Congress Takes Another Aim at Business Method Patents

Congress Takes Another Aim at Business Method Patents

by Jeffrey R. Kuester

Mr. Kuester ( is a partner with the patent, copyright and trademark law firm of Thomas, Kayden, Horstemeyer & Risley, LLP ( in Atlanta, Georgia. This article was originally published in the October 2000 issue of Patent Strategy & Management.

On October 3, H.R. 5364, entitled "Business Method Patent Improvement Act of 2000," was introduced in Congress. The text of the bill is available at Introduced by Representatives Berman and Boucher, this bill is an attempt by opponents of business method patents to restrict the ability of the PTO to issue them. In his floor statement, Congressman Boucher said he helped introduce the legislation "in an effort to repair the system before the PTO awards more monopoly power to people doing the patently obvious."

The legislation, which would apply to all applications pending as of enactment and to all patents issued after enactment, would:

* require automatic publication of all business method patent applications, establish a public protest proceeding for published applications and a new opposition process for patents;
* require applicants to disclose whether and to what extent a patentability search was performed;
* create a presumption of obviousness where a computer has been used primarily to implement a known business method; and
* lower the burden of proof for showing invalidity of a business method patent from the current "clear and convincing evidence standard" to the "preponderance of the evidence" standard.

The legislation begins with a definition:

Section 100 of title 35, United States Code, is amended by adding at the end the following:
''(f) The term 'business method' means-
(1) a method of-
(A) administering, managing, or otherwise operating an enterprise or organization, including a technique used in doing or conducting business; or
(B) processing financial data;
(2) any technique used in athletics, instruction, or personal skills; and
(3) any computer-assisted implementation of a method described in paragraph (1) or a technique described in paragraph (2).
(g) The term 'business method invention' means-
(1) any invention which is a business method (including any software or other apparatus); and
(2) any invention which is comprised of any claim that is a business method.''

This definition is very broad. Arguably, virtually every computer-related device would be included because virtually every electronic device today is a "computer-assisted implementation of a technique used in doing or conducting business." While the drafters probably did not intend to include basic electronic devices having little to do with business per se, the difficulty with properly constructing a definition of business methods has been a struggle long shared by the courts and the PTO. In any event, what do techniques used in "personal skills" have to do with business methods?

Representative Boucher suggested in his floor statement that "something is fundamentally wrong" with our system. No one will argue that bad patents are not bad for the system, and the PTO should certainly continue working to reduce the number of bad patents in this area. However, the changes suggested by this legislation, though possibly well meaning, would have very serious long-term effects on the entire patent system.

For example, lowering the burden of proof for showing invalidity of a business method patent from the current "clear and convincing evidence standard" to the "preponderance of the evidence" standard would automatically and unfairly reduce the value of a large number of patents that are clearly valid. In addition, the proposed opposition process would take the wind out of the sails for needed reexamination reform for all types of patents. More importantly, any legislative tinkering with the obviousness standard for one particular area of patents is bound to be problematic and have ripple effects.

According to the proposed legislation, a presumption of obviousness would be created if prior art "discloses a business method which differs from what is claimed only in that the claim requires a computer technology to implement the practice of the business method invention." While this sounds logical enough, the provision effectively suggests that every computerized "implementation of the practice" of a business method would automatically be considered obvious, regardless of how inventive any additional computer implementation steps might be. Furthermore, would this legislation erase the well-settled need for a "motivation to combine" the references?

Practice Tips
How should we plan for the future suggested by this legislation? First, it is more important than ever to draft claims that do not sound as though they incorporate business steps. While the language of the statute is loose at this point and may eventually focus more specifically on business limitations, it is the PTO that will classify applications into business methods class 705 and it already has standards in place for doing so that may remain unchanged. Consequently, if the claims of an application appear to be directed primarily to a technological innovation, the application may avoid being classified as a business method.

It is unclear whether article of manufacture claims would be included in the bill's definition of business method. While "business method invention" includes "any software or other apparatus," the meaning of "software" in that context is somewhat confused since it is known that a claim to software per se is not statutory subject matter. Nonetheless, it remains advisable to draft article of manufacture claims without method-like steps, in an attempt to escape the rigors of this proposed legislation.