Protecting your business method

The use of business method patents is highly visible today – consider the patent infringement suits involving’s “name your own price” reverse auction patent and’s “one-click” patent. However, many people don’t know precisely what matter should be considered for business method patent protection and where the line is drawn.

Recently, the Court of Appeals for the Federal Circuit provided some guidance on the subject with its decision, In re Bilski.

In Bilski, the court held that a method of hedging risks in commodities trading that was not implemented on a computer or machine was not patentable subject matter and, thus, invalid. The court reasoned that a business method is only patentable if it is, “(1) tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing” (commonly referred to as the “machine-or-transformation” test). If taken at face value, these parameters clarify some of the ambiguity surrounding business method patents. However, Bilski falls short of providing reliable answers and bright-line rules.

What does Bilski mean to your business method? First and foremost, due to the narrowly written decision, Bilski reinforces the well-understood uncertainty surrounding the protection of future business methods or currently pending applications for business methods. Specifically, the court declined to provide specific guidance for machine-implemented processes, such as “how computer implementation must be recited to tie a process claim to a particular machine.”

This decision may render some current business method patents invalid. Even non-business method patents that claim but do not necessarily require computer or machine implementation may be rendered invalid. Recently, the Patent and Trademark Office dismissed a patent application by IBM claiming a computer-implemented database management system. However, the greatest uncertainty is whether the U.S. Supreme Court will grant Bilski’s appeal and overrule or modify the appeals court decision.

Recently, the Supreme Court has taken a more active interest in patent law cases and redirecting the course of patent law. All of these aspects should be recognized as important factors in making decisions regarding current and future business method patent protection.

A checkpoint

The Bilski decision proposes a line of determination for business method patents, but provides nontransferable guidance. Despite the seeming uncertainty, Bilski should focus and hone a company’s use of patents to protect their technology.

It is true that the decision may not affect some patented business methods, such as those that are clearly integral to computers and machines. However, many patents may not be so effortlessly resolved and may need attention. Even if a patent or pending patent application is invalid under the machine-or-transformation test, it is likely that the claims can be rewritten or corrected to accommodate Bilski.

For example, a claimed business method may be corrected to include data that is transformed into a physical object or substance, or more explicitly require a computer. Accordingly, by limiting a business method to require a machine or transform an article, the business method can safely remain within the scope of patent protection.

The Bilski decision is a checkpoint for current patent owners to ensure continued validity and future patent owners to make certain that their business methods are within the scope of valid patent protection.

Todd A. Sullivan, managing attorney with Hayes Soloway, Concord, can be reached at 603-668-1400. Daniel Landau is a student at Franklin Pierce Law Center, Concord.