Business Method Update and Briefing for the Business Methods Partnership Meeting July 15, 2009 by

1. Business Method Update and Briefing for the Business Methods Partnership Meeting July 15, 2009 by Wynn Coggins Group Director, Technology Center 3600 wynn.coggins@uspto.gov

2. What is a “ Business Method”? • The term “Business Method” is a generic term that has been used to describe many types of process and apparatus claims over the years. • There has been confusion regarding business method claims vs. other process and apparatus claims.

3. What is a “ Business Method”? • Not all “business method”- type claims are classified in Class 705. Only computer-implemented processes related to e-commerce, the Internet and data processing involving finance, business practices, management or cost/price determination are classified in Class 705. Other process claims are classified and examined according to their structure or field of use. • For example, gaming methods and teaching methods which are often considered business methods are classified elsewhere.

4. Class 705 Title: Data processing: Financial, Business Practice, Management, or Cost/Price Determination Definition: Machines and methods for performing data processing or calculation operations in the: • Practice, administration or management of an enterprise, or • Processing of financial data, or • Determination of the charge for goods or services

5. Class 705 Comprises: • A collection of 20+ financial and business data processing areas. • Its four largest categories are:

6. The Four Categories…. • Determining Who Your Customers Are, and the Products/Services They Need/Want. • Operations Research - Market Analysis

7. The Four Categories…. • Informing Customers You Exist, Showing Them Your Products & Services, and Getting Them to Purchase. • Advertising Management • Catalog Systems • Incentive Programs • Redemption of Coupons

8. The Four Categories…. • Exchanging Money and Credit Before, During, and After the Business Transaction. • Credit and Loan Processing • Point of Sale Systems • Billing • Funds Transfer • Banking • Clearinghouses • Tax Processing • Investment Planning

9. The Four Categories…. • Tracking Resources, Money, And Products. • Human Resource Management • Scheduling • Accounting • Inventory Monitoring

10. Class 705 Workgroups3620, 3680, 3690 3620 Workgroup • AU 3621 - Business Cryptography, Andrew Fischer, SPE • AU 3622 - Incentive Programs/Coupons, Eric Stamber, SPE • AU 3623 - Operations Research/Voting, Beth Van Doren, SPE • AU 3625 - E-shopping, Jeffrey Smith, SPE • AU 3626 - Health Care/Insurance, Christopher (Luke) Gilligan • AU 3627 - Point-of-Sale/Inventory/Accounting, F. Ryan Zeender, SPE • AU 3628 - Cost/Price, Reservations, Transportation John Hayes, SPE • AU 3629 – Business Processing, John Weiss, SPE

11. Class 705 Workgroups3620, 3680, 3690 3680 Workgroup • AU 3685 – Business Cryptography, Calvin Hewitt, SPE • AU 3686 – Health Care/Insurance, Jerry O’Conner, SPE • AU 3687 - Point-of-Sale/Inventory/Accounting, Matthew Gart, SPE • AU 3688 - Incentive Programs/Coupons, Robert Weinhardt, SPE • AU 3689 - Business Processing, Janice Mooneyham, SPE

12. Class 705 Workgroups3620, 3680, 3690 3690 Workgroup (Finance and Banking) • AU 3691 - Finance & Banking, Alexander Kalinowski, SPE • AU 3692 - Finance & Banking, Kambiz Abdi, SPE • AU 3693 - Finance & Banking, James (Jay) Kramer, SPE • AU 3694 - Finance & Banking, James Trammell, SPE • AU 3695 – Finance & Banking, Charles Kyle, SPE • AU 3696 – Finance & Banking, Tom Dixon, SPE

13. Filing Trends in Class 705

14. Pendency in Class 705 (At Mid-year 2009) • Pendency to First Action = 31.6 months • Down from 41.4 months at the mid year 2008. • For comparison, corps-wide pendency to first action = 26.9 months • Pendency to Issue/Abandonment = 46.1 months • Down from 56.3 months at mid year 2008 • For comparison, corps-wide pendency to issue/abandonment = 33.7 months

15. IBM = 345 PITNEY-BOWES = 112 FUJITSU = 93 SONY = 91 HP = 70 MICROSOFT = 83 NCR = 56 HITACHI = 53 FIRST DATA CORPORATION = 51 12 TECHNOLOGIES US = 50 CONTENTGUARD = 48 JP MORGAN CHASE BANK = 43 Top Assignees for Patent Grants in Class 705 (2004-2008)

16. Examiner Growth Year FY ‘01 FY ’02 FY ’03 FY ‘04 FY ’05 FY ’06_ FY’07 FY ’08 FY ‘09 Number of Examiners 77 125 110 116 133 147 260 300 328 Patents 433 492 495 289 711 1,191 1,330 1,643 ** Issued ** End of year Data Not Yet Available.

17. Business Methods Web Site http://www.uspto.gov/web/menu/pbmethod/ Examples of what is posted: • Filings and Issue Data (1997 – 2008) • Updated annually • Guidelines on when an electronic document is considered prior art. • 103 rejection examples • Class 705 core databases and classification definitions • MPEP 2106 – Examination guidelines for business methods • Guidance for Examining Process Claims in view of In re Bilski, signed January 7, 2009 • The paper “Successfully Preparing and Prosecuting a Business Method Patent Application”

18. Prior Art • The USPTO is always looking for ways to ensure that examiners have the best prior art as early as possible in the examination process.  • When examiners have the right art in front of them, they make the right decisions. 

19. Reaching Out to Our Industry Partners • We have successfully partnered with industry to gain valuable input on prior art resources. They have shared: • Databases; • Books, Technical Reports, and Conference Proceedings, Journals; and • Web-based Resources

20. Prior User Rights for Business Method Patents - Defense to Infringement 35 U.S.C. 273 • In the American Inventors Protection Act of 1999 (AIPA), Congress created a defense to infringement suits with respect to any subject matter that would otherwise infringe one or more claims for a business method in the patent being asserted against a person, if such person had, acting in good faith, actually reduced the subject matter to practice at least 1 year before the effective filing date of such patent, and commercially used the subject matter before the effective filing date of such patent. • This defense alone does not invalidate the patent itself – simply allows the accused infringer relief against an infringement suit. • We are not aware of any decision on a § 273 defense.

21. Legal Update • In re Bilski • U.S. Court of Appeals for the Federal Circuit (CAFC) issued the en banc ruling 10/30/08. • The court’s opinion addressed the standards applicable in determining whether a claimed method constitutes a statutory “process” under 35 U.S.C. 101. • On June 1, 2009, the United States Supreme Court granted certiorari and will review the CAFC ruling.

22. Legal Update • Examiners have been instructed to follow the current patent subject matter eligibility guidelines appearing in MPEP 2106, with the modification set forth in the January 7, 2009 memorandum entitled “Guidance for Examining Process Claims in view of In re Bilski.”

23. Legal Update • The January 7, 2009 memorandum has been provided to assist examiners in determining whether a method claim qualifies as a patent eligible process under 35 USC § 101. • A method claim must meet a specialized, limited meaning to qualify as a patent-eligible process claim.  As stated in Bilski, the test for a method claim is whether the claimed method is (1) tied to a particular machine or apparatus, or (2) transforms a particular article to a different state or thing.  This is called the “machine-or-transformation test.” If neither of these requirements is met by the claim, the method is not a patent eligible process under§ 101 and should be rejected as being directed to non-statutory subject matter.

24. Legal Update • An example of a method claim that would not qualify as a statutory process would be a claim that recites purely mental steps.

25. Thank You