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The Business Method Paradox for the Financial Industry

The Business Method Paradox for the Financial Industry. James Moore Bollinger Fordham Intellectual Property Law Institute SESSION 8: PATENT LAW Friday, April 29 2011 Fordham Law School. PARADOX: THE PENROSE STAIRS. Continuously climbing – but returning to the beginning of the journey……….

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The Business Method Paradox for the Financial Industry

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  1. The Business Method Paradox for the Financial Industry James Moore Bollinger Fordham Intellectual Property Law Institute SESSION 8: PATENT LAW Friday, April 29 2011 Fordham Law School

  2. PARADOX: THE PENROSE STAIRS • Continuously climbing – but returning to the beginning of the journey……… Inception, Warner Bros. Pictures (2010)

  3. BILSKI:LEGAL PARADOX • A general purpose computer that is specifically programmed to perform one or more useful operations is generally considered patent eligible – unless: • Involves a business method …….(why?)

  4. Post-Bilski Rulings - District Courts • Financial Patents: general purpose computers are not a “particular machine” • Graff/Ross, LLP v. Federal Home Loan Mortgage Corp.(D.D.C. Aug. 27, 2010) • Heavy reliance on “Interim PTO guidelines” • If financially related operations – presumed ineligible • Bancorp Services, L.L.C. v. Sun Life Assurance Co. of Canada(E.D. Mo. Feb. 14, 2011) • Case history – two prior sj rulings against patentee – both reversed • Treated “system” claim as a “process” • CLS Bank Int'l v. Alice Corp. Pty. Ltd. (D.D.C. Mar. 9, 2011) • Patents directed to creating and settling debts • The court found that the claims represent an “incarnation of [an] abstract idea on a computer, without any further exposition or meaningful limitation”

  5. Post-Bilski Rulings - CAFC • Research Corporation Technologies, Inc. v. Microsoft Corp. (Dec 2010) • FOUND TO BE PATENT ELIGIBLE • PARALLELS THE IN RE ALAPPAT DECISION – 1994 • GENERAL PURPOSE COMPUTER – SELECTIVELY PROGRAMMED • NOT A BUSINESS METHOD – INVOLVES HALF-TONE IMAGING • Prometheus Laboratories, Inc. v. Mayo Collaborative Services (Dec 2010) • FOUND TO BE PATENT ELIGILBLE • Transformation prong of MOT

  6. HOW LONG WILL THE LEGAL PARADOX LAST • Future Business Method Cases – to be decided by CAFC: • Ultramercial, LLC v. Hulu, LLC • Next scheduled action: reply brief due Apr. 29, 2011 • DealerTrack, Inc. v. Huber • Next scheduled action: oral argument calendared for May 5, 2011 • CyberSource Corp. v. Retail Decisions, Inc. • Next scheduled action: oral argument calendared for May 3, 2011

  7. Business Method/Financial PatentsWILL THE PARADOX MATTER • Patent Reform – 2011 • Schumer Amendment – post grant review of business method patents: For purposes of this section, the term ‘‘covered business method patent’’ means a patent that claims a method or corresponding apparatus for performing data processing operations utilized in the practice, administration, or management of a financial product or service, except that the term shall not include patents for technological inventions.

  8. BILSKI: BUSINESS PARADOX FOR FINANCIAL FIRMS • Patent Procurement Program • Scope and direction • Litigation Strategy • NPEs and Competing Firms • Litigation Costs • Legislative Interface • Lobbying profile • Overall Risk Management • Can the above be reconciled ?

  9. Aspects of Risk Management For Financial Firms - Patents USPTO NPEs (Licensing Programs) Financial Firms (US) Competitors (Market Sh.) Congress U.S. Courts Litigation Costs Damages Injunctions

  10. Business method/financial patent paradoxQuestions?

  11. Citations • Research Corporation Technologies, Inc. v. Microsoft Corp., 627 F.3d 859 (Fed. Cir. 2010) • Prometheus Laboratories, Inc. v. Mayo Collaborative Services, 628 F.3d 1347 (Fed. Cir. 2010) • Ultramercial, LLC v. Hulu, LLC, No. 09-06918, slip. op. (C.D. Cal. Aug. 13, 2010) (Klausner, J.), appeal docketed, No. 2010-1544 (Fed. Cir. Sept. 16, 2010) (Next scheduled action: reply brief due Apr. 29, 2011) • DealerTrack, Inc. v. Huber, 657 F. Supp. 2d 1152 (C.D. Cal. 2009), stay of appeals lifted, No. 2009-1566 and No. 2009-1588 (Fed. Cir. Oct. 4, 2010) (Next scheduled action: oral argument calendared for May 5, 2011) • CyberSource Corp. v. Retail Decisions, Inc., 620 F. Supp. 2d 1068 (N.D. Cal. 2009), stay of appeal lifted, No. 2009-1358 (Fed. Cir. Jul. 30, 2009) (Next scheduled action: oral argument calendared for May 3, 2011)  • Bancorp Services, L.L.C. v. Sun Life Assurance Co. of Canada, No. 4:00-cv-1073, slip op. (E.D. Mo. Feb. 14, 2011) • H&R Block Tax Services, Inc. v. Jackson Hewitt Tax Service, Inc., No. 6:08-cv-37, slip op. (E.D. Tex. Feb. 2, 2011) • Graff/Ross, LLP v. Federal Home Loan Mortgage Corp., No. 07-796, slip. op. (D.D.C. Aug. 27, 2010)

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