The Hanging Tree: Business Method Patents Revisited

Several years ago a U.S. Supreme Court decision invalidated thousands of purported business method patents, because they protected subject matter which was not eligible for patent protection. The Court’s decision was premised on the fact that the disputed patent application exclusively disclosed, and requested protection for, abstract financial concepts. United States patent law is well settled that abstract ideas are never patent eligible. Consequently, patent eligibility analysis must initially determine whether disputed patent claims (sentences which define the invention in varying scope) are a mere designation of an abstract idea (such as a financial method). However, a significant number of invalidated patents purported to implement financial and economic methods with computer related devices. The Supreme Court decision was straightforward on the facts, because there were no computer related devices in the patent application for implementing an abstract financial method. The challenge now is: how much computer implementation is necessary to transform an abstract economic concept into a patent eligible method or device?

To date the most high profile cases from the U.S. Federal Circuit Court of Appeals addressed claim sentences which where not patent eligible. Unfortunately, these negative results do not provide the best road map for how much computer technology must be associated with an abstract procedure or device to merit patent eligibility. Nevertheless, we do have the recent Patent and Appeals Board decision of SAP v. Versata, and this decision was easy to understand with a straightforward legal analysis. The Board agreed with SAP that Versata’s disputed claims addressed the abstract idea of determining price using specific hierarchies. The Board then concluded that while the claims included computer hardware features, the underlying process could also be accomplished with pen and paper. The Board also recognized that the mere recitation of computer hardware, combined with an abstract idea, by itself was not a significant restriction on the implementation of the abstract financial concept. As a result, SAP’s request for protection as defined by these claim sentences, effectively became a request for ownership of the financial concept.

Most significantly, the Board also observed that the claim sentences only designated routine computer hardware. Consequently it becomes clear that the contribution of the patent did not lie in the type of computer device or practicing technical environment. This observation is consistent with the fact that the patent itself does not specify the invention’s hardware. Furthermore, the Board concluded that the alleged “improvement in the market place technology” did not establish that the designated claim steps in each claim were anything other than conventional routine implementing the abstract financial idea. Therefore the claim sentences that recite: storing, retrieving, sorting, eliminating and receiving do not add innovation to the implementation of the abstract financial idea.

What the businessperson should learn from SAP v. Versata is that a patent practitioner with a degree in computer science, or similar qualification, should draft the application. Furthermore Versata’s disputed Patent No. U.S. 6,553,350 discloses that it was filed in 1999 and issued in 2003. During this time frame many business method patents were filed with technical deficiencies, and prior to the U.S. Supreme Court affirmation of patent ineligibility of abstract business ideas. Unfortunately, apparently the innovation in the Versata patent lay (i) in the abstract financial idea and (ii) not within the hardware or software used to implement the idea.

© 2013 Adrienne B. Naumann, Esq.
Ms. Naumann does not endorse or sponsor the advertisements at


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