Patents & the Financial Services Industry

In Lincoln National Life Insurance Co. v. Transamerica Life Insurance Co. (Fed. Cir. 2010), after a jury found claim 35 of Lincoln’s patent, U.S. Pat. 7,089,201, infringed by Transamerica and not invalid and awarded Lincoln $13 million in damages, the CAFC reversed on infringement.

What is interesting about this case is not only the subject matter of the patent – a computer system for administering an annuity plan with a guaranteed minimum payment feature – but also the claim language itself, which includes one of the ever-troublesome contingency words, “if”.  It is not unusual for method claims to be drafted in the format, “performing step A if X, and performing step B if Y”, or some variation of this arrangement.  There are inherent deficiencies in this approach, but the contingency nature of the arrangement sometimes assists applicants with differentiating their inventions from the prior art.

One of the difficulties with this approach, however, is determining when such clauses are infringed.  Must both scenarios be performed?  Does the claim read on a process that performs one of the steps and is configured to perform the other step, even if that latter step is not actually performed?  What if a process performs one of the steps and the would-be infringer is obligated to perform the other step but has not yet done so?

Here, the language employed by the claim at issue is not quite identical to the format identified above, but the same issues arise:

Claim 35

A computerized method for administering a variable annuity plan having a guaranteed minimum payment feature associated with a systematic withdrawal program, and for periodically determining an amount of a scheduled payment to be made to the owner under the plan, comprising the steps of:

a) storing data relating to a variable annuity account, including data relating to at least one of an account value, a withdrawal rate, a scheduled payment, a payout term and a period of benefit payments;

b) determining an initial scheduled payment;

c) periodically determining the account value associated with the plan and making the scheduled payment by withdrawing that amount from the account value;

d) monitoring for an unscheduled withdrawal made under the plan and adjusting the amount of the scheduled payment in response to said unscheduled withdrawal; and

e) periodically paying the scheduled payment to the owner for the period of benefit payments, even if the account value is exhausted before all payments have been made.

Lincoln’s patent is directed to computerized methods for administering variable annuity plans, which is a contract that guarantees the payment of money to an annuitant upon certain intervals.  The claimed annuity plan entails an accumulation phase followed by a distribution phase, where during the latter the insurer makes periodic benefit payments to the annuitant from the account the annuity owner deposited money during the accumulation phase.  Under a variable annuity option, when there is a sufficiently poor fund performance, the dollar amount of the annuitant’s benefit payments could drop to zero.

One of the steps of Claim 35 requires “periodically paying the scheduled payment to the owner for the period of benefit payments, even if the account value is exhausted before all payments have been made.”  Transamerica sells and administers riders that guarantees policy owners the right to minimum payments regardless of market performance, thereby ensuring – at least theoretically – that the payments are made to annuitants “even if the account value is exhausted before all payments have been made.”  Transamerica argued that it did not perform step (e) because:

(1)          none of its policy owners has ever had an exhausted account and, therefore, that it has never made payments after an “account value is exhausted”;

(2)          it has not yet implemented a computer system that will make a payment in the event an account becomes exhausted.

The Federal Circuit rejected the first argument, finding that, per the district court’s claim construction, step (e) does not require actual exhaustion, only that Transamerica’s computerized method of administering riders must necessarily make a scheduled payment in the event of an exhausted account.  If a computerized system is configured such that it does not make a payment if an account is exhausted, step (e) is not performed and there is no infringement.

However, the Federal Circuit agreed with Transamerica on its second point: that, because Transamerica’s computerized system will not make payments if account value is exhausted  it does not perform step (e).  Rather, when a policy owner’s account value drops to less than the scheduled withdrawal amount, Transamerica manually produces and sends a check for the policy owner.

Two other interesting observations:

(1)  Legal Obligation to Perform Claimed Step.  Lincoln also argued that Transamerica was contractually obligated to practice the claimed method through its sale of riders, and Lincoln asserted that the riders require Transamerica to continue making payments to policy owners even in the event of account exhaustion.  The Federal Circuit disagreed that this was insufficient:

“More fundamentally, even if the GMWB riders did obligate Transamerica to perform the claimed method, this would not be sufficient to establish infringement. “The law of this circuit is axiomatic that a method claim is directly infringed only if each step of the claimed method is performed.” Muniauction, 532 F.3d at 1328 (emphasis added). A contractual obligation to perform an act is not performance; indeed, a party could avoid infringement simply by breaching its contract. To the extent the court’s instruction to the jury implied that Lincoln could establish direct infringement by relying on the terms of the GMWB riders rather than on Transamerica’s actual performance of the claimed steps, this instruction was erroneous.”

(2)  Contingency Language Such as “If”.  Lincoln also argued that, because the district court construed the “even if” clause of step (e) to be a contingent limitation, that limitation need not be performed to support a finding of infringement unless the condition occurred (i.e., Transamerica had an exhausted account).  That is, Transamerica’s system infringed, even though the computerized system would not make payments to exhausted accounts, because the “even if” clause need not be performed unless account exhaustion occurs.  The Federal Circuit likewise rejected this line of argument:

Because Transamerica’s computerized system does not make a payment if an account is exhausted, the system does not make a guaranteed payment regardless of the account value. Therefore, Lincoln failed to prove that Transamerica performs step (e). The undisputed evidence of record shows that Transamerica’s computerized system for administering its . . . riders does not make a scheduled payment if an account is exhausted. Rather, Transamerica’s computerized system stops making payments when an account becomes exhausted and [Transamerica] provides a manual check to the policy owner.”

The Federal Circuit left the issue of patentable subject matter under §101 undecided, finding it moot based on its non-infringement holding.  That in itself is not particular interesting but a good reminder that we have a mere 3 days until the S.Ct. publishes its opinion in Bilski v. Kappos.  Let the fun begin!

In Trading Technologies International Inc. v. eSpeed et al. (Fed. Cir. 2010), the CAFC upheld a $2.5 million infringement ruling against eSpeed Inc., a commodities exchange operator, and several of its affiliates.  The suit was brought by Trading Technologies International Inc. (TTI), which asserted U.S. Patent Numbers 6,766,304 and 6,772,132.

The patents-in-suit claim methods for displaying the market data for a commodity traded in an electronic exchange that includes a graphical user interface with “a dynamic display for a plurality of bids and for a plurality of asks in the market for the commodity and a static display of prices corresponding to the plurality of bids and asks.”  The GUI purportedly facilitates more accurate and efficient orders in a trading environment.  The problem solved by the invention relates to market fluctuations and rapid changes in bids and asks prices listed in those grids.  For example, when a trader wishes to place a buy at the inside market he may place the mouse cursor on the grids for the inside market and click the mouse.  However, as traders send bids and offers to the market, the price and quantity of the traded commodity change, which alter the inside market.  With earlier fixed grids, traders who wished to place an order at a particular price would miss that market opportunity if the inside market moved as the trader tried to enter an order, and in a fast moving market, missing an intended price could happen often and have very significant economic consequences.

The invention solved this problem by implementing static price levels, which are describe in more detail in the patents linked above:

(Claim 1 of the ’132 patent)

A method of placing a trade order for a commodity on an electronic exchange having an inside market with a highest bid price and a lowest ask price, using a graphical user interface and a user input device, said method comprising:

setting a preset parameter for the trade order;

displaying market depth of the commodity, through a dynamic display of a plurality of bids and a plurality of asks in the market for the commodity, including at least a portion of the bid and ask quantities of the commodity, the dynamic display being aligned with a static display of prices corresponding thereto, wherein the static display of prices does not move in response to a change in the inside market;

displaying an order entry region aligned with the static display prices comprising a plurality of areas for receiving commands from the user input devices to send trade orders, each area corresponding to a price of the static display of prices; and

selecting a particular area in the order entry region through single action of the user input device with a pointer of the user input device positioned over the particular area to set a plurality of additional parameters for the trade order and send the trade order to the electronic exchange.

 

(Claim 1 of the ’304 patent)

A method for displaying market information relating to and facilitating trading of a commodity being traded in an electronic exchange having an inside market with a highest bid price and a lowest ask price on a graphical user interface, the method comprising:

dynamically displaying a first indicator in one of a plurality of locations in a bid display region, each location in the bid display region corresponding to a price level along a common static price axis, the first indicator representing quantity associated with at least one order to buy the commodity at the highest bid price currently available in the market;

dynamically displaying a second indicator in one of a plurality of locations in an ask display region, each location in the ask

display region corresponding to a price level along the common static price axis, the second indicator representing quantity associated with at least one order to sell the commodity at the lowest ask price currently available in the market;

displaying the bid and ask display regions in relation to fixed price levels positioned along the common static price axis such that when the inside market changes, the price levels along the common static price axis do not move and at least one of the first and second indicators moves in the bid or ask display regions relative to the common static price axis;

displaying an order entry region comprising a plurality of locations for receiving commands to send trade orders, each location corresponding to a price level along the common static price axis; and

in response to a selection of a particular location of the order entry region by a single action of a user input device, setting a plurality of parameters for a trade order relating to the commodity and sending the trade order to the electronic exchange.

The district court ruled that eSpeed, Ecco, Eccoware, and eSpeed International nonwillfully infringed the two TTI patents, and the Federal Circuit affirmed.  One ruling of note related to the issue of priority.  On cross-appeal, eSpeed argued that the patents-in-suit did not deserve priority back to March 2, 2000, the filing date of the provisional application – both patents claimed priority back to a common provisional application – and that they were therefore invalid under the on-sale bar.

The crux of eSpeed’s argument about priority was that every claim of the patents-in-suit recites use of a “single action of a user input device,” but in contrast, the provisional application never used that phrase but instead referred only to “a single click of a computer mouse.”  It is well settled that, in order to enjoy the benefit the filing date of a provisional application, it must describe the invention in such a way that one of ordinary skill in the art “would understand that the genus that is being claimed has been invented, not just the species of a genus.”  eSpeed alleged that the district court erred in finding that one of ordinary skill in the art would understand the provisional application to mean that traders could enter orders through a “single action of a user input device.”

In its opinion, the Federal Circuit found that the patents-in-suit are indeed entitled to claim priority to the provisional application.  The provisional application distinguished between order entries performed in a single action and multiple-step actions, and the court agreed with TTI’s expert that the provisional did not distinguish a single-click from other types of single actions, and therefore one of ordinary skill in the art could read the provisional application to encompass any single actions.  Moreover, the parties’ experts did not dispute that one of ordinary skill in the art would have known about other forms of a “single action” such as a double-click or pressing a key.  The Federal Circuit reasoned that, considering the undisputed knowledge of those skilled in the art, disclosure of a species in this case provides sufficient written description and support for a later filed claim directed to a very similar and understandable genus.

In short, as long as the application did not distinguish a single-click from other types of single actions – such as a double-click or pressing a key – the disclosure of “a single click of a computer mouse” provides those skilled in the art with sufficient written description to support the broader “single action of a user input device.”  Presumably this would apply not just in a provisional/non-provisional context but also in a specification/claim context, where a claim recites a “single action of a user input device” and is sufficiently supported but a disclosure of “a single click of a computer mouse.”  This result makes sense; in the field of computer-based graphical user interfaces, skilled artisans understand a variety of I/O techniques, and this is particularly true in commodity trading interfaces or other financial transaction technologies.

In the Federal Circuit decision In re Henry Gleizer, an applicant appealed a BPAI decision that had affirmed the examiner’s decision to reject all pending claims as being obvious.  The appellant, Henry Gleizer, represented himself pro se.

The invention relates to systems and methods for electronically facilitated transactions.  Claim 89 reads:

89. An automated transaction method for enabling a transaction of electronic funds and physical goods between a buyer and a seller, said automated transaction method comprising:

a. accessing information comprising:

(1) an electronic funds payment instrument information corresponding to said transaction of said electronic funds, and

(2) a shipping information corresponding to said transaction of said physical goods, said shipping information comprising a shipping address;

b. receiving said electronic funds using said electronic funds payment instrument information;

c. printing a shipping label comprising said shipping information, and a shipment tracking information;

d. checking a delivery status of said physical goods using said shipment tracking information; and

e. disbursing said electronic funds to a party comprising a customer selected from the group consisting of said seller and said buyer.

On appeal one of the Appellant’s arguments was that even if the prior art disclosed every limitation in claim 89, the prior art failed to show the specific sequence of steps required by the claim.

This can be powerful argument for financial services patent applications when demonstrating to the PTO that claims are not rendered obvious; often times a financial services innovation may appear – at least facially – to be obvious when compared to prior art, and the differences may appear too subtle to convince an examiner of patentability, except for the particular order or sequence in which the claimed steps of the innovation are performed.  In other words, sometimes the innovative features of financial services inventions are not appreciated by examiners until it is explained to them how certain steps of a process may or must be performed in a different order than is taught in the prior art.

This “temporal relationship” of steps may be achievable in a new electronic commerce method or other financial system/process due to a variety of reasons, such as processing or receiving certain data earlier or later (relative to other steps) than what occurred in the prior art.  In this case, the Appellant argued that the electronic funds must be received from the buyer prior to shipping the purchased goods and that such sequence was not shown in the prior art.  On its face, this may not seem like an overwhelming argument for non-obviousness, but in the overarching context of the invention it plays better when put into context.

Although such “order” arguments can have merit, unfortunately for the Appellant in this case, the Federal Circuit found that the requirement of receiving electronic funds prior to shipping the goods was disclosed only in the specification and is not an actual requirement of the claims:

We have held that unless the steps of a method actually recite or implicitly necessitate a specific order, the steps are not ordinarily construed to require one. Interactive Gift Express, Inc. v. Compuserve Inc., 256 F.3d 1323, 1342–43 (Fed. Cir. 2001). We agree with the Board that Gleizer has failed to show how a sequence of steps described in one embodiment mandates a narrow construction of the claim. See In re Bigio, 381 F.3d 1320, 1325–26 (Fed. Cir. 2004) (“Absent claim language carrying a narrowing meaning, the PTO should only limit the claim based on the specification or prosecution history when those sources expressly disclaim the broader definition.”). We therefore agree that the Board properly affirmed the examiner’s rejection of claim 89.

This of course does detract from the strength of non-obviousness based on the order claim steps are performed; it just means – as always – make sure the limitations that distinguish an invention over the prior art are in the claims.

In Encyclopaedia Britannica v. Alpine Electronics, Inc. (Fed. Cir. 2009), the Federal Circuit reaffirmed its view that “where the disclosed structure in a means-plus-function claim is a computer programmed to perform a function, the structure is a special purpose computer programmed to perform the disclosed algorithm, not a general purpose computer.”

Encyclopaedia Britannica asserted its patent directed to a computerized multimedia search system with multiple separate and independent entry paths for searching and retrieving textual and graphical information.  The lone independent claim in the patent invoked § 112 ¶ 6, and on summary judgment the district court held the claim invalid for indefiniteness.

In a pattern that we’ve seen a lot of recent litigation, when the defendant argued that the means-plus-function claim was invalid for indefiniteness, the plaintiff (Britannica) responded by asserting claim was not indefinite due to the specification disclosing sufficient corresponding structure for the element because a person of ordinary skill in the art would recognize that the specification inherently discloses a class of algorithms for performing the function of retrieving information from a database on a general purpose computer.

The Federal Circuit was quick to point out – as have all the other courts where this attractive-but-misguided argument is made – that showing that one of ordinary skill in the art could build the claimed device incorrectly conflates the disclosure requirement of § 112 ¶ 6 and the enablement requirement of § 112 ¶ 1.  In short, the Federal Circuit reaffirmed Aristocrat (means-plus-function limitations for computer-implemented functions require that some algorithm be disclosed in the specification, 521 F.3d at 1337) and WMS Gaming (a specification must disclose an algorithm that transforms a general purpose microprocessor to a “special purpose computer” programmed to perform the disclosed algorithm, 184 F.3d at 1349), and found the patent invalid.

The moral is certainly not that means-plus-functions claims have lessened value or that they cannot be a useful tool for computer-based claims.  The key is to carefully draft the specification to ensure that the means-plus-function claims are definite.

Over the past decade it has been common for companies to use their intellectual property rights as collateral to secure loans from financial institutions.  Likewise, recognizing that patents and other IP assets represent substantial value, it has also become common for commercial lenders to secure obligations of borrowers using as collateral not only their tangible assets but also their intangible intellectual property assets.  Not surprisingly, the issue of how state law and the UCC interact with the U.S. Patent Act has become increasingly important as banks and other lenders are finding more and more borrowers defaulting on secured loans.

In Sky Technologies v. SAP AG (Fed. Cir. 2009), the CAFC addressed the issue of chain of title of a patent portfolio that was used as collateral in a defaulted loan.  In short, the Court reaffirmed that, if assignment is the method of transfer of patent ownership, it must be done in writing, but that assignments are not the only method by which to transfer patent ownership.  Patent ownership may be transferred by means other than assignment, for example by foreclosure under state law, which may properly foreclose a security interest and transfer full title and ownership of a patent in accordance with a state’s law.  That is because state law controls any transfer of patent ownership by operation of law not deemed an assignment.

Background

The patents-in-suit had a somewhat detailed chain of title:

1)      Jeffrey Conklin founded TradeAccess, Inc. in 1996 and, along with the other inventors, assigned all of his right in his patent portfolio to TradeAccess.  The assignments were recorded with the USPTO.

2)      TradeAccess later changed its name to Ozro, Inc.

3)      On April 2, 2001, Ozro granted a security interest in the patents to Silicon Valley Bank (“SVB”).  The collateral included the entire patent portfolio.  The SVB Agreement was recorded with the USPTO on April 2, 2001.

4)      On April 3, 2001, Ozro executed a similar security agreement with Cross Atlantic Capital Partners, Inc. (“XACP”).

5)      Ozro used both agreements to secure loans.  In the event of default by Ozro, both SVB and XACP had “the right to exercise all the remedies of a secured party upon such default under the Massachusetts UCC,” which included right to take possession and sell the intellectual property collateral.  In the event of default, Ozro would also be required to “assemble the Intellectual Property Collateral and any tangible property in which [SVB or XACP] has a security interest and to make it available to [SVB or XACP].”

6)      In December 2002, SVB assigned its security interest to XACP through a Non-Recourse Assignment, giving XACP all of the right, title, and interest formerly held by SVB. This Assignment was recorded with the USPTO.  At that point, XACP held the security interest in all of the patents.

Ozro defaulted on its loan obligations and XACP foreclosed on the patents.  In the meantime, Conklin started a new company, Whitelight Technology, later known as Sky Technologies LLC (“Sky”).  At the foreclosure sale, XACP was the only bidder at a public auction and purchased the patent rights. Then, XACP assigned the patent rights to Sky Technology.  Nowhere in the chain of title did Ozro execute a written agreement assigning all of its right, title, or interest in the patents to XACP.

Sky subsequently filed a patent infringement suit against SAP asserting the patents, and SAP moved to dismiss the complaint for lack of standing arguing that, because no writing exists transferring the patents to XACP, Sky did not obtain legal title from XACP and therefore does not have standing in the matter.

Akazawa

The district court, relying on Akazawa v. Link New Technology International, Inc., 520 F.3d 1354 (Fed. Cir. 2008), held the patents were transferred from Ozro to XACP through the foreclosure proceedings. Akazawa held that patent ownership is determined by state, not federal law.  Because XACP properly complied with the Massachusetts UCC foreclosure requirements by placing the patent collateral up for sale at a public auction and notifying Ozro of the sale, the district court held title was transferred on the foreclosure, and the chain-of-title had not been broken.

Transfer of Title Under State Law

On appeal, the Federal Circuit found that Akazawa controls in this case and therefore Massachusetts UCC is the controlling law for governing patent title transfer.  Massachusetts UCC § 9-610 permits a secured party to sell the collateral after default, in a commercially reasonable manner, and that same party may purchase the collateral at a public disposition.  Moreover, section 9-617 of the UCC states that once a secured party disposes of collateral after default, the transferee for value takes all of the debtor’s rights in the collateral. Therefore, because XACP foreclosed on the patents in conformity with these provisions, XACP properly obtained title to the patents.

The Court’s discussion noted that, although assignments transferring patent ownership must be done in writing, assignments are not the only method by which to transfer patent ownership.  Patent ownership may be transferred by means other than assignment, for example by foreclosure under state law, which may properly foreclose a security interest and transfer full title and ownership of a patent in accordance with a state’s law.  That is because state law controls any transfer of patent ownership by operation of law not deemed an assignment.

The Federal Patent Act requires that all assignments of patent interest be in writing. 35 U.S.C. § 261 (2006). This requirement dates back to the 1881 Supreme Court decision in Ager v. Murray, which held that a debtor’s interest in a patent that would be used to satisfy a judgment against him was property, “assignable by him, and . . . [could not] be taken on execution at law.” 105 U.S. 126, 131–32 (1881). The Court held that the patentee was required to execute a writing to assign title, or a trustee would be appointed to execute an assignment, “if the patentee should not himself execute one as directed.” Id. at 126, 132. This decision was based on the idea that a creditor cannot reach incorporeal property, such as a patent, due to its intangible nature; the transfer (either voluntary or involuntary) to a purchaser must be done by written assignment “in order to vest [the purchaser] with a complete title to the property.” Id. at 130 (citing Stephens v. Cady, 55 U.S. (14 How.) 528, 531 (1852)).

 

Even though a transfer of patent ownership, if through an assignment, must be in writing, this court has held, “[T]here is nothing that limits assignment as the only means for transferring patent ownership. . . . [O]wnership of a patent may be changed by operation of law.” Akazawa, 520 F.3d at 1356.

 

. . .

 

We find that Akazawa controls in the instant case, and that the district court’s reliance on its reasoning was appropriate because transfer of patent ownership by operation of law is permissible without a writing. Akazawa says nothing about permitting assignments without a writing; rather, this court made it clear that if assignment is the method of transfer of patent ownership, it must be done in writing, pursuant to § 261. See Akazawa, 520 F.3d at 1356. However, assignment is not the only method by which to transfer patent ownership. As noted below, foreclosure under state law may transfer patent ownership. Here, XACP’s foreclosure on its security interest was in accordance with Massachusetts law; therefore, Sky received full title and ownership of the patents from XACP providing it with standing in the underlying case.

The Court also reaffirmed that 35 U.S.C. §261 (Ownership; Assignment) is not preempted by finding that state law allows transfers of patent ownership without a writing.  The opinion reasoned that § 261 “speaks only to assignments of patents; there exists no federal statute requiring a writing for all conveyances of patent ownership,” and therefore no federal law preempts the use of Massachusetts UCC foreclosure provisions to transfer patent ownership by operation of law.

In re Baggett (Fed. Cir. 2009) (nonprecedential):  A brief reminder of how detail-oriented patent prosecution is, particularly with intricate terminology that appears in software-related arts that are common for financial services patents.  In the Baggett application:

1)      The Examiner read the claimed word “memoization,” which appeared in four claims, as “memorization” and rejected those four claims with art showing “memorization” not the claimed “memoization,”

2)      The Applicant failed to point this out in its Appeal Brief,

3)      The BPAI failed to notice this in its Decision on Appeal (indeed, the BPAI stated “Claim 9 further requires determining if any entry in a construction table was memorized before accessing the construction table . . . The Appellant contends that Gardner does not describe a memorization procedure”, despite the fact that nowhere in the claims nor the Appellant’s arguments does “memorized” or “memorization” appear)

4)      When Appellant pointed out this error in its Request for Reconsideration of the BPAI’s Decision, the Appellant requested reversal on this ground for only one of the four claims that recited the term “memoization,” and

5)      In its Decision on Request for Rehearing, the BPAI acknowledged that it, along with the Examiner, misread the term “memoization,” but then the BPAI only withdrew the rejection from one of the four claims that recited the term.  The other three claims containing the term remained rejected.

In the end, the PTO agreed that the proper remedy was remand, and that is exactly what the Federal Circuit decided.  But this seems like an expensive venue to resolve such issues (although numerous other unrelated obviousness rejections were appealed to the CAFC, and so the case was likely to be appealed anyhow), and it is a reminder of the value of careful prosecution at all stages.  Appellant also probably didn’t win any brownie points with the BPAI with this gem that just might have been construed as sarcasm: “The Board applies a novel approach to analyzing whether a claim is obvious.” (emphasis added)

And for those who do not use “memoization” in their daily vernacular:

Memoization is a computing term relating to an optimization for speeding up computer programs by having function calls avoid repeating the calculation of results for previously-processed inputs.  The applicant defined “memoization” in the Specification as:

Memoization is a technique for speeding up certain kinds of algorithms. If an expensive procedure is called many times, and if the procedure’s output depends only on the input (i.e., the answer is not dependent on any external factors, such as the current time), then memoization can be used. To memoize PO2 retrieval, the PO2 procedure call 80 forms a query 82 involving the constructed fare. The memoization retrieval process 80 has a store 88 of past queries and associated answers. If the memoization retrieval process 80 determines that the query has been stored, it is retrieved from the store 92. Otherwise, a procedure call for the PO2 record is produced and used to access the record from a remote database. The answer from the remote database is stored in the memoization store 88 for future references.

It has been widely circulated that the Supreme Court granted cert yesterday in In re Bilski.  See the NYT article here (“Justices to Weigh Issue of Patenting Business Methods”) and the WSJ Law Blog here (“Bilski! Supremes Grant Cert on Business-Method Patent Case”).  Congratulations to the many folks who worked hard to make the Supreme Court review of this case a reality.

Unfortunately, although I’ve been concerned about many of the post-Bilski decisions coming from district courts and the BPAI, I think some good future case law from the CAFC could have made the Bilski test, despite some of its shortcomings, a workable standard for financial services inventions.  On the other hand, I’m actually more concerned about what sort of patentable subject matter test may come from the Supreme Court.  This could be a case of be-careful-what-you-ask-for!

In Every Penny Counts, Inc. v. American Express, Visa U.S.A., Green Dot, MasterCard, First Data, Valutec, etc. (Federal Circuit 2009) the court affirmed the district court’s judgment of non-infringement based on claim construction of a patent directed to solving the problem of “loose change.”  The opinion itself is not particularly noteworthy, and the judgments from the district court in the Middle District of Florida are probably a more worthwhile read.

What is interesting about this decision is the utter disdain for the appellant’s patents.  The patents at issue generally claim an automatic donation system and method for contributing “excess cash” from retail sales transactions into predetermined charitable or savings accounts.  Here, Senior Circuit Judge Cudahy of the Seventh Circuit (sitting by designation) twice referring to the patentee’s invention with quotation marks (“Dr. Bertram Burke is a retired psychoanalyst who relates his “invention” back to an experience he had . . .”), including one reference: “‘invention,’ such as it is. . .”

Although the presumption of validity applies to all patents, not just those in a certain field or industry that we like, I suspect that we have all run across our share of patents that we think perhaps should not have been issued in the first place.  Nonetheless, a healthy respect for the presumption of validity is still an important aspect of our patent system.