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US Patents: New USPTO treatment of business methods

The US Supreme Court's unanimous June 19 ruling in Alice Corporation Pty, Ltd v CLS Bank International et al – that a computer-implemented method of reducing risk in financial transactions between two parties by employing a neutral intermediary is patent ineligible – is already affecting USPTO review of business method and software patents.

The Alice Court found that claims for mitigating settlement risk were directed to abstract ideas and, as such, were patent ineligible under Section 101 of the Patent Act, even if the claims referred to a computer. Relying on the prior case of Mayo Collaborative Services v Prometheus Laboratories, Inc – holding that a method of measuring drug metabolites to adjust patient treatment was patent ineligible subject matter because it applied a law of nature using techniques routine in the art without adding an "inventive concept" – the Court determined that (1) the claimed invention was "a fundamental economic practice long prevalent in our system of commerce" and, therefore, directed to an abstract idea, and (2) "implement[ing] this abstract idea using a general-purpose computer" did not provide an "inventive concept" sufficient to transform the abstract idea into a patent-eligible invention.

Just six days following the Alice opinion, on June 25, the PTO issued the USPTO Preliminary Examination Instructions In View Of The Supreme Court Decision in Alice Corporation Pty Ltd v CLS Bank International, et al. These Preliminary Instructions interpreted Alice to suggest that all claims directed to laws of nature, natural phenomena, and abstract ideas, regardless of the technology or the category of invention, should be analysed for patent eligibility using the two-step Mayo analysis. Some public commentary asserted to the PTO following the Preliminary Instructions report that many pending business method and software claims, which under the previous USPTO guidance may have been patent eligible, are now being rejected as patent ineligible.

Likewise in an August 4 blog entry, USPTO Commissioner for Patents Peggy Focarino announced that the PTO has now withdrawn some notices of allowance issued before Alice, with the patent applications being returned for further examination, because they claimed an abstract idea and "no more than a generic computer to perform generic computer functions". In addition, the PTO's Patent Trial and Appeal Board has relied on the Mayo opinion to institute a covered business method patent review procedure, on the basis that at least one challenged claim was likely directed to "a fundamental economic practice long prevalent in our system of commerce" (that is, an abstract idea) with implementation on a computer not providing the needed inventive concept (Stewart Title Guaranty Co v Segin Software, LLC and Coupa Software, Inc v Ariba, Inc).

Insofar as the Preliminary Instructions are continued as PTO policy, it may prove more challenging for business method and software inventors to obtain patents. Correspondingly, it may be that there will be efforts to narrow pending business method and software claims during their prosecution to recite patent eligible subject matter under Alice – limited, of course, to the scope of the disclosure already on file.

Leslie Kushner Robert H Fischer

Fitzpatrick, Cella, Harper & Scinto

1290 Avenue of the Americas
New York, NY 10104-3800
Tel: +1 212 218 2100
Fax: +1 212 218 2200


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