Dec. 2011/Jan. 2012 / Intellectual Property
Uncertainty About Business Method Patents
A split has developed in the Federal Circuit Court of Appeals. It comes after the Supreme Court’s decision in Bilski v. Kappos, in which it invalidated the patent at issue but held that business methods can be patented even if they do not pass the “machine or transformation” test.
A series of recent Federal Circuit decisions since then reflect remarkably different judicial approaches, specifically regarding the scope of the “abstract idea” exception to otherwise patent-eligible inventions. It remains to be seen whether the appellate court will soon reconcile these approaches.
The court’s approach in CyberSource v. Retail Decisions would leave many business methods ineligible for patent protection, whether they were implemented by humans or computers. In CyberSource the court said that “the basic character of a process claim drawn to an abstract idea is not changed by claiming only its performance by computers.” CyberSource also applied the pre-Bilski preemption test: Claims that as a practical matter preempt the use of an abstract idea are not patent-eligible.
By contrast, the appeals court’s approach in Ultramercial v. Hulu would render many business methods eligible for protection. The panel there wrote that the abstract idea exception was a “coarse filter” which would screen out only inventions that were “manifestly abstract.”
Until the split is resolved, the author suggests that in-house counsel carefully analyze the facts of each case to ascertain whether the claims involve mental steps and preempt use of an underlying abstract idea.
