Stupid Patent of the Month: Trading By Tweet

from the uspto-messing-up-again dept

We’ve written many times about how the patent system is a poor fit for software. Innovation in the U.S. software industry happens despite, not because of, the thousands of software patents that are granted each year.

But software is not the only industry where patents make very little sense. In the 1990s, the Federal Circuit opened the door to patents on methods of doing business. While the Supreme Court tried to undo some of that damage, financial institutions are still hit with patent lawsuits. Many of these suits come from trolls that don’t produce anything. And yet, just as in the tech sector, there are some financial companies that keep heading back to the U.S. Patent and Trademark Office seeking a 20-year monopoly on some tactic or another.

This month, we’re highlighting U.S. Patent Number 10,147,140, which was recently granted to BNY Mellon Bank. The first claim of the ‘140 patent uses a lot of financial jargon to describe an extremely simple process: checking social media for a particular event or statement, then making a trade based on that “investment triggering content.” One example of that: making a trade because someone put a hashtag in a tweet.

Even if this was a new product idea or investment strategy, it is not a new invention. The trend of stock market trading has been clear now for decades: automated trading has become faster and more computerized each year. BNY Mellon Bank did not invent computerized trading, social media, or anything else remotely technical. Rather, its patent proposes the idea of trading based on a social media event.

In the patent prosecution documents, the patent examiner even starts out by admitting that “the concept described in claim 1 is not meaningfully different than the economic concept? found by the courts to be an abstract idea.” Appropriately, the examiner cited Alice v. CLS Bank, which forbids “do it on a computer”-type patents. Similarly, Alice should clearly forbid patents on very old practices, like trading stocks, and simply adding in “social media monitoring.

But then the examiner goes on to agree with the applicant’s specious argument that just because the claim has additional limitations?such as “using a processor to withdraw[] funds from a customer financial account and then purchase shares,” and an interface that shows social media information?it becomes eligible. “When viewed as an ordered combination, the additional limitations amount to significantly more than the abstract idea,” the examiner concludes, “[t]he idea is patent eligible.”

Adding generic computer processes shouldn’t have made this patent eligible. So how does it happen? One big problem is that incentives in the patent application process line up to favor the granting of patents. Patent examiners are graded through a “count” system that gives them progressively less credit as persistent applicants file new amendments, arguments, requests for continued examination, and continuation applications. This system makes it impossible for the Patent Office to ever finally reject an application. There is only one way for the Patent Office to get rid of a persistent applicant: give them a patent.

In this case, the BNY Mellon’s lawyers essentially just pounded their fists on the table. They offered nothing more than the bare insistence that the patent included an “ordered combination,” and that should negate the Alice rules. “There was no showing that the combination as a whole failed to provide an inventive concept,” wrote the applicants. The examiner simply gave up and issued a patent that is plainly ineligible under Alice and many other cases.

We’ve written before that the Patent Office needs to do a better job applying Alice. Unfortunately, the new Director appears to want the opposite. Other lobbyists are pushing for legislation to undo Alice entirely. If they get their way, we can expect another flood of silly patents on business methods and software.

Reposted from the EFF’s Stupid Patent of the Month series.

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Comments on “Stupid Patent of the Month: Trading By Tweet”

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16 Comments
Anonymous Coward says:

Re: Erm...

Every time the market makes a correction everyone tries to blame the wind, the computer software, twitter, facebook, etc…

Markets make corrections because people cash out. Markets don’t just go up in a straight line. The market went up too fast for too long, it’s bound to go down sometimes. Why is it such a surprise that markets don’t go up in a straight line?

Anonymous Anonymous Coward (profile) says:

Insanity here, get your insanity here

Wall Street has insantity for sale

Unless one is a) super rich and b) risk sympathetic, why would one want to trade stocks on the quasi truthful information posted on Twitter?

The first qualification needs to be was the tweet authentic?

Then one needs to know if the tweet was truthful?

Then one needs to know if that tweet would be helpful or harmful to the stock in question?

Then one needs to know if that helpful/harmful is short term or long term?

Then one needs to know how short is short term and how long is long term?

Then one need s to know how big a gamble any trading on that stock might be?

Regardless of the patentability of this application, what would make anyone think that some tweet or another might be a reason to trade, and incur such costs that come along with such trading?

One would think that investors take more into there trading decisions than mere tweets. Then again, there is programmed trading…and who knows what is in those algorithms.

Anonymous Coward says:

Re: Re:

For those new to the site, “blue” and “out_of_the_blue” refer to those arrogant commentors who pay for the privilege of putting their deathless wit in Techdirt’s unique “First Word” and “Last Word”, the highlighting done by hyper-links (hence the name “out of the blue”), usually large and always annoying. You see those only rarely because reviled.

Mason Wheeler (profile) says:

In the 1990s, the Federal Circuit opened the door to patents on methods of doing business. While the Supreme Court tried to undo some of that damage, financial institutions are still hit with patent lawsuits. Many of these suits come from trolls that don’t produce anything.

Patent trolls on one side, Wall Street on the other. This is another one of those "I don’t know which one to root for" scenarios.

Anonymous Coward says:

One example elon musk,s tweet re going private ,stock at 420,
https://gizmodo.com/elon-musk-claims-420-tweet-with-20-million-sec-fine-wa-1830050362
Maybe every message on twitter is not totally reliable ,
or a good source to base investments decisions on.
I despise all patent trolls they patent basic idea,s then just wait to sue some company who does actual work or produce a product .
The patent office is under pressure to give out patents even if the idea,s are pointless stupid or
obvious to anyone in business .

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