Proper Business Method Patent Challenges Under the America Invents Act?


Scott McKeown, Partner at Oblon Spivak and Practice Center Contributor, sent in this article discussing how the “Transitional Program for Covered Business Method Patents” provision that is included in the pending patent reform legislation may impact technology companies.

Patent Reform Provisions to Impact Technology Companies?

The race to the USPTO door may start very shortly for those defendants charged with infringement of a “business method patent.”

Patent reform legislation is ostensibly poised for a September 2011 enactment.  The current version of the legislation (H.R. 1249) includes a provision entitled “Transitional Program for Covered Business Method Patents.” The provision essentially provides post grant review (as defined in the legislation) for patents that were issued prior to enactment. This provision is of a limited time, 8 years, and can only be used if actually sued or charged with infringement of a covered business method patent.

The clear intent of the author of this provision (Sen. Charles Schumer, D-N.Y) was to provide relief to the New York Banking Industry from the likes of Data Treasury. Some have gone as far as to label this provision a “bank bailout.” (note the provision in the bill excluding ATM machines as a venue tool Sec. 18(c))

The legislation defines a business method patent in fairly pliable terms, defining ”business method patents” as:

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.

(emphasis added)

This definition would seem to overlap with the criteria used by the USPTO in classifying  inventions under Class 705.  Class 705 is widely known as the primary business method patent classification, identified as by the USPTO as follows:

Data Processing: Financial, Business Practice, Management, or Cost/Price Determination:

Machines and methods for performing data processing or calculation operations in the:

-Practice, administration or management of an enterprise, or
-Processing of financial data, or
-Determination of the charge for goods or services

Based on the similarity between these definitions, it seems that patents falling in Class 705 will be especially susceptible to the bulk of the challenges going forward.

Interestingly, in the July 2011 Business Methods Partnership Meeting, some USPTO statistics were shared regarding the identity of the Top 10 filers of Class 705 applications between 2006-2010.

At least half of the top ten filers of Class 705 Patents are clear technology companies, including:

IBM (590 patents)
Microsoft (185 patents)
Sony (142 patents)
Hewlett-Packard (113 Patents)
Fujitsu (105 Patents).

Companies like AT&T, Oracle, Ebay, Amazon and Pitney Bowes round out the list (with only a sprinkling of companies being clear banking/financial organizations).

Thus, a provision primarily meant as a rifle shot to the heart of Data Treasury may in fact be a shotgun blast to many unsuspecting technology companies.

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