Download Business Method and Software Patents After State Street Bank

Business Method and Software
Patents After State Street Bank.
Issues Related to Intellectual
Property Protection on the
Internet
Maria Eliseeva
Schwegman Lundberg Woessner &
Kluth
Jerusalem-Tel Aviv, March 28, 2000
State Street Bank v. Signature Financial
Group, 47 USPQ2d 1596 (Fed. Cir. 1998)
• State Street Bank and Signature Financial
are in the business of being custodians and
accounting agents for certain funds.
• Signature Financial had a patent (US
5,193,056) for a data processing system.
• Negotiations broke down and State Street
filed a declaratory judgment action of
invalidity, non-infringement and
unenforceability of the ‘056 patent.
State Street Bank v. Signature Financial
Group, 47 USPQ2d 1596 (Fed. Cir. 1998)
• One of the grounds for challenging the
validity of the patent was that it was
directed to a mathematical algorithm and to
a method of doing business, which are not ,
as State Street asserted, subject matter
patentable under US patent law.
• The patented system was directed to a data
processing system facilitating a structure in
which mutual funds (Spokes) pool their
assets in an investment portfolio (Hub)
State Street Bank v. Signature Financial
Group, 47 USPQ2d 1596 (Fed. Cir. 1998)
• The system provides a way to allocate daily
the assets of two or more Spokes invested in
the same Hub (investment portfolio)
• Each Spoke sells shares to the public, and
the price of those shares is based on the
Spoke’s percentage interest in the portfolio.
• Often a fund administrator is required to
calculate the price of the shares to the
nearest penny right after the market closes.
• A computer with the appropriate software is
a necessity in such a situation.
State Street Bank v. Signature Financial
Group, 47 USPQ2d 1596 (Fed. Cir. 1998)
• The case reconfirmed that a mathematical
algorithm, formula or calculation which
produces a useful, concrete and tangible
result is patentable subject matter.
• Software-related inventions producing a
useful, concrete and tangible results are
capable of protection by a patent.
State Street Bank v. Signature Financial
Group, 47 USPQ2d 1596 (Fed. Cir. 1998)
• This case reconfirmed that the
transformation of data resulting in a
calculation of a share price, constitutes a
practical application of a mathematical
algorithm, which is a useful concrete and
tangible result.
• If a computer related invention produces a
concrete and useful result, it is patentable
subject matter, provided that other
conditions for patentability are satisfied.
Patentability of methods of doing
business
• The State Street court concluded that claims
should not be categorized as methods of
doing business. Instead, they should be
examined as any other process claims.
Forms of protection compared
• Patents -- expensive but powerful even
against independent creation ($5-10K for
filing depending on the complexity of the
subject matter)
• Trademark registrations -- modest cost
(<$1K per filing).http://www.uspto.gov
(TEAS and TARR)
• Copyright registrations -- minimal cost and
offer great benefits (<$300 per filing)
The importance of obtaining
trademark registrations
• Even without the Internet, it would be
important to obtain trademark registrations
• Your enforcement position is stronger if you
have a trademark registration
• It is much more difficult for others to
question your use of a name if you have a
trademark registration
How to file for a trademark
registration
• The law permits you to do it yourself
• Application prepared by counsel has modest
cost (likely <$1K)
• $325 per trademark class, plus professional
fees likely $400-600 per application
Policing the Web for trademark
violations
• Use search engines to look for overt and
covert (meta-tag) uses that take advantage
of your good name
• Even if the web site is for a foreign
company, there is the chance you can get
remedies against it in the US. Their DNS,
or web site hosting service, or email service
provider, may be in the US, for example
Policing the Web for trademark
violations
• Be aware of risks of sending cease-anddesist letters. The recipient of the letter
might bring a declaratory judgment action
against you
• Risk of negative publicity
• The court of public opinion
Domain name issues
• You should get trademark registrations
• New anti-cybersquatter legislation -- several
cases have been brought, a few decided
• The new ICANN Uniform Dispute
Resolution Policy -- about a dosen of cases
decided as of now. Decisions are reported at
http://www.icann.org
The importance of obtaining
copyright registrations
• You can elect statutory damages (up to
$150,000 per work infringed)
• You can collect attorneys fees
• Enforcement is much more likely to
succeed if you have a registration
• Cease and desist letters are more potent
Filing a copyright application
•
•
•
•
It is easy and inexpensive to do
The law permits you to do it yourself
Government fee is $30 per application
Professional fees likely to be $200 or so per
application
Policing the Web for copyright
violations
• Watermarking of images(expand)
• Text searches for improperly copied matter
Patents and the Internet
• A new emphasis on Internet, software, and
business method and business model patents
• The law is in fact unchanged since at least
ten years ago
• Despite this, such patents have been much
more visible in the media lately. The highly
publicized cases made such patents more
visible. All that changed is that now
everyone knows it can be done
Claiming strategy
• When patents are analyzed for the purpose
of licensing, infringement, litigation, the
advantage of having a lot of independent
claims of varying scope is more evident.
• In litigation, the more independent claims a
patent has, the more difficult and expensive
it is to analyze and attack the patent.
• In licensing, a greater number of
independent claims makes it more likely
that the patent coverage is complete.
Some recent Internet patents and
related lawsuits
• Amazon.com obtained a patent on its 1click ordering method, sued Barnes and
Noble, obtained a preliminary injunction.
• Priceline.com obtained a patent on reverse
auction of airplane tickets and sued
Microsoft.
• Amazon.com also now has a patent on
referral sales commissions.
Getting patent protection
• Getting patent protection is important even
if you don't think you would ever use the
patent offensively
• Cost to prepare and file, for complex
subject matter, is likely to be in the range of
$5K to $10K. The law permits you to do
this yourself. There are, however, many
reasons to consider hiring a patent firm
Waiting too long to file
• It is important to file promptly after
inventing, and before public disclosure or
sale
• US “grace period” of one year does nothing
to excuse delay with respect to non-US
patent rights
• Keep lab notebooks and reward inventors
Where to find these slides
• I will post them at
http://www patentbar.com/il.ppt when I get
back.