Print PDF

Business Method Patents

Finnegan client Fidelity National Information Services Inc. (FIS) successfully challenged four banking patents owned by its rival financial-services-technology provider Fiserv Inc. FIS petitioned the Patent Trial and Appeal Board (PTAB) for covered business method patent review (CBM). The PTAB said the four patents—directed to processing payment instructions, providing electronic biller notifications, and processing interbank fund-transfer transactions—cover abstract ideas that, in light of the Supreme Court’s decision on patentability in Alice Corp. v. CLS Bank International, are too abstract to be patentable. The PTAB decisions stem from a suit filed in January 2012, in which Fiserv subsidiaries CheckFree Corp. and CashEdge Inc. accused FIS and its subsidiary Metavante Corp. of infringing the patents. Following a Markman hearing, the court stayed the litigation while the PTAB reviewed the Fiserv patents. 
Finnegan client Fidelity National Information Services Inc. (FIS) challenged two check-imaging patents owned by DataTreasury in covered business method (CBM) reviews at the Patent Trial and Appeal Board (PTAB), and successfully defended the PTAB’s decisions invalidating those patents on appeal to the Federal Circuit. DataTreasury’s infamous “Ballard” patents were called out by name as troublesome business method patents by Congress when it wrote the CBM statute. The PTAB, in its final written decision (FWD), said the two patents—directed to transferring information from one location to another where the transferred information is unreadable without a secret decoder key—cover abstract ideas that, in light of the Supreme Court’s decision on patentability in Alice Corp. v. CLS Bank Int’l, are too abstract to be patentable. The PTAB also held that many of the claims lacked sufficient written description for encrypting subsystem identification information and thus fail to meet the rigors of 35 U.S.C. § 112. The Federal Circuit affirmed the PTAB’s decision with a Rule 36 judgment, which the Supreme Court declined to review on certiorari. Finnegan represented FIS in the CBM challenges, in DataTreasury’s appeal of those CBM challenges, and also in mandamus petitions to the U.S. Court of Appeals for the Federal Circuit, resulting in a successful stay of the underlying litigation in the Eastern District of Texas.
In its highly anticipated Bilski v. Kappos decision, issued on June 28, 2010, the U.S. Supreme Court overturned the U.S. Court of Appeals for the Federal Circuit's "machine−or−transformation" test, which required that a patentable process either be tied to a machine or apparatus or involve a transformation of a particular article into a different state or thing.   The Court also affirmatively recognized that "business methods" are not categorically excluded from the scope of 35 U.S.C. § 101.   The decision was the culmination of Finnegan’s efforts on behalf of the applicants in In re Bilski, which began with the Supreme Court granting Finnegan’s petition for a writ of certiorari filed in June 2009.  The petition sought to overturn a decision issued on October 30, 2008, by the Federal Circuit which set forth a test requiring that a patentable process either be tied to a machine or apparatus or involve a transformation of one thing into something else.  While the Supreme Court affirmed the rejection of the Bilski business method patent application, its decision overturning the Federal Circuit’s machine-or-transformation test was a victory for patents on business method and software.  Finnegan made the oral argument before the Court on November 9, 2009. 
We represented a major travel-related company in securing worldwide patent protection on a diverse portfolio of software and business-method–related inventions. We advised and defended the client on various allegations of patent infringement and third-party claims for indemnification against infringement allegations.
The U.S. Court of Appeals for the Federal Circuit ruled in favor of Finnegan client Research Corporation Technologies, Inc., affirming the patentability of RCT’s methods for halftoning digital images.  The decision is particularly important because it is the Federal Circuit's first dealing with patentable subject matter under 35 U.S.C. § 101 since the Supreme Court’s landmark Bilski v. Kappos decision.  Chief Judge Rader, writing for a unanimous panel, reversed the district court’s ruling that the claimed halftoning methods were invalid under section 101.  Instead, he wrote, “the invention presents functional and palpable applications in the field of computer technology.”  Following the Supreme Court’s Bilski decision, the Federal Circuit explained that the coarse filter of section 101 excludes only laws of nature, physical phenomena, and “manifestly” abstract claims, and that courts should focus primarily on the patentability criteria of the rest of the Patent Act.
We represented our client in a litigation involving business competitors in the supply chain management software field.  We obtained reexamination of five of the asserted patents.  Following a Markman hearing, the parties settled this case.

Finnegan client SAP received a favorable ruling in the first Patent Trial and Appeals Board (PTAB) decision in a post-grant review of a covered business method patent, a proceeding established as part of the America Invents Act.  The Board found all of the challenged claims of a patent owned by Versata Software unpatentable under section 101 of the Patent Act.  The ruling came just nine months after Finnegan filed the petition on September 16, 2012, the first day the new procedure took effect.

Finnegan client GTECH Corporation was sued in the Eastern District of Texas for patent infringement by Flashmark Technologies and various individuals. GTECH sells lottery terminals and tickets, and Flashmark accused the company of infringing a patent related to document cancellation. The court issued its Markman decision, construing the claims in a way that precluded a finding of infringement against GTECH. Following this decision, the parties filed a stipulation of noninfringement.
Finnegan prepared and filed an ex parte reexamination request for a client that was sued on a patent directed to systems and methods for financial analysis. We worked with the client’s litigation counsel to identify relevant prior art and to develop strategy for the reexamination proceeding. We made sure that the positions we took in the request were consistent with positions taken in litigation. The PTO issued an order granting reexamination noting that substantial new questions of patentability had been raised based on our request.
Finnegan client CRS Advanced Technologies achieved a complete win in the second decision related to covered business method (CBM) patents issued by the Patent Trial and Appeal Board (PTAB) at the U.S. Patent and Trademark Office (USPTO). The Board cancelled every claim that had been pending in a related district court infringement litigation. In the CBM, Finnegan challenged the patent as not meeting the requirements of 35 U.S.C. § 101 and presented arguments in favor of claim cancellation, in what was the second such CBM hearing before the PTAB. The decision capped a decade of litigation for CRS. Frontline Technologies, Inc. initially sued CRS for patent infringement on one patent, which ultimately settled with CRS taking a patent license that Finnegan had negotiated with Frontline. Frontline later terminated the license and sued CRS a second time. The district court subsequently stayed the case pending a reexamination proceeding instituted by the USPTO on a petition filed by Finnegan on CRS's behalf, from which the patent emerged, heavily amended, two years later. Meanwhile, another Frontline patent issued and was asserted against CRS but, after a third party requested reexamination of that patent, Frontline granted CRS a covenant against suit and dropped that second patent from the litigation. The case continued for three more years on the reexamined patent, allowing Finnegan to file a CBM petition on the first day that procedure became available. The PTAB granted the petition, and a month later the district court again stayed the case, which was then in the final stages of pre-trial submissions. The Board agreed with CRS that the claims were unpatentable, and the related district court proceeding has since been dismissed with prejudice with the consent of the parties.
We successfully defended VeriSign, Inc. in a lawsuit brought by Leon Stambler. The suit alleged infringement of three patents asserted against the Internet security protocol known as SSL and against VeriSign’s digital certificates and payment gateway technology. Stambler was seeking damages and an injunction, claiming that every Internet communication secured using the industry standard SSL protocol infringed his patents. We obtained a summary judgment on one patent, and the jury returned a verdict of no infringement of two of the Stambler patents.
eSpeed and Cantor Fitzgerald claimed that Finnegan clients ICAP, the world’s largest electronic interdealer broker, and OMX, a Swedish technology company, infringed a patent related to the electronic trading of U.S. Treasury securities. When eSpeed appealed from a finding that its patent was invalid and unenforceable, we secured a favorable judgment for our clients, with the Federal Circuit holding eSpeed’s patent unenforceable for inequitable conduct.