Hey – that’s my idea!

A patent infringement suit filed by a firm founded by Microsoft co-founder Paul Allen could result in a substantial extension of the scope of patentability under U.S. patent laws and radically alter the use of the Internet.
Although the original suit filed by the research firm Interval Licensing was dismissed on Dec. 10, 2010, for failing to “identify the infringing products or devices with any specificity,” Allen refiled his complaint with greater detail, but with the same baggage as the last time. If eventually successful, which is by no means certain, Allen’s suit could in a sense “privatize” the virtual world.Allen, Microsoft’s co-founder, filed an action against several Internet giants, including Google, Facebook, YouTube and others, alleging they infringe certain business method patents that claim some of the most basic tools for accessing and navigating through the Internet.The contested patents claim:• Browsers for use in navigating a body of information represented by audiovisual data• Attention managers for occupying the peripheral attention of a person in the vicinity of a display device• Alert to items of current interestThe suit alleges that the defendants’ websites automatically call up and display searched items as well as related content for the user in a manner that infringes the claimed patents.Patents may validly claim a business method so long as they specifically describe a new, useful and non-obvious process for achieving a result, but many courts have invalidated such patents for vagueness and over-breadth, and for claiming unpatentable ideas rather than specific processes. Where the court eventually draws the line in Allen’s case may well determine when unpatentable “ideas” cross the line into patentable “methods,” and will likely affect the future of the Internet and indeed the culture of invention itself for years.

Methods vs. ideas Patents cannot be issued for abstract ideas. For a patent to be issued, an invention must be a “new and useful process, machine, manufacture, composition of matter or any new and useful improvement thereof.” Courts have struggled under this statute over where to draw the line between patentable processes on the one hand and unpatentable ideas on the other.Until 1998, the Patent Act was commonly understood as not allowing patents to cover a way of doing business. In State Street Bank & Trust Co. v. Signature Fin. Group, however, a U.S Circuit Court ruled that a business method that was sufficiently specific could be considered a “process” patentable under the Patent Act.Business method patents became very popular after the State Street decision, particularly among Internet companies in the process of discovering how to make Internet business easy and effective.The year after State Street, Amazon.com obtained a patent for its “1-Click” express ordering feature. In 2001, the circuit upheld the patent in an infringement claim against BarnesandNoble.com. Following Amazon.com and State Street, patents were issued for a variety of Internet business methods, including Netflix’s “Dynamic Queue System,” which allows customers to rent DVDs from an online source, and Priceline.com’s reverse auction system, enabling customers to set their own price at an Internet auction.Recently, the popularity for business method patents has declined. In 2008, the federal circuit invalidated a patent for a method of hedging risks in commodities trading because the method at issue amounted to merely an abstract idea, and it did not involve the transformation or reduction of something into a different state or thing.The Supreme Court affirmed the circuit’s holding but found that the machine or transformation test was not the only test for patentability, explaining that the test should be used as a tool to determine whether a patent claims a process that is truly new, useful and non-obvious under the Patent Act.The inventions protected by the Interval Licensing patents are not strictly business methods. Unlike the 1-Click System patent, or the “Dynamic Queue System” patent, the Interval Licensing patents do not strictly involve business transactions. In particular, the “Attention Manager” invention can display commercial information, but it can also alert a user to a new email, a change in a friend’s status in an instant messenger program, or the newest sports scores.Had the Interval Licensing suit been brought shortly after the Amazon.com suit, it’s possible that the U.S. District Court in Washington would have adopted an expansive interpretation of business methods and upheld the patents. Although such a decision is still possible, it is less likely in light of the recent decisions by the circuit and Supreme Court.Regardless, any decision on the merits in the Interval Licensing case will certainly play a key role in determining whether Internet tools are patentable or should instead be categorized as mere abstract ideas.

Christopher Vrountas, an attorney with Nelson, Kinder, Mosseau, & Saturley, can be reached at 603-606-5015 or cvrountas@nkms.com.