Congress Considers Reformulation of Business Method Patent Definition

 Congress to Choose Between Competing Definitions

One of the more intriguing mechanisms of the America Invents Act (AIA) is the Transitional Program for Covered Business  Method (CBM) Patents. To date, these specialized post grant patent challenges have been pursued in relatively limited numbers as compared to the more generic Inter Partes Review (IPR) proceedings. The reason for the disparity between CBM and IPR filing rates is quite simple - IPR is available for any technology not just "business method patents." Yet, the CBM proceeding is far superior to IPR in many strategic respects.

Recognizing the potential of CBM filings to have a greater impact on the patent litigation landscape, Congress is actively considering alterations to the existing statutory framework that would encourage greater use of this AIA mechanism.The first proposal comes from Senator Schumer (D-NY) as Senate Bill S.866 or the "Patent Quality Improvement Act." This bill was introduced some weeks back to amend Sec. 18 of the AIA, which pertains to CBM standing. The Bill proposes to remove the language "a financial product or" from the standing definition. In its place, the bill proposes "an enterprise, product, or." The change would effectively make clear that any e-commerce patent, even if not related to finances per se, is subject to a CBM challenge. (Note that the USPTO has been sued very recently on the importance of this "financial" component of the statute.)

The second proposal is part of the "discussion draft" proposed by Congressman Goodlatte (R-Va). The draft discussion seeks to import the holding of the decision made in SAP America, Inc. v. Versata Dev. Group, Inc., CBM2012-00001, Paper 36 (January 9, 2013). This is the USPTO decision that is subject to the lawsuit noted above.

In chosing between the two, Senator Schumer's language would arguably expand CBM proceedings in the direction of e-commerce software applications (i.e., "enterprise products" is a more generic reference to non-financial methodologies/apparatus than currently recited in the statute). This language would also undercut arguments that patents reciting standard computer elements for implementing non-financial business methodology are outside of the scope of the statute as "technological inventions."

The Goodlatte proposal would simply clarify the already existing landscape, namely, a financial component is not required for proper CBM standing. On the other hand, the Schumer proposal will accomplish the clarification of the Goodlatte proposal while simultaneously providing increased opportunities for patent challengers.  Seems to me that the Schumer Bill is the most likely result going forward considering the significant anti-troll sentiment driving these legislative initiatives.

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