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U.S. PATENTLAW 15What is not patentable? Generally speaking, laws of
nature, physical phenomena and abstract ideas, per se,
are not patentable. For example,a new mineral discovered in the earth or a new
plant found in the wild is not patentable....
Likewise, Einstein could not patent his cele-
brated law that E =mc^2 ; nor could Newton
have patented the law of gravity. (Diamond v.
Chakrabarty, 1980)Of course, a practical application of some physical phe-
nomena may be patentable. For example, although a new
plant found in the wild is not patentable, its medicinal use
may be patentable. InDiamond v. Chakrabarty(1980), the
Supreme Court clearly stated that even living things, in
this case microorganisms produced by genetic engineer-
ing, are patentable. In fact, all that matters is whether the
living matter is the result of human intervention.
In particular, Internet-related inventions are paten-
table and can be protected with method claims, appara-
tus claims, so-called Beauregard claims, embedded signal
claims, and so on, all of which are discussed later in the
chapter. Many Internet-related inventions are protected
by “business method” patents.Business Methods
Prior to theState Street Bank and Trust Co. v. Signature
Financial Group, Inc.(1998) decision by the Court of Ap-
peals for the Federal Circuit (CAFC) in 1998, there was
some uncertainty as to whether methods of doing busi-
ness were patentable. Although the invention claimed was
technically a “machine” that implemented business meth-
ods,State Street(available at Georgetown University’s
Web site at http://www.ll.georgetown.edu/federal/judicial/
fed/opinions/97opinions/97-1327.html) is cited for con-
firming that indeed business methods themselves are
patentable.
In that decision, Signature was the assignee (owner)
of U.S. Patent No. 5,193,056. The claimed invention is
a system in which mutual funds pool their assets into
an investment portfolio to take advantage of economies
of scale in administering investments. State Street Bank
had been negotiating a license with Signature Financial.
When negotiations broke down, State Street Bank sought
a declaratory judgment that the patent was invalid be-
cause it described a business method. The court, however,
determined that indeed business methods are patentable
subject matter.
When is a method a business method? It is not always
clear if a particular method is strictly a business method.
For example, Amazon.com received a patent (U.S. Patent
No. 5,960,411) for its 1-click invention. Although the in-
vention has been labeled a method of doing business by
some, Amazon has asserted that its 1-click patent is not a
business method patent.
The USPTO has established a classification system,
with more than 400 classes, which are further divided
into subclasses. Every application is assigned to a class
and subclass according to the technology of the inven-
tion. In general, methods that fall into the USPTO’s
Class 705 (“Data processing: financial, business practice,management, or cost/price determination”) are consid-
ered to be business methods. Refer to http://www.uspto.
gov/web/offices/ac/ido/oeip/taf/def/705.htm for a list of
Class 705 categories. For example, some of the first few
subcategories of Class 705 include health care manage-
ment; insurance; reservation, check-in, or booking display
for reserved space; staff scheduling or task assignment;
market analysis, demand forecasting, or surveying; and so
on. For those inventions that are considered to be busi-
ness methods, some special rules apply during prosecu-
tion of a business method patent application and with re-
spect to infringement. Whereas most patent applications
are subjected to examination by a single examiner, the
USPTO subjects business method applications to one or
more extra reviews. This extra review was added in part as
a response to numerous complaints, made in the popular
press and elsewhere, that many patents were being issued
on inventions that were “clearly” not patentable.
Furthermore, accused infringers of issued business
method patents have at their disposal an extra defense
against the accusation that infringers of other types of
patents do not have. For example, for most patents, if
Party A receives a patent for an invention, and Party B
has been practicing the invention before issuance of the
patent, Party B must stop its practice or obtain a li-
cense once the patent issues. AfterState Street, however,
Congress added§273 to Title 35 of the U.S. Code as part
of the American Inventor’s Protection Act of 1999, pro-
viding for “intervening rights” to protect parties that may
not have applied for a business method patent based on
the misconception that such patents were unobtainable.
The details of§273 are beyond the scope of this article,
but basically it provides, in certain situations, a defense
to an infringement claim for a party that was using the
patented business method before the patent issued.Requirements of an Invention
Three basic requirements must be met before one can ob-
tain a patent for an invention: the invention must be novel,
it must not be obvious in view of the current state of the
art (and with respect to a person knowledgeable or “of
ordinary skill” in the art), and it must be useful.
Novelty is statutorily provided for in 35 U.S.C.§102,
which describes several conditions in which a patent may
not be obtained: 35 U.S.C.§102 states that a patent can-
not be obtained if the invention was known or used by
others in the United States prior to the patent applicant’s
invention (this could happen, for example, when two peo-
ple separately invent the same invention, each unaware
of the other’s activity or accomplishment) or if the inven-
tion has been patented or described in a printed publica-
tion anywhere in the world. “Printed publications” may
include any information that is freely accessible via the
Web, even though a Web page is not technically printed
in hard copy.
Even inventors’ own writings can be held against them.
Inventors have 1 year to file a patent application in the
United States if the inventions were patented or described
in a printed publication anywhere in the world or if the
inventions were in public use or on sale in the U.S.
The prohibition against obviousness is statutorily pro-
vided for in 35 U.S.C.§103(a), which states in essence