Ever since the Supreme Court handed down its decision in Bliski v. Kappos, 130 U.S. 3218 (2010), practitioners have grappled with the line between eligible and ineligible patent processes. Two recent cases, one eligible and one not will undoubtedly be cited to describe the divide as it relates to a business process.
In August, the United States Court of Appeals for the Federal Circuit Court decided that a method of verifying the validity of credit card transactions over the Internet was patent ineligible. Cybersource Corp. v. Retail Decisions, Inc., 654 F.3d 1366 (Fed. Cir. 2011). The claims were very broad and were capable of implementation through a purely mental process. Further, use of a computer to perform the method, by itself was insufficient to render the process patentable.
In September the Federal Circuit decided that a method, that provided for a triangular business transaction was patent eligible. Under scrutiny was a method of providing copyrighted materials to one party, in exchange for royalties from a third party advertiser. In this transaction, the advertiser paid the royalty to the intellectual property owner, and in return secured an individual to view their advertisement. Ultramercial, LLC v. Hulu, LLC, 2011 WL 4090761 (Fed. Cir. 2011). The viewer received entertainment value of the copyrighted material for the cost of viewing the advertisement. Although the Court concluded that “the mere idea that advertising can be used as a form of currency is abstract,” it noted that the patent “disclosed a practical application of this idea.” Id. at 5. Such is fully consistent with accepting patentability of the Arrhenius equation when narrowly and practically applied to the manufacturer of rubber. Diamond v. Diehr, 450 U.S. 175, 187 (1981).
But why is one patent eligible and the other not? Although the Court disavows level of complexity as a factor, one is left to consider.
The Court rejected the credit verification card method as all the steps could be “performed in the human mind or by a human using a pen and paper.” Practice of the patent would require no more than construction of a list and comparing future transaction to that list; furthermore, no particular algorithms were disclosed. Cybersource at 1372. In contrast, the process to implement the “controlled interaction with a consumer via an Internet website” was “far removed from purely mental steps.” Ultramercial at 6.
Both the eligible and ineligible methods included the use of computers. The Court reiterates that “use of a computer to execute an algorithm that can be performed in the mind” does not make the method patentable, nor does “mere manipulation or reorganization of data.” Cybersource at 1375. In contrast, the triangular business method “required intricate and complex computer programming” and “specific application to the Internet.” Ultramercial at 5
In conclusion, the rumor that patentable business methods are dead is premature at best. The Federal Circuit may allow the patentability of a business method; however, implementation must require more than a purely mental process. Although future decisions will define the degree of required non-mental process, the Federal Circuit has present some hints; computer programming must be more involved than data management and must truly relate to implementation of the method, application of specific algorithms in a narrow fashion is desirable and finally, complex methods requiring complex computer programming are more likely patentable than simple system.
This article first appeared on the Louisiana Law Blog here