Business Process/Methods &
Software Patents
IM 350: Intellectual Property Law and
New Media
Spring, 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”
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 705
1. Determining Who Your Customers
Are, and The Products/Services They
Need/Want
3.Exchanging Money and Credit Before,
During, and After the Business
Transaction
–
–
–
–
–
–
–
–
– 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
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
Serialize
d Filings
Class 705
CPA-RCER129
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, 2011
SOURCE: http://www.uspto.gov/patents-getting-started/patentbasics/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.
Ramifications of Alice
• If a patent covers an implementation of an
idea, the Patent Office 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.
A final word on patent trolls
• Rockstar Consortium
– A patent holding company
– NPE = non-practicing entity
– Members = Apple, Blackberry, Ericsson, Microsoft
and Sony
– Bought Nortel patents out of bankruptcy, $4.5B
– Has sued Google, Huawei, Samsung and other
makers of Android phones
• Reports indicate Apple and Google settled late last year