Subject Matter: Overview

§ 101 Categories

• Process

• Machine

• Manufacture

• Composition of Matter

• Improvements

Computer Software

1972

Gottschalk v. BensonS Ct rejects patentthat would wholly

preempt an algorithm

Diamond v. DiehrCalculation + post-

solution activity patentable

Gradual Liberalizationof patent standards

PTO Guidelines

1981 1996 1997

Adobe case

BCLT/FJC - 1999 © 1999 Menell/Merges

1960s

PTO rejectssoftware patents:

mental stepsdoctrine

Software Patents Issued

1982 1986 1990 1994 1998

15003000Approx.

600

6000

16000

Business Method Claims

1983

State Street Bank(data processingsystem for portfoliomanagement)

BCLT/FJC © 1999 Menell/Merges

1908 1998

Paine, Webber(system for managinga margin brokerage

account)

Hotel Security Checking Co.(a method for maintaining

restaurant records so asto prevent fraud by waiters)

Patent 4,839,804(certificate of depositfor hedging against college tuition costs)

1988

State Street Bank

HUB(Pooled fund)

MF

MF

MFMFMF

MF

MF MF

Computer software: method of doing business

Prior User Rights

• P. 172

• Requirements and Limitations

What’s not patentable under State Street?

System for implementing dependency recovery process

5,980,447 An interactive multi-media computer system for providing support and guide to an individual undergoing recovery from asubstance or emotional dependency.

5,905,975 Computer implemented system & method of executing an auction

Assignee: onsale.com

5,897,620 Method & Apparatus for the sale of airline-specified flight tickets

Assignee: priceline.com

5,982,303 Method for entering alpha-numerical data

More!

• 6,029,141: Amazon Affiliate Program

• 6,681,985: System for Providing Enhanced Systems Management, Such as in Branch Banking– Washington Mutual

Two Primary Types of Patent

• E-commerce

• Financial services

Internet Coupons - Case Study I

• U.S. Patent 5,761,648

• Has Sued 9 Companiesfor Infringement

• A few Have Settled

Internet Coupons (cont.)

• 5 Companies Have FiledLaw Suits Against

Coolsavings

• Planet-U Bought A Patent (U.S. Patent 5,907,839)

and Sued Coolsavings

• Coolsavings’ S-1 indicates Brightstreet.com has Filed an Interference Against Coolsavings

Catalina Mktg v. Coolsavings.com

• Catalina Mktg Patent: 4,674,041

– Primary embodiment: in-store coupon-dispensing machine

– Coolsavings.com: web-based coupon distribution

Catalina Marketing Primary Embodiment

Catalina Mktg. ‘041 Patent1.A systen [sic] for controlling the selection and dispensing of

product coupons at a plurality of remote terminals located at predesignated sites such as consumer stores wherein each terminal comprises:

[a] activation means for activating such terminal for consumer transactions;

[b] display means operatively connected with said activation means . . .

[c] selection means . . .; [c] print means; and[d] control means . . . .

‘041 Patent cont’d

25. A system for controlling the selection and dispensing of product coupons at a plurality of remote terminals located at predesignated sites such as consumer stores, comprising:

a plurality of free standing coupon display terminals located at predesignated sites such as consumer stores, each of said terminals being adapted for bidirectional data communication with a host central processing unit . . .

Catalina v. Coolsavings, 289 F.3d 801, 62 U.S.P.Q.2d 1781 (Fed Cir

2002)

Rader, Circuit Judge, held that: (1) phrase "located at predesignated sites such as consumer stores" was not a limitation on claim in which it was only part of preamble, but did limit separate claim in which it appeared in both preamble and body of claim; (2) phrase in question required designation of the physical site of the terminal before location of the terminal at a point of sale location; (3) district court's improper construction of first claim required vacatur of judgment of no literal infringement; (4) web-based system did not literally infringe second claim that did contain limitation . . .

Rader opinion

• “Whether to treat a preamble as a limitation is a determination ‘resolved only on review of the entire[ ] ... patent to gain an understanding of what the inventors actually invented and intended to encompass by the claim.’”

Rader opinion (cont’d)

“In this case, the claims, specification, and prosecution history of the '041 patent demonstrate that the preamble phrase "located at predesignated sites such as consumer stores" is not a limitation of Claim 1. The applicant did not rely on this phrase to define its invention nor is the phrase essential to understand limitations or terms in the claim body.” – 289 F.3d at 810

Walker Digital (of Priceline Fame)

Allegedly has over 200 Patent

Applications Filed for

E-Commerce Business Methods

AS MANY AS SIX IMPOSSIBLE PATENTS BEFORE BREAKFAST: PROPERTY RIGHTS FOR BUSINESS CONCEPTS AND PATENT SYSTEM

REFORM, 14 BTLJ 577 (1999)By Robert P. Merges †

ABSTRACT In this paper, Professor Merges describes the emergence of patents for

business "methods" or concepts, such as Internet airplane ticket purchase systems. Professor Merges is agnostic about whether these

patents are worthwhile. Nevertheless, he argues that the increased volume of patent applications stemming from this newly patentable

subject matter has pushed the patent system into crisis.

Practical Advice

•Consider Broad System/

Method Patents

•New Functions

•New Features (e.g., One-

Click Buy)

Case Study II: Financial Services

U.S. Patent 6,681,985 to Curtin et al

Assigned to Washington Mutual

Criticized in Wall Street Journal, 8/23/04 p. B1

United States Patent 6,681,985 Curtin ,   et al. January 27, 2004 System for providing enhanced systems management, such as in branch banking

Abstract. . . One embodiment includes an entrance, a concierge desk, two or

more teller towers, and a teller cash dispenser. The teller towers may contain a teller computer, a top surface, one or more cash slots, and a cash box. A bank employee at the teller tower performs transactions for a customer, such as depositing cash, performing account inquiries, etc. In one embodiment, the teller cash dispenser receives information regarding a withdrawal transaction and dispenses cash to a customer or the customer receives a printed receipt to receive cash from the cash dispenser. In another embodiment, the teller towers are arranged in a circle, semicircle, elongated circle, or oval.

Inventors: Curtin; Karen (Bellevue, WA) [et al]Assignee: Washington Mutual, Inc. (Seattle, WA) Appl. No.:

972754Filed: October 5, 2001

The Uninvited Guest: Patents on Wall Street

by Robert P. Merges

Federal Reserve Bank of Atlanta Economic Review

Fourth Quarter 2003, Volume 88, Number 4

Before the advent of patents, several “appropriability” mechanisms protected financial services innovation: “first mover” advantages, complementary or “cospecific” assets, and trade secrecy. Evidence suggests that, in the immediate post-patent era, financial firms’ first order of business was to protect these traditional appropriability practices. This explains the early push to secure a “prior use rights” defense to protect established firms against patent claims by upstart outsiders.

Although patents may increase the costs of interchanging innovative ideas, they may bring some unintended benefits as well – by fostering spin-offs and facilitating entry by startups, for example.