Recent Court Decisions Limit Patentability of Business Methods

The Federal Circuit recently issued two opinions addressing the question of “what is a patentable invention” in the context of software and business methods.  Although the opinions are not likely to cause a major change in current USPTO examination practice, they do affirm certain aspects of that practice.  The cases also will guide corporate IP managers and due diligence professionals who need to examine the likelihood that a software/business method invention is patentable — or whether an issued software/business method patent is likely to withstand a challenge in the future.First, in In re Nutjen, the court examined software patents that include claims covering an electric signal that carries the code from one electronic component to another.  The court noted that there are four categories of things that can be patented:  processes, machines, articles of manufacture or compositions of matter.  The court stated that “transitory electrical and electromagnetic signals propagating through some medium, such as wires, air, or a vacuum” do not fall within any of those categories.  Although one judge dissented – stating that a signal is an article of manufacture, even if it is fleeting and only exists for a moment – the impact of this case for due diligence is that any issued software patents containing a signal claim should be reviewed for potential invalidity in view of the Federal Circuit opinion.

Second, in In re Comiskey, the court held that inventions that employ only human action or intelligence – in other words, business methods that do not involve machines, compositions, or manufactures –are not patentable.  The court also noted that not all machine-implemented methods can be patented.  In particular, the court stated that the routine application of a machine to an otherwise unpatentable process is not necessarily enough to make the process patentable.   Any corporate IP officer who desires to protect a business method via a patent should consider this case and ensure that the method doesn’t simply apply a machine to what is otherwise an ordinary manual activity.

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