and tangible result.” Patent laws were intended to protect any method, whether or not it required the aid of a computer, so long as it produced a “useful, concrete, and tangible result.” The court legitimized both software patents and methods of doing business The court legitimized both software patents and methods of doing business Did State Street hurt or harm the internet Did State Street hurt or harm the internet

Offense vs. Defense There are a number of reasons why people file for patent protection There are a number of reasons why people file for patent protection Offensive (The Sword) – to stop competitors from using the same technology. This is the most common motivation for seeking a patent. Offensive (The Sword) – to stop competitors from using the same technology. This is the most common motivation for seeking a patent. Example: Amazon.com v. Barnes and Noble Example: Amazon.com v. Barnes and Noble Defensive (The Shield) – so if sued by a competitor for patent infringement, you will have some bargaining power Defensive (The Shield) – so if sued by a competitor for patent infringement, you will have some bargaining power Example: IBM, Microsoft Example: IBM, Microsoft Truce – Each company cross licenses the other’s patents Truce – Each company cross licenses the other’s patents

How to challenge a business method patent Two ways to challenge a business method patent: Two ways to challenge a business method patent: Sue in federal court Sue in federal court Institute re-examination Institute re-examination This is not as costly as litigation. But if it fails and the patent survives, it will be “strengthened” to the extent that others will be less likely to challenge it and the patent owner will feel more confident enforcing it This is not as costly as litigation. But if it fails and the patent survives, it will be “strengthened” to the extent that others will be less likely to challenge it and the patent owner will feel more confident enforcing it

Thomas Jefferson’s views on patents Every man should be protected in his lawful acts, and be certain that no ex post facto law shall punish or endamage him for them Every man should be protected in his lawful acts, and be certain that no ex post facto law shall punish or endamage him for them “But he is endamaged if forbidden to use a machine lawfully erected, at considerable expense, unless he will pay a new and unexpected price for it”. “But he is endamaged if forbidden to use a machine lawfully erected, at considerable expense, unless he will pay a new and unexpected price for it”. Inventions cannot, in nature, be a subject of property. Inventions cannot, in nature, be a subject of property. Society may give an exclusive right to the profits arising from them, as an encouragement to men to pursue ideas which may produce utility Society may give an exclusive right to the profits arising from them, as an encouragement to men to pursue ideas which may produce utility

Richard Stallman’s concerns “Foolish government policies gave Amazon the opportunity to get its patent – but an opportunity is not an excuse. Amazon made the choice to obtain this patent, and the choice to use it in court for aggression” “Foolish government policies gave Amazon the opportunity to get its patent – but an opportunity is not an excuse. Amazon made the choice to obtain this patent, and the choice to use it in court for aggression” Many software patents cover obvious ideas and Stallman’s fear is that they pad claims to make them into complex ideas Many software patents cover obvious ideas and Stallman’s fear is that they pad claims to make them into complex ideas The patent system does not promote progress by granting patents to trivial concepts that are well known throughout the computer world The patent system does not promote progress by granting patents to trivial concepts that are well known throughout the computer world

Conclusion The PTO is adding an additional “layer of review” to business method patent applications and is hiring technology specialists to aid examiners in the areas of finance, e-commerce, insurance and Internet infrastructure The PTO is adding an additional “layer of review” to business method patent applications and is hiring technology specialists to aid examiners in the areas of finance, e-commerce, insurance and Internet infrastructure There is a happy medium between patentability and creativity There is a happy medium between patentability and creativity Business method patents have helped to provide structure to internet Business method patents have helped to provide structure to internet