If one were to ask ten Americans the question, “What is patentable?” chances are that at least three people would not know the answer. Three people might answer high-tech scientific inventions. Three others might recount a recent experience of someone who made money by patenting a piece of software, and one person might get the correct answer. The correct answer is that one can get a patent on most anything provided that “anything” meets the three tests for patentability: utility, novelty, and non-obviousness. What many do not know is that, in recent years, US courts have expanded the meaning of “utility” to cover inventions heretofore not thought patentable by most Americans.
Until a few years ago, those teachers who taught about patents always used to end their description of patentable inventions with the caveat, “except methods of doing business.” It turns out that this caveat was not entirely correct. Two recent opinions of the Court of Appeals for the Federal Circuit let the world know that the methods of doing business are patentable in the US, with limitations.
Back to the original question, “What is patentable?” The answer in 35 U.S.C. 101 – that section of U.S. Patent law which describes Utility Patents: Whoever invents or discovers any new and useful process, machine, manufacture or composition of matter, or any new and useful improvement thereof, may obtain a patent therefore, subject to the conditions and requirements of this title.
A further reading of Title 35 of the United States Code will also reveal that protection is available in the form of a Design Patent to those who enhance the appearance of a product: Whoever invents any new, original and ornamental design for an article of manufacture may obtain a patent therefore, subject to the conditions and requirements of this title.
And, protection is also available in the form of a Plant Patent for those who create new things such as new flowers or fruits: Whoever invents or discovers and asexually reproduces any distinct and new variety of plant including cultivated spores, mutants, hybrids, and new found seedlings, other than a tuber propagated plant or a plat found in an uncultivated state may obtain a patent therefore, subject to the conditions and requirements of this title.
Of the three types of patents: Utility, Design, and Plant, Utility Patents are the most common and, if written properly, provide the greatest protection for the construction and operation of an invention.
35 U.S.C. 101, the basic statute describing what can be the subject of a Utility Patent, is like many other statutes. Specifically, it contains simple words whose importance is easily lost at first reading. One of those words is “useful.”
The word “useful” as it is used in 35 U.S.C. 101, means that an invention must have a use to be patentable. For example, if a chemist mixes a group of chemicals together, heats the mixture to obtain a chemical reaction, and thereby creates a new chemical compound, that new chemical compound is NOT patentable, unless the new compound has a use.
The word “useful” as it is used in 35 U.S.C. 101, also means that the invention works. For example, there have been numerous patent applications describing perpetual motion machines. Physicists teach that a perpetual-motion machine cannot work. Accordingly, any perpetual-motion machine will not work because it violates the law of physics. Therefore, a perpetual-motion machine cannot be patentable because it does not work, and something that does not work has no usefulness.
The word “process” is another word whose importance is easily lost in a first reading of 35 U.S.C. 101. Most would think of a “process” invention in the context of a large factory where people and machines build tangible products. Not so in patent law. The patentability process may be invisible; that is, it may be a process which maneuvers electrons or controls the flow of an electrical signal through a circuit. Or, the patent process may act on a cell or virus.
With the understanding that a process is patentable, and that process extends to computerized methods of doing business, patent protection extends to a wide range of computerized business method inventions heretofore thought to be unpatentable by many. While the following outline is not exhaustive, it represents inventions which are now being protected by US Patents.
I. Money Management Systems
a. Cash Processing
b. Debt Management
c. Investment Systems
d. Insurance Claims Processing and Payment
II. Asset Management Systems
a. Purchase and Ownership Systems
b. Asset Maintenance
c. Asset Valuation
d. Asset Disposal
III. Selling and Buying Systems
a. Value Assessment
b. Needs Assessment and Projections
c. Customer Interaction Systems
IV. Training and Testing Systems
a. Skill and Knowledge Assessments
b. Teaching Techniques
Many businesses, particularly those businesses that deal in money, such as banks, insurance companies, and investments, are taking advantage of the “process” portions of 35 U.S.C. 101 to obtain patent protection for their internal systems.
Those who find it difficult to believe that a money management business can obtain the type of patent protection need to re-read the closing phrase of each of the three statutes quoted above, “… subject to the conditions and requirements of this title.” The key “conditions and requirements” are novelty and non-obviousness. While these two conditions and requirements are further explained in Sections 102 and 103 of Title 35 of the United States Code, respectively, simply stated, novelty means that the exact same invention is not an obvious modification of an older invention.
The purpose of this article has been to change the beliefs of many that patents are not just for those working to advance the frontiers of technology through the creation of scientific breakthroughs. Ideas which make a business more efficient or bring in greater profits are also patentable, provided they have the attributes of being novel and non-obvious.
In 2008, the Court of Appeals for the Federal Circuit examined the question of the patentability of business methods. The specific holding of the court on the facts of the case was that a non-computer operated investment management system was not patentable.
However, the opinion of the Court of Appeals went further to instruct that an invention regarding a method of process must include a “machine or transformation” to be patentable. What this criteria means is currently under debate in academic and legal circles. For those desiring to protect a new business method, it will be wise to consult a patent professional to assure that what the new business method is described in words and phrases will assure its patentability.