Changes to U.S. Patent Law Under the AIA: Business Method Patents

more+
less-

We continue our series in the changes to patent law under the America Invents Act (AIA) with a discussion of the handling of challenges to business method patents. On September 16th, implementation of the America Invents Act gave rise to the new Transitional Program for Covered Business Method Patents, which provides for challenging the validity of a subset of business method patents, generally relating to operations for "financial products and services." Previously the responsibility of the U.S. federal court system, the Transitional Program shifts the burden of discerning the validity of these patents to the U.S. Patent and Trademark Office, and the effect this will have on business organizations may vary. Organizations with patent portfolios relating to the financial industry should be wary of the shift, while organizations that practice in the financial industry may see this program as a cost-saver if they find themselves on the receiving end of an asserted patent.

Patents subject to this Transitional Program include those that claim "a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service." The breadth of what is included in these "financial" patents will be better defined over time, but some examples may include patents covering consumer financial transactions such as debit or credit card transactions, accounting systems or methods, financial asset transactions such as equity trading or monitoring, or other financially related operations. While the program excepts technological inventions, what constitutes a technological invention is vague, but claims that include a novel and unobvious technological feature and that also solve a technical problem using a technical solution may be considered technological inventions. For example, the exception of technological inventions may apply to devices that perform physical operations, rather than mere data processing. Inventions relating to improved hardware performance of existing systems may also be able to side-step the program.

If an organization owns or licenses patents falling within the "financial" umbrella that also do not meet the technological exception, the patents may be challenged by anyone that is sued for or charged with infringement of the patent. Accordingly, in communications with potential infringers, particularly where future goals relate to reaching a license agreement, organizations may want to avoid accusing the potential infringer. However, for companies pulled into the Transitional Program, defending the validity of the patent becomes of the utmost importance; if the patent comes out successfully, the challenger will no longer be able to rely on a defense of invalidity in the court system.

Because the Transitional Program provides that the Patent Office handle questions of validity, rather than the courts, the procedural process will follow a format similar to the new post-grant review process, and the process will no longer involve lengthy court processes such as discovery, for example. As a result, questions of validity will be answered much more quickly, which in turn may result in lower costs.

Organizations functioning in the financial products or services industry and also practicing in the realm of other organizations' patent protections may consider this program if a patent is asserted against them or if charged with infringement. This program will likely be a much more cost-effective pathway, when compared to the court system, to challenge the validity of the patent.