Court Slaps Down Software And Business Model Patents

from the a-sense-of-sanity-returning-to-patents? dept

It seems like barely a week goes by without another good story of the courts reigning in the worst abuses of the patent system. While patent reform issues languish in Congress, the courts are doing an excellent job correcting a lot of patent abuses. Just as the Supreme Court is looking at yet another patent case, the Court of Appeals for the Federal Circuit (CAFC) seems to be putting some limits on business model and software patents. This is somewhat amusing, as it was a CAFC decision about a decade ago in the State Street case that opened the floodgates to business model patents. Prior to that, it was widely believed that you couldn’t patent “business methods,” but the ruling at CAFC said that wasn’t true at all. The real travesty of the situation was that the guy who wrote the decision had been a former patent attorney who had written the last major update to patent law — with almost no Congressional oversight. In other words, one patent attorney almost singlehandedly changed a large part of patent law without Congress even realizing it. However, with the Supreme Court smacking down CAFC patent decisions left and right, it appears that the folks at CAFC are now recognizing that perhaps it needs to bring a little sanity back to the patent system. A little over a month ago, that meant raising the bar for “willful infringement,” and now it means raising the bar for business model and software patents.

This case involved a guy who was trying to patent the concept of “mandatory arbitration involving legal documents.” The USPTO denied the patent. After a failed appeal, the guy went to court, and CAFC is also saying that his concept does not deserve patent protection, with this being the key quote: “The routine addition of modern electronics to an otherwise unpatentable invention typically creates a prima facie case of obviousness.” In other words, simply taking a common process and automating it on a computer should be considered obvious — and thus, not patentable. This doesn’t rule out business model or software patents by any means — but it at least suggests that the courts are beginning to recognize that the patent system has gone out of control. The court also specifically addresses its own earlier State Street decision, suggesting that people had been misinterpreting it to mean any business model was patentable — when the USPTO and the courts should still be applying the same tests to see if the business models are patentable. It then notes that a business model on its own shouldn’t be patentable unless it’s tied to some sort of product, and then states: “It is thus clear that the present statute does not allow patents to be issued on particular business systems — such as a particular type of arbitration — that depend entirely on the use of mental processes.”

All in all, this is a very good decision that could take us even closer to stomping out innovation-destroying software or business model patents completely.

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Comments on “Court Slaps Down Software And Business Model Patents”

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Anonymous Coward says:

And there goes your profit....

I take it then that a simple word processor, which is software to translate the old type writer to the screen, would fail this test too. After all, I am typing at the keyboard. I think Microsoft knew this a long time ago and that’s why Notepad has been included in every version of windows for free….

ehrichweiss says:

there goes several patents..

“In other words, simply taking a common process and automating it on a computer should be considered obvious — and thus, not patentable.”

That means the eBay “Buy it now” buttons are now safe. Amazon’s 1-click patent isn’t going to be valid since it’s the automation of, say, having a tab at a bar or, for those of us who remember such days, your local grocer recognizing you and adding that can of beans to your bill, or a million and one other possibilities.

Tom G. says:

It's a bit more complicated from my perspective...

If I invent a magic solution that cleans things, and assuming the magic solution is new and not obvious, this magic solution should be patentable. If I also further claim that it can be used to clean windows, carpet, etc., shouldn’t these claims also be patentable?

If after several years everyone uses my magic solution, people would claim that it’s obvious the universal cleaner should be useful for cleaning windows and carpet, and that those claims are invalid. Those claims certainly weren’t obvious until everyone knew about the new solution.

Now if somebody comes up with a great idea, without patent protection, it would be too risky to invest the money to bring it to market. That’s the reason for patents, to safeguard the innovator from intellectual property theft during the period of time that an investment is made and recovered. This benefits society as a whole by promoting innovation.

Saying something is not patentable because at some later date is seems obvious is not a good idea. The best ideas are always obvious after the fact.

The crux of the issue are these things: 1) is the invention and it’s uses novel at the time of application; 2) is financial protection warranted to protect the inventor’s recovery of investment for a reasonable period of time; 3) is society’s as well as the inventor’s interest served by grant of patent.

The second and third ideas above are rarely considered, yet are the key reasons for having patent law in the first place.

The patent system should be structured to encourage quality over quantity. It should be hard to get a patent and the application should include a business plan of the investment needed to bring the product to market as well as an argument for its benefit to society. Once granted, protection of the patent should be at the goverment’s expense and the penaly of willful infringment should be very high.

I always wanted to air these opinions 😉

angry dude says:

Re: It's a bit more complicated from my perspectiv

Dear Tom,

Your opinions are much appreciated but you seem to completely misunderstand the purpose of patents…

Patents are about promoting the progress, not about making good business plans…
Patents always protect original ideas and not the final products you can sell (with the rare exception of drugs and simple hand tools)
Any modern high-tech product like cell phone incorporates at least a few hundred patents owned by many different parties…
Just think about it

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