Which business methods are patentable in the US?

In Insights, Uncategorized

9 February, 2012

When the Bilski decision was handed down by the US Supreme Court in 2010, it was taken as a clear indication that business methods would now be more difficult to patent in the US. After all, the Supreme Court came to the conclusion that the subject-matter at stake, a method for hedging risk, was abstract, and therefore not patentable.

However, the Bilski decision did not explicitly make the threshold for patentability higher. In fact, the Supreme Court rejected the “machine-or-transformation”-test** as the only test for patentable subject-matter, and established that also other arguments could succeed in showing that an idea is non-abstract. The Supreme Court also clearly stated that there is no explicit exclusion of “business methods” in the US statute.

So, the question still remains: are business methods patentable in the US, and if so, what does it take to make them so? It is up to the Court of Appeals of the Federal Circuit (CAFC) to answer this question, and three recent decisions may provide some guidance on which factors impact whether a business method is patentable or not.

In Cybersource Corp, the invention related to a method for verifying a credit card transaction, by utilizing a map of credit card numbers from other credit card transactions.

The CAFC considered this method to be abstract. According to the court, none of the steps of the claim actually require the use of any machine. The credit card information could be read from a database by a human, the map may be constructed by a person, and the act of utilizing the map encompasses literally any analysis of gathered data to detect a fraud. The conclusion therefore is that the method is drawn to a mental process, which is “a subcategory of unpatentable abstract ideas”.

In Dealertrack, the invention related to a “computer aided” method of managing a credit application, wherein credit application data is received and forwarded to funding source terminal devices, from which decision data is returned. According to the invention, the application data is sent to more than one funding source at the same time.

The CAFC found the method to be abstract, despite the “computer aided” limitation in the preamble, and various devices involved in the steps. According to the court, the term “computer aided” is no less abstract than the underlying concept of a clearinghouse.

In Ultramercial, finally, the invention related to a method for providing media contents over the Internet to a user, and in return requiring the user to view or interact with an advertisement. In other words, advertising is used as a sort of currency to access the media contents.

This time, the CAFC came to the conclusion that this method was not abstract. According to the Court, the subject-matter, when viewed as a whole, involved “an extensive computer interface”. The claim was considered NOT to preempt the abstract idea of using advertisements as currency, but instead presents a particular method where several steps require a specific application to the Internet. Needless to say, the conclusion that the subject-matter is statutory says nothing about its merits with respect to novelty, inventive step, and enablement, a fact pointed out not only once but three times by the CAFC.

So, where does this lead us? To begin with it is evident that, much like in Europe, the level of detail in the claims will have a significant impact on patentability. A claim as unspecific and broad as in Cybersource Corp will more likely be perceived as “abstract”. To “disguise” a very broad method with a few hardware features (Dealertrack) will probably not do much good, while a method directed to a more detailed implementation (Ultramercial) may very well pass the test.

From a European perspective, it is also interesting to note that the end result most probably would have been the same by applying the technical character standard of the EPO. Of course, the EPO examiners very rarely attempt to determine whether the subject matter as a whole is excluded. However, in an inventive step analysis the claim in Ultramercial would most likely have been found to have several features with technical character, while the claims in Cybersource Corp would not. In Dealertrack, the features would probably have been considered technical (after all, they include “devices”), but disregarding all non-technical content of these technical aspects it would hardly require any prior art to determine a lack of inventive step.

Perhaps even more interesting is a dissenting opinion by one of the judges in the Dealertrack case. According to this judge, the CAFC should instruct the District Court to assess other requirements on patentability (i.e. novelty, inventive step and enablement) before attempting to determine if the invention is statutory subject-matter. This would lead to an approach much similar to the one chosen by the EPO, where most business method claims are eliminated during an inventive step analysis.

To summarize, the CAFC are working hard to clarify the border between patentable and not patentable, between abstract and non-abstract. While it is yet difficult to see any clear and concise guidelines to help an applicant pass the test, it is certainly clear that not all claims have the same chance. And for the time being, at least, it may well be that the differences in patentability of business methods between the US and Europe are less significant.

Fabian Edlund, European Patent Attorney, Vice President

** The ”machine-or-transformation”-test stipulates that a claimed invention should 1) relate to a particular machine, or 2) represent a transformation of matter. Before Bilski, the CAFC had treated this test as the sole deciding test for determining if subject-matter was patentable.

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