Business Process/Methods & Software Patents

IM 350: Intellectual Property Law and New MediaFall, 2015

What makes an invention patentable?

• New• Useful• Non-obvious to one of “ordinary skill in the

art”

What factual inquiries guide a patent examiner?

• Determining the scope and content of the prior art;

• Ascertaining the differences between the prior art and the claims in issue;

• Resolving the level of ordinary skill in the pertinent art; and

• Evaluating any objective evidence of nonobviousness (i.e., so-called "secondary considerations").

What is a Business Method Patent?

• Discloses and claims a new method of doing business

Why is it advantageous to own a business method patent?

• The patent owner can stop others from making, using or selling anything that relies upon patented method . . . unless the owner gives express permission.

• The power of exclusion - great competitive advantage.

• Generate revenue - opportunity to license the invention and earn royalties.– Fodder for “patent trolls”

Growth in Business Method Patent Filings

Class 705 – Modern Data Processing

• Machines and their corresponding methods for performing data processing or calculation operations, where the machine or method is utilized in the – 1) practice, administration, or management of an

enterprise, or – 2) processing of financial data, or – 3) determination of the charge for goods or

services.

Data Processing in Specific Enterprises

• Insurance • Stock/Bond Trading • Health Care Management • Reservation Systems • Postage Meter Systems (Computerized)• Electronic Shopping • Auction Systems • Business Cryptography

Four largest groupings in Class 7051. 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 – Redemption of Coupon

3.Exchanging Money and Credit Before, During, and After the Business Transaction

– Credit and Loan Processing – Point of Sale Systems – Billing – Funds Transfer – Banking – Clearinghouses – Tax Processing – Investment Planning

4. Tracking Resources, Money, And Products

• Human Resource Management • Scheduling • Accounting • Inventory Monitoring

Class 705 Application Filing and Patents Issued Data

Fiscal Year

Class 705

Serialized

Filings

Class 705 CPA-RCE-

R129 Filings

Class 705 Total

Filings

Class 705 Issues

2002 6,774 626 7,400 494

2003 6,387 1,310 7,697 486

2004 6,681 1,731 8,412 291

2005 6,976 2,056 9,032 711

2006 8,352 2,532 10,884 1,195

2007 9,843 2,925 12,778 1,333

2008 10,293 4234 14,527 1,643

2009 8,229 7,160 15,389 1,725

2010 8,495 8,736 17,231 3,649

*This data is based on information available as of May 5, 2011SOURCE: http://www.uspto.gov/patents-getting-started/patent-basics/types-patent-applications/utility-patent/business-methods-18

Examples of Business Method Patents

– Amazon’s “1-Click shopping”– Priceline’s “Reverse Auction”– Merc Exchange’s “Buy It Now”

What invention is described below?

ABSTRACT

A method and system for placing an order to purchase an item via the Internet. The order is placed by a purchaser at a client system and received by a server system. The server system receives purchaser information including identification of the purchaser, payment information, and shipment information from the client system. The server system then assigns a client identifier to the client system and associates the assigned client identifier with the received purchaser information. The server system sends to the client system the assigned client identifier and an HTML document identifying the item and including an order button. The client system receives and stores the assigned client identifier and receives and displays the HTML document. In response to the selection of the order button, the client system sends to the server system a request to purchase the identified item. The server system receives the request and combines the purchaser information associated with the client identifier of the client system to generate an order to purchase the item in accordance with the billing and shipment information whereby the purchaser effects the ordering of the product by selection of the order button.

Amazon’s 1-Click Patent No. 5960411

ABSTRACT

A method and system for placing an order to purchase an item via the Internet. The order is placed by a purchaser at a client system and received by a server system. The server system receives purchaser information including identification of the purchaser, payment information, and shipment information from the client system. The server system then assigns a client identifier to the client system and associates the assigned client identifier with the received purchaser information. The server system sends to the client system the assigned client identifier and an HTML document identifying the item and including an order button. The client system receives and stores the assigned client identifier and receives and displays the HTML document. In response to the selection of the order button, the client system sends to the server system a request to purchase the identified item. The server system receives the request and combines the purchaser information associated with the client identifier of the client system to generate an order to purchase the item in accordance with the billing and shipment information whereby the purchaser effects the ordering of the product by selection of the order button.

Costs of Business-Method Patents

• PTO filing fees = $1,000 (approx.)• Legal fees to prepare = $10,000 to $20,000• Legal fees to respond to “office actions” =

$1,500 to $3,500• Foreign filing and prosecution fees = it

depends but can total as much as $100,000

What are software patents?

Now, when we talk about software patents, what exactly do we mean? Let me be clear: patents aren't issued merely for lines of code. Patents are issued for process and apparatus, which are determined to be novel and non-obvious. Patents are not granted for abstract ideas. But they are available to protect innovations, such as those enabling-automated language translation, voice recognition, and video compression, all involving major technological advances, all of which can be implemented in software.

Under Secretary of Commerce for IP & Director of the USPTO David Kappos, Nov. 20, 2012

The Future of Method/Software Patents

• Alice v. CLS Bank (2014)The patents in suit claimed (1) a method for exchanging financial obligations, (2) a computer system configured to carry out the method for exchanging obligations, and (3) a computer-readable medium containing program code for performing the method of exchanging obligations.

Supreme Court holds that because the claims are drawn to a patent-ineligible abstract idea, they are not patent eligible under Section 101.

Post- Alice: 2-Step Test

• Invention must pass a two-step inquiry: – 1) does invention consist in significant part of a

patent-ineligible concept—for example, a law of nature, natural phenomenon or abstract idea?

– 2) If so, invention is patent-eligible only if the remaining parts of the invention have an “inventive concept”—one or more elements that ensure a patent on the invention amounts in practice “to significantly more than a patent upon the ineligible concept itself.”

Ramifications of Alice

• PTO issued new guidelines for its examiners– If a patent covers implementation of an idea, PTO

wants proof of an inventive concept beyond that idea– Must add new steps or new hardware, not just

conventional hardware or conventional steps. – Can’t rely on computer technology that is generic or

functionally described. • Many patent claims on software written from

1998 to 2008 may be vulnerable. Less leverage for trolls

What does a design patent cover?

• Design embodied in or applied to an article of manufacture (or portion thereof) and not the article itself.

• Design for an article consists of the visual characteristics embodied in or applied to an article

• Subject matter of design patent may relate to the configuration or shape of an article, to the surface ornamentation applied to an article, or to the combination of configuration and surface ornamentation.

Apple v. Samsung Design Patent

Apple get’s shown the money, but …

• Apple wins over $1 billion• Reduced to $500 million• And then, in August 2015, the PTO invalidates

Apple’s ‘677 patent relating to the design– Apple could not rely on earlier filed patent to

claim priority because they did not describe the ‘677 patent

– Priority tied to actual filing date in 2008– By then, prior art made the invention obvious