New Patent Law Might Invalidate Business Method Patents Altogether

Let there be light, and let me patent it.

This is a guest post by Steve Rubin, a patent attorney specializing in computer science at Dilworth & Barrese.

The America Invents Act became law last week. It is touted as creating jobs and fostering innovation. Those are great sound bites. However, a close read of the Act reveals it will hurt innovation and will be especially harmful to startup companies. In fact, the new law leaves open the possibility that an entire class of patents may be invalidated by corporations with the money to lobby Congress.

A quick breakdown on the changes:
First to File: The United States was unique in that patent rights were awarded to the first “inventor”. Now the first entity to file a patent application will be awarded the rights. Things like sales, publications, etc. that occur before your filing date, anywhere in the world, will preclude patent protection. Bottom line: file a patent application before you publish.

Post-grant Review: allows someone to challenge a patent on any invalidity ground if the request is filed within 9 months of a patent issuing. These grounds include novelty, statutory subject matter, challenges to the description, the clarity of the claims, etc. This type of challenge is much broader than what was available before.

Business method patent review:

Why make patent examination and enforcement more nebulous? One of the supposed goals in the Act was to make examination quicker – not create more complexities. Combine this with other provisions stating that tax avoidance strategies are not patentable, and a rule that you cannot get a patent directed to or encompassing a human organism, and basically Congress is saying that with enough lobbying money, you can invalidate a whole class of inventions. There is no logical reason for these types of provisions except that large companies lobbied to get them removed.

There was clear existing law in this area. A patent is awarded for something that is not too abstract (statutory subject matter) and which is new to the world (novelty). We already went through issues regarding statutory subject matter in conjunction with the Bilski case last year. In Bilski, a patent application was appealed all the way to the Supreme Court because the claimed process was said to be so abstract that it was not worthy of patent protection. The Supreme Court articulated a pretty good test for abstractness – generally if a process is tied to a machine or causes a transformation of subject matter, it is not too abstract. We did not need further law.

A big factor here is the negative connotation surrounding “business method” or sometimes “software” patents and people assume that these patents (whatever they are)must be invalid. There is no good definition of a “business method” patent and so much innovation relates to software it seems almost ridiculous to even suggest that software should not be patentable. I would even argue that all patents relate to someone’s business. The real test for patentability should simply be – is this new to the world? If it is new, why bother trying to shove the patent into arbitrary categories?

If you have been sued on a “business method patent”, you may file a challenge in the Patent Office, at any time on any invalidity ground. Basically, this is a – let’s get rid of those bad business method patents – law. This provision is particularly troubling because a “business method patent” is necessarily defined too broadly. Briefly, it includes any patent with a claim relating to a financial product or service but specifically excludes technological inventions. Does this mean that banks can no longer get patents on their software or hardware improvements? What is a “technological invention”? Is “software” or “stuff I don’t like” next? The new law leaves open the possibility that an entire class of patents may be invalidated by corporations with the money to lobby Congress.

New Patent Law Might Invalidate Business Method Patents Altogether