Business method patents before the Commissioner

Patent Baristas has a guest post from Bill Bennett at Pizzeys considering the Deputy Commissioner’s recent rejection of the “Iowa Lottery” patent application.

1. A prize pool for a lottery game played among a plurality of member lotteries, at least two of which are from diverse jurisdictions, the prize pool comprising:

a system of prize levels including a jackpot prize and at least first and second subordinate prizes;

a super pool of accumulated funds that is used to pay the jackpot prize and inflate the second subordinate prize; and

wherein, in a drawing having a jackpot prize winner in at least one jurisdiction, a member lottery in a jurisdiction without a jackpot prize winner pays out of its own funds the first subordinate prizes and contributes money to the jackpot winner and second subordinate prize winners in each jurisdiction having a jackpot winner, and

wherein one or more of the jurisdictions sets a jackpot prize limit such that money in the super pool in excess of the jackpot prize limit is awarded as second subordinate prizes.”

The third independent claim, claim 12 for a method added in (at least) using a computing device to calculate the allocations to the different prize pools.

In a world where Tattslotto and Powerball have existed for donkey years, apparently, the “exciting” element in this claimed invention was the ability of lottery operators in different states to combine.

The Deputy Commissioner appears to have considered that the claim was just to a mere scheme:

  1. I consider that the same can also be said in relation to all the subject matter of the present application. What is claimed, in whatever guise, is a scheme and not an artificially created state of affairs within the principles articulated in the NRDC decision. In considering the applicant’s submissions I note that in relation to claims 1-2 and 17 it is argued that Grant is distinguished because what is claimed is not a method and more significantly that the claimed prize pool is an artificially created state of affairs whose significance is economic. While clearly of economic significance and a creation of human activity, I however consider the prize pool to be merely information (ie the size of a potential future payment) generated in or reflective of the operation of the scheme defined in the claims. Information even if represented in a physical way has never been considered sufficient for patentability save for some material advantage or mechanical effect in the arrangement of the information. See for example Re Cooper’s Application for a Patent (1901) 19 RPC 53 and Re Virginia-Carolina Chemical Corporation’s Application (1958) RPC 35).
  2. I further do not consider the claiming of a product characterised by the features of a scheme by which it is produced or is affected, even if a real, physical thing, fundamentally alters the question of patentability over the claiming of the scheme as a method. Clearly Mr Grant would have had no better success had he claimed a house characterised by his asset protection scheme. As observed in the Virginia-Carolina decision care should be taken not to allow the form of words use to claim an alleged invention to cloud the real issues of manner of manufacture and it should not be the case that:

“claiming clauses ostensibly directed towards a manner of manufacture cloak the real nature of the applicant’s disclosure”

The Deputy Commissioner went on to reject another set of claims on the grounds that:

15 Obviously a financial transaction, or otherwise, the legal transfer of an asset, is not the sort of physical or observable effect that the Court [in Grant’s case] was referring to, and this is apparent from its reference to the situation in Welcome Real-Time v Catuity Inc [2002] FCA 445 finding at [30] that Mr Grant’s method [was not patentable]

The Deputy Commissioner did not think that reciting in a computer to do all the calculations helped. The change in state or information in the computer was not sufficiently substantial to secure a patent. In this connection, at Patent Baristas, Mr Bennett is concerned by the Deputy Commissioner’s statement in [17] that:

…. As I indicated in my decision in Invention Pathways Pty Ltd [2010] APO 10 I do not believe there is any authority in Australian law for the proposition that the mere identification of a physical effect is sufficient for patentability. It must in my view be an effect “…of such substance or quality that the method considered as a whole is “proper subject of letters patent according to the principles which have been developed for the application of s. 6 of the Statute of Monopolies” ”.

Iowa Lottery [2010] APO 25

A new approach to business method patents Down Under?

Patent Baristas has a guest post from Bill Bennett at Pizzeys on the Deputy Commissioner’s rejection of a patent application for (as described by the Deputy Commissioner):

“a method for commercialising inventions that includes the step of applying for patent protection. The specification indicates that the method is intended to facilitate the uptake of commercialisation of inventions taking into account the restricted timeframe to file for intellectual property rights and the effect of automatic patent publication. The latter is a reference to the practice in most jurisdictions of publishing patent applications 18 months after their earliest priority date.”

Claim 1 reproduced in the Deputy Commissioner’s decision reads:

1. An invention specific commercialization system to facilitate success of inventions, the system including the steps of:
a) applying for patent protection for the invention in a country which is party to the Paris Convention,
b) conducting a review of specific commercialization process required by the invention,
c) preparing a research and development plan, testing the business dynamics of the invention,
d) conducting prototype testing, developing a prototype cost/benefit analysis,
e) determining product positioning and packaging,
f) conducting a manufacturing checklist,
g) entry of the information collected in steps a) to f) into an electronically fillable checklist having a prescribed time limit for each step to form a commercial entry strategy (CES) with a number of sub-steps, the CES prepared on the basis that each of the sub-steps in the CES are to be completed by a corresponding deadline, all deadlines falling within 30 months from the earliest priority date of the patent application, the checklist being computer-implemented and stored in computer or human readable format in data storage means and associated with processing means to allow updating of the checklist; and
h) policing compliance with the deadlines for the completion of the sub-steps through the production of reminders based on the prescribed time limits in the checklist to ensure that all sub-steps are completed within the deadlines.

At the risk of seeming glib and/or flip, one might think this was a checklist for the commercialisation of “an invention”, where one of the items on the checklist includes applying for patent protection, and using a calendaring system to generate reminders so you don’t miss a deadline.

Wonder what business managers and patent managers have been using Excel, Outlook and any number of computerised database for until now?

Any how, Mr Bennett’s blog, focusing on the “electronically fillable” and “computer-implemented” wording in the claim, contends that the Deputy Commissioner has reinterpreted Grant (you remember: the asset protection method (formerly known as a trust) in light of the US Supreme Court’s ruling in Bilski so that the production of a physical effect will lead to a “manner of manufacture” only where the effect is:

of such substance or quality that the method considered as a whole is “proper subject of letters patent according to the principles which have been developed for the application of s. 6 of the Statute of Monopolies”.

(Do read Mr Bennett’s more detailed consideration.)
However, this seems to confer on the Commissioner a rather wide discretion. Was it really necessary?

Invention Pathways Pty Ltd [2010] APO 10

Business method patenting?

The US Federal Circuit (9 panel bench) has handed down its decision ruling that Bilski’s method of hedging risks in commodities trading was not patentable.

As summarised by Patently-O, the majority opinion substantially retreats from State Street.

a process claim [must be] tailored narrowly enough to encompass only a particular application of a fundamental principle rather than to pre-empt the principle itself. A claimed process is surely patent-eligible under § 101 if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.

Judge Newman would have found the invention patentable; Judge Rader would have rejected the patent, without the need to develop a new principle, on the grounds that all that was claimed was an abstract principle.

Read Patently-O’s summary, which also has a link to the decision itself.  Compare our Full Federal Court in Grant.