1. The Business Method Paradox for the Financial Industry James Moore Bollinger Fordham Intellectual Property Law Institute SESSION 8: PATENT LAW Friday, April 29 2011 Fordham Law School

2. PARADOX: THE PENROSE STAIRS Continuously climbing – but returning to the beginning of the journey……… Inception, Warner Bros. Pictures (2010)

3. BILSKI: LEGAL PARADOX A general purpose computer that is specifically programmed to perform one or more useful operations is generally considered patent eligible – unless: Involves a business method …….(why?)

4. Post-Bilski Rulings - District Courts Financial Patents: general purpose computers are not a particular machine Graff/Ross, LLP v. Federal Home Loan Mortgage Corp. (D.D.C. Aug. 27, 2010) ºHeavy reliance on Interim PTO guidelines ºIf financially related operations – presumed ineligible Bancorp Services, L.L.C. v. Sun Life Assurance Co. of Canada (E.D. Mo. Feb. 14, 2011) ºCase history – two prior sj rulings against patentee – both reversed ºTreated system claim as a process CLS Bank Int'l v. Alice Corp. Pty. Ltd. (D.D.C. Mar. 9, 2011) ºPatents directed to creating and settling debts ºThe court found that the claims represent an incarnation of [an] abstract idea on a computer, without any further exposition or meaningful limitation

5. Post-Bilski Rulings - CAFC Research Corporation Technologies, Inc. v. Microsoft Corp. (Dec 2010) FOUND TO BE PATENT ELIGIBLE ºPARALLELS THE IN RE ALAPPAT DECISION – 1994 ºGENERAL PURPOSE COMPUTER – SELECTIVELY PROGRAMMED ºNOT A BUSINESS METHOD – INVOLVES HALF-TONE IMAGING Prometheus Laboratories, Inc. v. Mayo Collaborative Services (Dec 2010) FOUND TO BE PATENT ELIGILBLE ºTransformation prong of MOT

6. HOW LONG WILL THE LEGAL PARADOX LAST Future Business Method Cases – to be decided by CAFC: Ultramercial, LLC v. Hulu, LLC ºNext scheduled action: reply brief due Apr. 29, 2011 DealerTrack, Inc. v. Huber ºNext scheduled action: oral argument calendared for May 5, 2011 CyberSource Corp. v. Retail Decisions, Inc. ºNext scheduled action: oral argument calendared for May 3, 2011

7. Business Method/Financial Patents WILL THE PARADOX MATTER Patent Reform – 2011 Schumer Amendment – post grant review of business method patents: For purposes of this section, the term covered business method patent means a patent that claims a method or corresponding apparatus for performing data processing operations utilized in the practice, administration, or management of a financial product or service, except that the term shall not include patents for technological inventions.

8. BILSKI: BUSINESS PARADOX FOR FINANCIAL FIRMS Patent Procurement Program Scope and direction Litigation Strategy NPEs and Competing Firms Litigation Costs Legislative Interface Lobbying profile Overall Risk Management Can the above be reconciled ?

9. Aspects of Risk Management For Financial Firms - Patents Financial Firms (US) NPEs (Licensing Programs) Competitors (Market Sh.) USPTO Congress U.S. Courts Damages Litigation Costs Injunctions

10. Business method/financial patent paradox Questions?

11. Citations Research Corporation Technologies, Inc. v. Microsoft Corp., 627 F.3d 859 (Fed. Cir. 2010) Prometheus Laboratories, Inc. v. Mayo Collaborative Services, 628 F.3d 1347 (Fed. Cir. 2010) Ultramercial, LLC v. Hulu, LLC, No. 09-06918, slip. op. (C.D. Cal. Aug. 13, 2010) (Klausner, J.), appeal docketed, No. 2010-1544 (Fed. Cir. Sept. 16, 2010) (Next scheduled action: reply brief due Apr. 29, 2011) DealerTrack, Inc. v. Huber, 657 F. Supp. 2d 1152 (C.D. Cal. 2009), stay of appeals lifted, No. 2009-1566 and No. 2009-1588 (Fed. Cir. Oct. 4, 2010) (Next scheduled action: oral argument calendared for May 5, 2011) CyberSource Corp. v. Retail Decisions, Inc., 620 F. Supp. 2d 1068 (N.D. Cal. 2009), stay of appeal lifted, No. 2009-1358 (Fed. Cir. Jul. 30, 2009) (Next scheduled action: oral argument calendared for May 3, 2011) Bancorp Services, L.L.C. v. Sun Life Assurance Co. of Canada, No. 4:00-cv-1073, slip op. (E.D. Mo. Feb. 14, 2011) H&R Block Tax Services, Inc. v. Jackson Hewitt Tax Service, Inc., No. 6:08-cv-37, slip op. (E.D. Tex. Feb. 2, 2011) Graff/Ross, LLP v. Federal Home Loan Mortgage Corp., No. 07-796, slip. op. (D.D.C. Aug. 27, 2010)