Patent Board Eliminates "Technological Arts" Requirement For Business Method Patents

Ex parte Lundgren, Appeal No. 2003-2088 (BPAI 2005).

In a landmark decision, the Board of Patent Appeals and Interferences has issued a precedential opinion eliminating the Patent Office procedure of rejecting patents under 35 U.S.C. § 101 as outside of the “technological arts”

Our determination is that there is currently no judicially recognized separate "technological arts" test to determine patent eligible subject matter under § 101.  We decline to create one. Therefore, it is apparent that the examiner's rejection can not be sustained. 

This decision will once again expand the role of business method patents by freeing them from being tied to a computer or other electronic device.  At the same time, this decision widens the gap between the US and many other countries who are still debating patentability of software.

It is unclear at this point whether the PTO solicitor will ask the Federal Circuit to review this case.

The Majority Opinion:

Lundgren had claimed a “method of compensating a manager” that involved several steps of calculating a proper compensation based on performance criteria and then transferring payment to the manager. The examiner rejected the claims arguing that they were “outside the technical arts, namely an economic theory expressed as a mathematical algorithm without the disclosure or suggestion of a computer, automated means, apparatus of any kind, the invention as claimed is found non-statutory.”

A five member panel reviewed this action, and three signed on to the per curiam majority opinion that found the claim to “produce a useful, concrete, tangible result” without being a “law of nature, physical phenomenon or abstract idea.”  Regarding the PTO “technological arts” test, the majority found that such a test does not exist under the law.

Rejection reversed, there is no judicially recognized "technological arts" test for patentability.

Dissent by Judge Smith:

Judge Smith dissented, arguing that the “technological arts” standard is simply the modern lexical equivalent to the phrase “useful arts” found in the US Constitution. He then argued that Congress does not have power to pass patent laws that expand beyond those “useful arts.”

While I do not question the power of Congress to pass laws to carry out this mandate, whatever law passed by the Congress cannot be applied in such a manner as to enlarge the constitutional mandate.  Thus, any laws passed by the Congress to grant patents should be applied in a manner that is consistent with the constitutional mandate. 

The dissent then implicitly calls for the Federal Circuit to review the case and explicitly calls fro Congress to “step in and clarify the limits of 35 U.S.C. § 101.”

Dissent by Judge Barrett:

In a 78 page dissent, Judge Barrett suggests a new test under section 101 that would require some transformation of physical matter.

Notes:

• The BPAI holds its appeals in secret — and the Ex parte Lundgren opinion is yet to be officially released by the Board.  I published this article on the case after receiving copies of the opinion from reliable sources. Opinion.v1; Opinion.v2.
• Link. Read more about Dr. Lundgren.

Comments

[Peter Chiabotti]

The official opinion is up: http://www.uspto.gov/web/offices/dcom/bpai/prec/2003-2088.pdf

Thank you for alerting us to this opinion.

[Anthony Diepenbrock]

This opinion will not stand for long. The majority provides no way to distinguish "business" methods, wholely divorced from the physical world, from abstract mental steps. There is a line to be drawn here, but the majority did not articulate it.

[Jonathan Ward]

If this decision does stand, it may very well serve as the vehicle to expand who may qualify for a patent license - MBAs, anyone?

[Mark Nowotarski]

According to examiners I have spoken to, the USPTO has decided not to ask the Federal Circuit to review the decision and is drafting new examiner guidelines. Hopefully they will be available by Nov 05.

[Blaise Mouttet]

By the logic of this decision it would seem that subject matter drawn to human activity lacking any technological component may be patentable. So for example if a health spa came up with a new method of performing a massage could they patent it? Or if an obstetrician develops a new method of breathing to assist in labor could this too be patentable? How about a new method of speed dating or a new political process or a new way of practicing religion?

[Reinier Bakels]

The statutory (!) question is whether an "average person skilled in the art" is able to successfully execute the invention (routinely). Business methods typically depend on business skills, and sheer luck, so success is not just a matter of craftsmanship. So (typical) business methods do not qulify for patents. And they don't need patents! Patents more than anything else serve the purp[ose to limit competition in those cases where otherwise a level of "perfect" competition would result that would render the exploitation of an invention totally unattractive: "everybody's business is nobody's business". This problem does not exist at all in case of such business methods. IMHO "technical"means: ready for application by an average person skilled in the art, the famous PHOSITA, so it is entirely statutory to test for that.

[John Guay]

For one of ordinary skill in the art to successfully practice a business method, it would not require that a profit be made. In other words, patents are not issued only to good business methods, just novel and nonobvious ones!

[Stewart]

A person is probably able to make an invention but hardly to manage red tape. it's very hard to get a patent. One must have a hell of patience.

[john beck]

There is a line to be drawn here, but the majority did not articulate it.
http://www.Johnbecksamazingprofits.com/john-becks-amazing-profits.html