Patents & the Financial Services Industry

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.