Bill Would Change Business Method Patent Process

(October 3, 2000) Rep. Berman and Rep. Boucher introduced a bill in the House that would make several changes to the business method patent process.

Rep. Howard Berman (D-CA) introduced HR 5364, the Business Methods Patent Improvement Act of 2000 on October 3. The sole cosponsor is Rep. Rick Boucher (D-VA). Both men sit on the House Judiciary Committee's Courts and Intellectual Property Subcommittee.

The bill would still permit patents to be issued for business method inventions; and the term would not be affected. However, such patents would be harder to obtain, and easier to challenge.

The highlights of the bill include the following:

• It would require the USPTO to publish all business method patent applications after 18 months. (page 3)
• It would create a new opposition panel for business method patents that would be less costly and more expeditious than litigation. (pages 6-11)
• It would lower the burden of proof to preponderance of the evidence for anyone challenging a business method patent. (pages 13-14)
• It would set low fees for filing some oppositions to a business method patent. (page 14)
• It would create a rebuttable presumption of nonobviousness for an invention that uses a computer to implement a business practice. (page 15)
• It would require the PTO to conduct a rule making proceeding to amend the rules to require an applicant for a business method patent to disclose the applicant's search for prior art (page 16)

Rep. Howard Berman (D-CA)

Rep. Berman stated at a press conference on Tuesday morning, October 3, that he is not opposed to patents for business method inventions. "My primary concern in this issue is the protection of intellectual property, which I believe is critical both to innovation and to the economy -- and in that context, I want to make sure that the quality of U.S. patents is the highest possible."

"Since questions have been raised about whether this is the case," said Rep. Berman, "the responsibility of Congress is to take a close look at the functioning of the patent system in this very new, and rapidly growing area of patenting."

	Rep. Rick Boucher (D-VA)

Rep. Rick Boucher (D-VA), who joined Rep. Berman at the press conference, stated: "Two years ago, the U.S. Court of Appeals for the Federal Circuit ruled in the State Street Bank decision that a patent could be issued on a method of doing business. Since then, the Patent and Trademark Office has been deluged with applications for business method patents. Unfortunately, the PTO has granted some highly questionable ones. Last year, it awarded a patent to Amazon.com for its "one-click" method of shopping at a web site. The press recently reported that the PTO is now on the verge of awarding a patent covering any computer-to-computer international commercial transaction."

Rep. Boucher concluded that "something is fundamentally wrong with a system that allows individuals to get patents for doing the seemingly obvious. And it has led to a lot of unnecessary litigation."

Both men stated that the bill will not be enacted in the current Congress. Rather, their intent is to start a debate on the topic, and continue the legislative process in the 107th Congress, which begins in January, 2001.

One of the fundamental changes that the bill would be the creation of a new, expeditious, and inexpensive opposition process. The bill would direct the PTO to establish an "Administrative Opposition Panel." Then, "Any person may file a request for an opposition to a patent on a business method invention on the basis of section 101, 102, 103, or 112 of this title", at any time within 9 months of the issuance of the patent.

An "administrative opposition judge" will then conduct a hearing, and within "18 months after the filing of a request for an opposition" that judge "shall determine the patentability of the subject matter of the patent". "Any party to the opposition may appeal" under Section 134, or "seek court review" under Section 141-145, any decision regarding patentability.

Another major change would be the lowering of the burden of proof in certain proceedings. The bill provides:

"In the case of reexamination, interference, opposition, or other legal challenge (including a civil action brought in whole or in part under section 1338 of title 28) to a patent (or an application for a patent) on a business method invention, the party producing evidence of invalidity or ineligibility shall have the burden of showing by a preponderance of the evidence the invalidity of the patent or ineligibility of the subject matter of the application." (parentheses in original; page 13-14)

Yet another key feature regards creating a rebutable presumption of nonobviousness for certain applications for patents for a business method inventions. The bill would add language to Section 103 that provides if:

"(A) subject matter within the scope of a claim addressed to a business method invention would be obtained by combining or modifying one or more prior art references, and

(B) any of those prior art references discloses a business method which differs from what is claimed only in that the claim requires a computer technology to implement the practice of the business method invention,"

then,

"the invention shall be presumed obvious to a person of ordinary skill in the art at the time of the invention."

However, it also provides that "An applicant or patentee may rebut the presumption ... upon a showing by a preponderance of the evidence that the invention is not obvious ..."

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