Patents & the Financial Services Industry

David Kappos, the assistant general counsel for IP law and strategy at IBM, was chosen by the Obama administration to be the next director of the Patent and Trademark Office.  Many patent practitioners will be watching closely to see whether IBM’s position on business method patents and the Bilski test will permeate from Kappos to the rest of the PTO.  Here is a quote from the BNA “Patent, Trademark & Copyright Law Daily” about Kappos’ opposition to business method patents:

On Jan. 15, 2007, Kappos published an opinion piece on the Web site of the Intellectual Property Owners Association suggesting that allowing patents on business methods has not served the public.

 

He left no doubt of his feelings on the topic a year later, at a Jan. 14 Brookings Institution conference (13 PTD, 1/23/09), saying that IBM looked at State Street Bank & Trust Co. v. Signature Financial Group Inc., 149 F.3d 1368, 47 USPQ2d 1596 (Fed. Cir. 1998), as initiating an “experiment” in allowing patenting of business methods that, after ten years, can now be seen as having failed.

 

In further remarks at that conference, Kappos was particularly critical of business method patents “untethered to any particular application.” He could see “no sound innovation policy that supports abstract, non-technical patents” given to business methods. These patents are now covering results, and not how the results are achieved, he said, and this discourages rather than encourages innovation.

 

Kappos saw “a good piece of work” in the line drawn by the U.S. Court of Appeals for the Federal Circuit in In re Bilski, 545 F.3d 943, 88 USPQ2d 1385 (Fed. Cir. 2008) (211 PTD, 10/31/08). At least it is clear that legal obligations and business risk do not meet the subject matter test, he said. Lots more work needs to be done, though, he added, suggesting that further clarification should be along the lines of the “technical contribution” requirement for patentability used in Japan and the European Union. We should be considering a global perspective in our line-drawing, he said; harmonization is a good thing.

 

However, it is worth noting that IBM’s amicus brief on Bilski, which Kappos coauthored, included a recognition of “important technological advances” in the financial field, so it is likely his definition of “business method” is not as broad as some might think (see also David J. Kappos, John R. Thomas, & Randall J. Bluestone, A Technological Contribution Requirement for Patentable Subject Matter: Supreme Court Precedent and Policy, 6 Nw. J. Tech & Intell. Prop. 152 (2008)).

 

In another development, Kappos was also in the news after the PTO published its rules changes for continuation and claiming practice that led to the still-ongoing Tafas v. Doll litigation. 559 F.3d 1345, 90 USPQ2d 1129 (Fed. Cir. 2009) (53 PTD, 3/23/09). However, in a declaration in support of an amicus brief on the case, Kappos confined his complaints to the retroactivity terms of the PTO’s rules, and did not directly contest the changes for future patent applications (http://pub.bna.com/ptcj/KapposDecl.pdf).