Week of April 21, 2008 • vol. 34, no. 16 www.ctlawtribune.com Connecticut

BUSINESS METHOD UNDER FIRE Upcoming case may shed light on problematic issue

By MARINA CUNNINGHAM the determination to satisfy § 101 is Comiskey, suggesting that business method and SCOTT LYDON whether an produced a “useful, patents will now be considered invalid concrete and tangible result.” Thus, busi- unless the invention has a practical applica- or the past 10 years, business method ness methods became eligible subject mat- tion and can be performed by a computer Fpatents have been considered one of the ter, “subject to the same legal requirements or other tangible medium. more nebulous and problematic genres of for as applied to any other The application at issue in patentable subject matter in the United process or method.” Comiskey contained one set of claims directed to a system of mandatory arbitra- tion of legal documents and a second set directed to software for conducting manda- tory arbitration of legal documents. The Federal Circuit upheld the rejection of the first set of claims, stating “they merely claimed a mental process standing alone and untied to another category of statutory subject matter even when a practical appli- cation was claimed.” However, the Federal Circuit recognized the second set of claims as patentable sub- ject matter. In its opinion, the Federal Circuit stated that an otherwise abstract idea is only valid if it “(1) [is] tied to a machine; or (2) creates or involves a com- position of matter or manufacture.”Thus, a business method would have to satisfy one of these criteria to be considered patentable States, inspiring a great deal of discussion Since the ruling in State Street, the U.S. subject matter. and debate. Patent and Trademark Office (USPTO) has Though Comiskey appeared to define Before 1998, there was a general under- been overwhelmed with business method practical guidelines for drafting business standing that methods of doing business patent applications. Most business methods method claims, a pending Federal Circuit were simply not patentable subject matter. manifest themselves as software applica- case, in re Bilski, may bring even these However, the Federal Circuit’s ruling in the tions, an example of which is Amazon’s guidelines into question. Specifically, draft- 1998 case of State Street eliminated the “One Click” payment system, which allows ing business method claims to cover a phys- business method exception by stating that a customer to make an online purchase ical manifestation of an invention may soon with a single click of a computer mouse. fail to provide for patentable subject matter. In deciding to hear Bilski, the Federal Marina Cunningham is a partner with McCormick, Judicial Reconsideration Circuit has indicated that it would like to Paulding & Huber LLP in Hartford. She has experience in In recent months, the USPTO and the domestic and foreign patent prosecution, trademark and review the patentability of business meth- Federal Circuit have begun to reconsider copyright matters, e-commerce related issues, negotia- ods as a whole. tion of licenses and other types of agreements relating to the definition of patentable subject matter intellectual property, and litigation. Scott Lydon received as laid out in State Street, with regard to Weather-Related Risk his bachelor of science in mechanical and aeronautical business methods. In September 2007, the Bilski involves a method for managing the engineering from Rensselaer Polytechnic Institute. Federal Circuit issued a decision in in re weather-related risk associated with a com-

This article is reprinted with permission from Connecticut Law Tribune. ©2008 ALM Properties, Inc. Further duplication without permission is prohibited. All rights reserved. 2 CONNECTICUT LAW TRIBUNE • APRIL 21, 2008 VOL. 34, NO. 16 modity, such as managing the risk of a hot comes. One point of review is whether the the patentability of business method claims day to energy consumption, by making claims include patent-eli- as we know them today. hedged trades on the commodities market. gible subject matter. Another point of review At the very least, the outcome of Bilski The Federal Circuit will hear the case en under consideration is whether any aspect of should further define if and when business banc, requiring all 12 judges to hear the case the State Street decision should be overruled. methods constitute patentable subject mat- in a single joint session. The Federal Circuit Arguments in Bilski are scheduled to be ter and will, hopefully, provide substantive has indicated five points of review for Bilski heard in May and, based on the points of guidelines for practitioners preparing and encompassing a vast array of potential out- review, Bilski has the potential to eliminate prosecuting business method patents. ■