U.S. Court of Appeals Clarifies Patentability Criteria for Business Method Patents

By Barry R. Lewin

Criteria regarding business method patents continue to evolve. In two recent cases, the U.S. Court of Appeals for the Federal Circuit described what is meant by “an inventive concept,” and when software-based invention claims recite a “technical solution to a technical problem,” both needed for patentability.

In Trading Technologies International, Inc. v. IBG LLC, the U.S. Court of Appeals for the Federal Circuit examined patentability of three patents, where the claims were directed to a method of displaying transactional information. In general, these patents are directed to presenting information to a trader to make him/her better informed and/or less prone to error when making a trade. After parsing the claims to examine where the improvement in the claims resides, the Court held that the claims as written “do not improve the functioning of the computer, make it operate more efficiently, or solve any technological problem. Instead, they recite a purportedly new arrangement of generic information that assists traders in processing information more quickly.” The Court further explained that the claims may help a trader process information more quickly, but that alone is insufficient for patentability as it does not improve computer functionality. That is, the absence of an improvement in computer functionality in this category of patents makes the claims insufficient for patentability.

In a related case (with the same named parties), the same Court examined another patent, where a display was introduced displaying profit and loss in a particularly calculated way. That is, there was a presumably novel technique used to perform a calculation and display the corresponding result. For this patent, the Court similarly concluded that the patent claims were ineligible for similar reasons.

While these cases are generally consistent with earlier cases, they do clarify that a technical problem in this space exists only when computer functionality is improved. That is, the claims must be directed to at least one improvement in the functionality of computer technology. While there are many ways to improve computer functionality (including architectural changes, reconfiguring a database, or performing improvements to a user interface, as examples), at least one such improvement must be included in each independent claim. As we have discussed in the past, patent applicants need to develop robust specifications to make clear how a computer (or another element associated with a computer system, such as a database) is improved as a consequence of the invention. That is, the specification needs to make clear that a computer-based problem is being solved and the specification also needs to detail the solution, which also is directed toward some improvement in computer functionality, not merely just to what is displayed to a user.