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Unwired Planet: Covered Business Methods and the Tangled Web of Serial Distortion

December 19, 2016

By Ken Bousfield

On November 21, 2016, the Court of Appeals for the Federal Circuit released its decision in Unwired Planet v. Google Inc. concerning the applicability of the “Covered Business Method” statutory exclusion of 37 C.F.R. s. 42.301

The representative claim in question was claim 25 of US Patent 7,203,752. It read:

25. A method of controlling access to location information for wireless communications devices operating in a wireless communications network, the method comprising:

  • receiving a request from a client application for location information for a wireless device;
  • retrieving a subscriber profile from a memory, the subscriber profile including a list of authorized client applications and a permission set for each of the authorized client applications, wherein the permission set includes at least one of a spatial limitation on access to the location information or a temporal limitation on access to the location information;
  • querying the subscribe[r] profile to determine whether the client application is an authorized client application;
  • querying the subscriber profile to determine whether the permission set for the client application authorizes the client application to receive the location information for the wireless device;
  • determining that the client application is either not an authorized client application or not authorized to receive the location information; and
  • denying the client application access to the location information.

37. C.F.R. 42.301 reads:

            42.301 Definitions.

In addition to the definitions in § 42.2, the following definitions apply to proceedings under this subpart D:

(a) Covered business method patent means a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.

(b) Technological invention. In determining whether a patent is for a technological invention solely for purposes of the Transitional Program for Covered Business Methods (section 42.301(a)), the following will be considered on a case-by-case basis: whether the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art; and solves a technical problem using a technical solution.

In review proceedings, the Patent Trial and Appeal Board had held that claim 25 fell within the statutorily excluded Covered Business Methods exception as pertaining to a financial transaction.

On appeal, the Federal Circuit disagreed. The court indicated that the approach of the Board, based on a finding that the method was incidental to financial transactions as described by Senator Schumer was mistaken. The Federal Circuit took the view that interpretation of the statue required …

…  interpretation of the statute!

Nothing in the claim indicated that it is limited to financial transactions. Accordingly, it cannot fall within 37 C.F.R. 42.301.

A first irony in this case is that the current distinction is drawn in respect of the “covered business method” exclusion.

Art 1, s. 8 of the US Constitution empowers Congress to legislate in respect of writings and discoveries pertaining to Science and the useful Arts. That being the case, there is no patent that could ever fall within the “Covered Business Method” exclusion that would not also fall outside Art. 1, s. 8. The “Covered Business Method” exclusion should be redundant. This was clear to Stevens, J., in Bilski.1 But for the peculiar tip-toeing of Scalia, J., in Bilski that view would now govern patent-eligibility.

Art. 1, s. 8 would readily dispose of the Unwired claims.

Consider, however that Claim 25 may now be subject to review under the general standards of patent-eligibility. In recent times, often where claims recite a method of conducting business - here the manipulation of accounting or customer records - claims like claim 25 have tended to be found to be “Abstract”, and therefore non-patent eligible. That claim 25 is not abstract, but strikingly mundane, will not prevent such a finding from being made.

That is, where a claim merely automates a conventional business process, or automates a process that could otherwise be carried out with a pencil, an eraser, and a piece of paper, there is a high probability that the claim will have difficulty with a subject-matter challenge. While this pattern can be seen in the cases, it nonetheless underlines the relatively arbitrary nature of using “abstract” as a catch-all. This is precisely the outcome predicted, and scorned, by Stevens J., in Bilski.

Both the Unwired case and the Covered Business Method Exclusion are by-products of the serial distortion of the law caused by the two-decade fallout of State Street. The Scalia J., side-step in Bilski means that the serial-distortion-ghost-of-State Street remains alive and well.

1 Bilski v. Kappos, 561 US 593 (2010).

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