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By Michael B. Lang, Esq. and William A. Drennan, Esq.
A tax guru seeking a patent on her latest innovation may greatly enhance the chance of a claim being patented if a computer performs a function as part of the claim.
The Federal Circuit's 1998 State Street Bank decision unleashed a flood of patent applications based on new methods of doing business. In 2007, the Patent Office received over 11,000 business method patent applications.1 In regards to a subset of business method patents of great interest to tax practitioners, as of Feb. 12, 2010, the Patent Office reported 92 tax patents issued, and 139 applications pending on tax inventions.2 The Federal Circuit's liberal approach to business method patents was questioned by a handful of U.S. Supreme Court Justices in 2006 3 and presumably in response, the Federal Circuit decided two prominent cases regarding patent applications on business methods.
First, In re Comiskey involved a purely legal method patent. Stephen Comiskey, a "general practice attorney"4 submitted a patent claim that called for including a binding dispute resolution clause (an arbitration clause) in a will or contract and then follow-up procedures to enforce the clause. Comiskey admitted that the claim did "not require the use of a mechanical device such as a computer."5 The Federal Circuit concluded that the claim was not patentable, stating "mental processes … standing alone are not patentable even if they have practical application …."6 Second, the Federal Circuit in In re Bilski considered an asserted claim that did not involve a computer or other machine, and the court concluded that the claim was unpatentable.7
In contrast, when a computer is used the chance of patentability may increase substantially. For example, the Federal Circuit considered other claims submitted by Comiskey and stated:These claims, under the broadest reasonable interpretation, could require the use of a computer as part of Comiskey's arbitration system … . When an unpatentable mental process is combined with a machine, the combination may produce patentable subject matter … . While the mere use of the machine to collect data necessary for application of the mental process may not make the claim patentable subject matter … these claims in combining the use of machines with a mental process, claim patentable subject matter."8
It should be noted that a year later in Bilski, the Federal Circuit noted some limitations. For example, the Federal Circuit states "insignificant post-solution activity [or any other insignificant extra-solution activity regardless of when it appears] will not transform an unpatentable principle into a patentable process,"9 and that "the use of a specific machine … must impose meaningful limits on the claim's scope to impart patent-eligibility."10 The Federal Circuit also stated, "a claimed process wherein all of the process steps may be performed entirely in the human mind is obviously not tied to any machine and does not transform any article into a different state or thing … as a result, it would not be patent-eligible …."11 The U.S. Supreme Court has also indicated that the "token" use of a machine will not make a claim patentable.12
Part of the magic of computers may be traced to the Federal Circuit's 1994 opinion in In re Alappat. In that case the court stated, "programming creates a new machine, because a general purpose computer in effect becomes a special purpose computer once it is programmed to perform particular functions pursuant to instructions from program software."13
Finally in the oral argument before the U.S. Supreme Court for In re Bilski, Chief Justice Roberts noted that even the argument by the attorney on behalf of the Patent Office gave great deference to claims that incorporate a computer.14
Although this view may change in the future, these legal sources suggest that claims incorporating a computer are more likely to be patented.15
2 www.uspto.gov/patft/index.html(using the search term "ccl/705/36T").
3 See Laboratory Corporation of America Holdings v. Metabolite Laboratories, Inc., 548 U.S. 124 (2006); eBay Inc. v. MercExchange, LLC, 547 U.S. 388 (2006) (Justices Kennedy, Stevens, Souter and Breyer concurring) (mentioning the "burgeoning number of patents over business methods" and the "potential vagueness and suspect validity of some of these patents").
14 See Bilski v. Kappos, Transcript of Oral Argument, page 33 of 52 (Nov. 9, 2009), available atwww.supremecourtus.gov/oral_arguments/argument_transcripts/08-964.pdf. ("But then you say … it might be [patentable] if you use a computer to identify the parties that you are settling a price between and if you used a microprocessor to calculate the price. That's like saying if you use a typewriter to type out the process then it is patentable… . [T]hat takes away everything that you spent 53 pages establishing.").
15 This conclusion is echoed in Orion Armon and Eamonn Gardner, "New Restrictions on the Patentability of Process Claims: Looking Beyond In re Bilski" 12 J. Internet L. No. 11, 1, 22 (2009) ("To avoid pitfalls associated with [35 USC §] 101, we suggest … that claims should be structured to emphasize particular machine implementations or the physical results of claimed processes.").
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