business method patent

Business Method Patent Definition Keyed to Claim Scope?

The Transitional Program for Covered Business Method Patents, (TPCBMP) will be implemented by the UPSTO on September 16, 2012. The new post grant option essentially provides that any “covered business method patent” is eligible for Post Grant Review (PGR) independent of the standard limitations for initiating PGR (i.e., 9 month window, patent application filing date).

The legislation defines a “covered business method patent” in amorphous terms, as follows:

a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.

It is left to the USPTO to interpret the practical scope of a “covered business method patent.” Not surprisingly, those that routinely obtain patents in this space, USPTO (Class 705), advocate a narrow interpretation. On the other hand, companies subject to e-commerce patent assertion campaigns hope that the definition will be keyed to claim breadth– embracing patents outside of the banking and financial services industry.

In their submission on Group 2 Rule making, Google, Verizon and Cisco advocate that:

[T]he scope of patents eligible for review under the transitional program is not limited to those covering any particular financial activity. . . .The plain meaning of this language encompasses a broad range of services relating to money. It includes for instance, payment–‐processing services for sales that occur in person or over the Internet. Certainly, nothing in the statute suggests that covered financial services are limited by the type of institution providing the service, such as a bank. On the contrary, Section 18 addresses the problem of invalid business method patents for “all businesses that have financial practices.” . . .

The example provided illustrates the full breadth of Section 18:

For example, if a patent claims a general online marketing method but does not specifically mention the marketing of a financial product, such as a savings account, if that marketing method could be applied to marketing a financial product or service, the patent would be deemed to cover a “financial product or service.”

A more narrow definition of “covered business method patents” would destroy the ability of the transitional program to promote innovation by weeding out invalid business method patents that would otherwise generate wasteful litigation and unwarranted licensing fees. . . .

Although “technological inventions” are not subject to review under the transitional program, both the statute and the legislative history indicate that this exception is narrow. . .[T]he PTO should not consider all patent–‐eligible subject matter under 35 U.S.C. § 101 to be a “technological invention” that falls outside the transitional program. The AIA clarifies that there is no link between patent–‐eligible subject matter and patents eligible for the transitional program. Excluding any invention sufficiently “technological” to satisfy Section 101 would vitiate the Section 18. . .

[T]he PTO should state that the presence of claim limitations reciting physical elements, such as a computer or the Internet, does not render a claim a “technological invention.”

(see full submission here)

On the other side of the debate are companies such as top business method patent (Class 705) filer IBM.

The definition is written to include methods (and corresponding apparatus) for performing certain functions relating to a financial product or service. As there is some ambiguity in the scope of this language, we believe it is important for the Office to ensure the definition remains appropriately limited to its purpose, which is to address poor quality business method patents. We therefore encourage the Office to interpret the exclusion for “technological inventions” broadly to ensure technological innovations, such as software innovations, are considered to be “technological inventions” and thus not included within the Section 18(d) definition.

(emphasis added, IBM submission here)

The first post grant review filings will be TPCBMP filings. This is because regular PGR filings cannot begin until first inventor to file patents begin to issue. As such, an expansive definition of “covered business method patent” could subject  many technology companies to post grant review challenges sooner than anticipated.