PATENTS FOR BUSINESS METHODS (REVISED)

Introduction

Methods of conducting business can be patentable.  However, the USPTO inquiry expands beyond the questions of whether the method is new (Section 102) or whether the method is an obvious variation of prior art methods (Section 103).  Further, the pendency of business method applications is the longest within the USPTO.

Discussion

As suggested above, a patent application directed to a method of conducting business activity is certain to trigger an expanded inquiry.  The Court of Appeals for the Federal Circuit (last stop before the Supreme Court) ruled that a process, i.e., method of performing a function, could be patentable if the process included use of a machine or there was a resulting transformation of a particular article into a different state or thing.  Keep in mind this standard pertains to whether a new process is patentable subject matter (statutory subject matter under 35 U.S.C. Section 101).  Note also that the use of the machine or transformation of the state or thing can not be merely an “add-on” to an otherwise ineligible claim.

There are also the separate tests of whether the development is novel or whether the development would be obvious to a person skilled in the art.  These tests  pertain to sections 102 and 103 mentioned above.

Patentable Subject Matter

Section 101 states all things invented by man are patentable subject matter. However, the courts have determined that laws of nature, natural phenomena, abstract ideas, unapplied mathematical algorithms and products of nature can not be patented.

Ideas for governing human conduct are generally deemed to be abstract ideas.  The courts have not provided a definition of abstract ideas.  However the volume of court decisions grappling with this issue have provided some clue.

Mathematical concepts, certain methods of organizing human activity, and mental processes are generally considered to be abstract ideas.

The courts have developed a two part test (“Alice/Mayo” test) to evaluate patentable subject matter.  Briefly, the first step is whether the patent claim recites an abstract idea.  If no, the subject matter is deemed potentially patentable, i.e., patentable if new (section 102) and non-obvious (section 103).

If  the claim does recite an abstract idea, i.e., a mathematical concept, a method of organizing human activity or a mental process, then the inquiry shifts to whether other elements of the claim are something other than generic functions directed to performing the mathematical concept, human activity, etc.  If no, the inquiry then shifts to whether the steps of the claim, taken as a whole or in combination operate in a non-conventional and non-generic way to preform a novel activity or perform a task in a novel way.  (I concur that this test continues to be subjective.  As I have stated in other posts, the issue is highly nuanced and requires careful drafting of both the specification and the claims.)

Discussion Continued

A method of conducting business, i.e., a business method, will be viewed as a method of conducting human behavior and therefore fall into the milieu of a business method.  It will be subject to the Alice/Mayo test discussed above.

Recently, it has been suggested that Alice/Mayo test has been refined or clarified such that if a combination of claim elements are integrated to perform a practical application, then the claim (and patent) is patent eligible.  Stated differently, the patent can not be invalidated as covering non-eligible subject matter under section 101.  Also, a pending application can not be rejected for claiming non-eligible subject matter.

Note again, the subject matter must also be novel and non-obvious in order to be eligible for patent protection.

Computer software is frequently a part of a development for conducting business.  Software may also be separately patentable if it meets the related “machine or transformation test”, i.e., the software is controlling a machine or utilized in the production or transformation of matter.  Although this test shifts focus from an abstract idea (e.g. controlling human activity) to use of a natural law, (e.g., a scientific principle used in the control of machinery transforming a material or product).  The evaluation of whether the business method results in a practical application seems similar to whether the software is used in transforming a material or controlling a machine.  See my discussion of Diamond v. Diehr in Patenting Medical Diagnostic Procedures.

Conclusion

The patentability of a business method is admitted by the court as “hardly straight forward”.  It is therefore highly recommended that careful and knowledgeable consideration be given in the drafting of an application for patent.  Particularly care must be used in creating the specification as well as the individual patent claims.  The issue of patentability may rest on the foundation created in the preparation of the application.

Copyright  David McEwing, 2019