USPTO Releases New Business Method Guidelines: Requires “physical transformation” or “concrete and tangible result”

In the wake of the Lundgren case, the USPTO has released a set of interim examination guidelines for determining subject matter eligibility of patent applications. (Link).  The guidelines will be used by examiners “in determining, on a case-by-case basis, whether a claimed invention falls within a judicial exception to statutory subject matter (i.e., is nothing more than an abstract idea, law of nature, or natural phenomenon), or whether it is a practical application of a judicial exception to statutory subject matter.”

The crux of the new guidelines is that an invention falls within the scope of 35 U.S.C. 101 “if the claimed invention physically transforms an article or physical object to a different state or thing, or if the claimed invention otherwise produces a useful, concrete, and tangible result.”  The application itself should enable one of ordinary skill in the art to understand the utility of the invention.


How to find Statutory Invention Registrations

Although rarely used, an inventor can apply for a statutory invention registration with the patent office under 35 U.S.C. 157.  Under the law, the inventor must waive the right to receive a patent on the invention.  The statutory inventions are searchable through the USPTO patent database and are given “H-numbers”—such as H342. 

There are currently just over 2100 published SIRs, most of which were filed by the U.S. government.  This search (SEARCH) will grab them all.

(NOTE — This tip comes from the PUIG newsgroup).


Including Claims in Provisional Patent Applications?

An ongoing debate amongst some patent attorneys is whether to include claims in provisional applications.  According to the rules of practice, claims are not required in the provisional application. (MPEP 601).  However, there are a few good reasons for including claims in the application.

In the wake of Phillips v. AWH, it has become even more important to ensure that a patent’s specification accurately describes the meaning of the associated claim terms.  This task is all but impossible in the absence of any claim terms to describe.   Thus, it is important to draft at least a few model claims with the provisional application.  Some practitioners, such as Russ Krajec, have advocated drafting the claims but then deleting them from the application before filing.  Russ argues that claims in the provisional can only hurt the applicant.

I disagree.  The claims can be helpful in ensuring adequate disclosure and enablement — this is especially true in cases where the provisional is rushed through on a very short deadline and/or low budget.  The claims, as part of the specification, can easily tie together loose ends that may have been created in the rush.  As Todd Mayover aptly points-out, including claims in the provisional creates a clear record associating those claims with the earliest filing date or priority date.  It is also unlikely that patent attorneys would seriously stick to the practice of initially drafting claims that will eventually be deleted — this is especially true in the fast-paced area of provisional applications.  One newfound fear is that including claims in the provisional leaves the patentee open to Festo-type prosecution history estoppel.  However, we have no evidence that presenting new claims in a subsequent nonprovisional would create any such estoppel — especially since the nonprovisional is newly-filed rather than simply an amended version. 

An astute Patently-O reader provided the following comment:

I include at least one extremely broad, never likely obtainable claim in a provisional.  First under US law, it is true that a provisional need not include one in order to be considered valid.  But foreign courts can say otherwise and render the US provisional (if serving as a priority document) invalid in a foreign court. Not including a provisional claim is only useful if you are absolutely certain that you won’t go foreign.

I hear the arguments related to the effect of narrowing by amendment as creating PHE.  In the post-Festo world, you can at least explain the amendment so as to overcome the presumption of PHE.  Let’s face it, if you are relying on the DOE to win your case anyway and the case rests on whether you started broad and narrowed by amendment, you are fighting a likely unwinnable battle.  In the last 10 years or so, how many DOE cases has the Fed. Circuit actually upheld? Not too many.

No U.S. practitioner has been able to cite a case, rule, regulation, expanded Board of Appeals decision, etc. from a foreign court that has categorically said, “A U.S. provisional application serving as a priority document [to this foreign application] that does not include at least one claim is nonetheless considered a permissible priority document.”  Why take the chance of not including a claim in a provisional if there is a likelihood that the foreign counterpart could get knocked out.

Another reason to the include at least a broad claim is that most foreign laws have strict adherence to the rule that the broadest initially presented claim will set the claim scope for the application.  So if you present a very broad claim initially, you can amend narrower.  But if you present a narrower claim first then realize that you can go broader, you cannot amend to go broader.  It is for this reason you can include a “claim” that says something like, “I claim, the product comprising any feature described, either individually or in combination with any feature, in any configuration.” or a “process to […] comprising any process described, in any order, using any modality, …”


Please leave your own comment below.

Claim Term of “Conventional Computer” Limited to Computers Available as of Patent’s Effective Filing Date

Patentlyoimage034 PC Connector Solutions v. SmartDisk (Fed. Cir. 2005).

PC Connector sued SmartDisk for infringement of its patent directed to the connection of peripherals to a computer via a coupler inserted into the disk drive.  The claims include limitations such as “an input/output port normally connectable to a conventional computer input/output port.”

SmartDisk argued that its flash memory cards could not infringe the patent because, like other terms in the claims, the terms “normally” and “conventional” must be interpreted as referring to technology that existed at the time of the invention.  The district court agreed, finding that there could be no literal infringement because flash memories were not in normally connectable at the time the patent was filed in 1988.

On appeal, the Court of Appeals for the Federal Circuit affirmed, finding that a claim’s “meaning must be interpreted as of its effective filing date.”  As such, the appellate panel held that SmartDisk did not infringe because “even a casual observer, [the flash memories] cannot be connected to a vintage 1988 computer I/O port that uses a multi-pin connector, there can be no literal infringement.”

Prosecution Tip: Do not use the modifiers such as “normally,” “traditional,” or “conventional” in your claims. Such limitations do not allow you to overcome any prior art but do severely limit the scope of the claims.

Patently-O Patent Prosecution TipCast No. 1

PatentlyOImage010The first Patently-O Patent Prosecution TipCast has just been released.  The TipCast series is an audio lecture series that is intended to provide helpful hints and information to patent attorneys and agents.  TipCast No. 1 provides a tip relating to revival of abandoned applications.

Click to Download and Listen to TipCast No. 1. (2.9 MB, mp3 format, 3 minutes audio).


Thanks goes to Evan Brown and the rethink(ip) group for their inspiration and encouragement.  For those interested in the creation of the TipCast — I used my laptop computer hooked to a Logitech USB microphone ($14) and a software package titled Media Wizard (CDH Productions, $50) to record my voice.  I also used Media Wizard to mix-in the music.  Although I have some radio experience from my days as an announcer at WPRB Princeton, this was my first digital recording.

A client who is also a Patently-O reader sent me a note this morning that the recording was very nicely done, but that it seems like a lot of work on my part — She asks, “why the audio form rather than visual?”

My Response: There is new technology coming along that is going to make the audio format very easy to use — although right now only the real techno-geeks and audiophiles are involved. I have to admit that I still know very little about this, but there is technology available to allow your hand-held device, such as your iPod or even your cell phone, to subscribe to an audio feed. Each time the feed is updated, the device would download the mp3 file and allow you to listen to the newest update. With a touch of a button, you could listen while on your morning commute or while working out at the gym.

 Thank you for all the comments and complements on the TipCast.  Even my wife was very nice this morning to mention that I certainly have the face for Podcasts. . .

How to Jump-Start your Business Method Cases: Part V

Keeping the invention secret:

  The financial service industry has been dramatically changed by the availability of patents on computer-implemented methods of doing business – often thought of as software patents.  Most large financial institutions now have in-house patent counsel who manage prosecution, licensing, and potential litigation. Many of these institutions have aggressive patenting strategies and are hoping to amass large patent portfolios both to protect their own business and for licensing. 

  Financial institutions have a history of being quite secretive in their practices.  In one sense, this practice stops with the emergence of the patentability option.  In order to obtain a patent, an inventor must publicly disclose the details of the invention.  However, many institutions are opting to request that at least the patent application be left unpublished in order to maintain secrecy of the patent until the date the patent is issued (if ever).

  Formerly, patent applications were kept in confidence at the PTO until the resulting patent issued.  However, in 1999, in order to comply with the international TRIPS agreement, the PTO began a program of publishing (or “laying-open”) patent applications eighteen months after filing.  One clause of the ’99 law guarantees that the PTO will keep the application in secret if the patentee promises to not obtain foreign patent rights.  Foreign patent offices are quite sour on financial service-type business method patents.  Thus, the applicants do not give up much by agreeing to only obtain U.S.rights on their new methods of doing business.

By requesting nonpublication, financial institutions are generally able to maintain secrecy of the invention until the patent issues.  Further, if it appears that the patent will not issue or that the patent would disclose important trade secret information, then the institution may abandon the patent rather than risk public disclosure.


How to Jump-Start your Business Method Cases: Part IV

In part III, I introduced the concept of a petition to make special as one of the best ways to decrease pendency of your patent application.  The petition to make special allows the Patent Office to examine your application out of turn and on an expedited basis. 

Normally, during examination, the Patent Office is relied upon to perform a search and analysis of the prior art.  However, the Office offers rapid examination through the petition to make special if the patent applicant performs the search himself.

MPEP 708.02 provides the rules for filing the petition to make special based on prior art search by the applicant.  Specifically, the applicant must submit the following:

  1. A petition to make special with fee ($130).
  2. Patent claims to a single invention (avoid a restriction requirement)
  3. A statement that a pre-examination search was made listing (i) field of search by class and subclass, publication, chemical abstracts, foreign patents, etc.  Note — the search must be directed at the claimed invention.  (A search made by a foreign patent office satisfies this requirement if the claims in the corresponding foreign application are of the same or similar scope to the claims in the U.S. application for which special status is requested.)
  4. A copy of each reference deemed most closely related to the subject matter encompassed by the claims; and
  5. A detailed discussion of the references, which points out with particularity, how the claimed subject matter is patentable over the references.  A general allegation that the claims define a patentable invention without specifically pointing out how the language of the claims patentably distinguishes them from the references is not sufficient.

If your petition to make special is deficient, you will be given one opportunity to perfect the request.  However, that would cause a delay — something your are trying to avoid.

Comments: The petition to make special comes with some risks.  Specifically, that of inequitable conduct if (i) the search was not done properly or (ii) the references were mischaracterized.  To avoid this, I would recommend relying upon an external search firm to perform the search.  In addition, the inventor should be thoroughly questioned to ensure that all prior art that he is aware of has been presented.  Care should be taken to avoid mischaracterizing the references — if you cannot properly distinguish the prior art then it may be better to not file a patent application.


How to Jump-Start your Business Method Cases: Part III

Financial services business method patent applications have an unusually long pendency.  There are many cases where applications have been on file at the PTO for 4+ years without receiving any substantive response from the Office. 

John Love is the director of the technology department at the PTO that handles financial services business method patents.  Last week, Director Love indicated that the current pendency to first action is about 36 months, while pendency to issue/abandonment is 42 months.  For many, 42 months is a long time to wait for a patent.  In the area of on-line financial transactions, this time-lag is greater than the half-life of an invention’s usefulness.

The key to reducing pendency time for your applications is likely to reduce the time to the first office action.  One great way to do this is by filing your application along with a petition to make special.

Petition to Make Special is a useful tool for advancing the examination your patent application. According to Director Love,

"a petition to make special is an excellent way to shorten the time to first office action." 

Once the application has been processed and sent to his department, Love indicates that they normally act on the case within three to six months.  Thus, if you follow the procedures correctly, you may cut several years off of the prosecution time!

There are several grounds for filing a petition to make special.  Two that may be most useful in your case are (i) actual infringement of the patent claims, or (ii) completion and analysis of a prior art search.

Director Love admitted that the petitions have a tendency of getting lost in the file.  Because of this issue, I would recommend the following proactive procedure for your petition to make special:

  1. File the application without the petition.
  2. Soon after you receive the serial number for the patent application, call the technology group Special Program Examiner (SPRE) to discuss the petition and let him know that it is on its way. It is often the SPRE that decides whether to allow the petition, and because timing is critical, you don’t want to have to appeal his decision.
  3. File the petition by Fax.
  4. Follow up with a phone call to the SPRE in a month to ensure that the petition is being decided. 

Employing this procedure can ensure that your petition is handled properly and may quickly lead to an issued patent. 

NOTE: Each case I handle is a little different from the last — So, don’t blindly follow the rules outlined here. 

UPDATE I: SPE changed to SPRE

UPDATE II: A long-time patent examiner gave a few more pointers.  First, the SPRE does not usually not appreciate receiving status-update telephone calls on every petition to make special — "20-25 calls a day eats up a lot of the SPRE’s time."  He would recommend using PAIR for status checks rather than calling. In addition, the Examiners are under a serious time crunch — they do not always appreciate another case being thrown on the "do this one first pile." 


How to Jump-Start your Business Method Cases: Part II

We are discussing the unusually long pendency of financial services business method patent applications (Class 705).  There are many cases where applications have been on file at the PTO for 4+ years without receiving any substantive response from the Office. 

A little more digging found the PTO’s statistics on issuances from class 705:

Class 705 1995 1996 1997 1998 1999 2000 2001 2002 2003
Applications Filed 330 584 927 1340 2821 7800 8700 6782 6000
Patents Issued 126 144 206 420 585 899 433 493 495

This table is a bit misleading because of the problem of long pendency.  For example, very few, if any, of the almost five hundred patents that issued in 2002 were among the 6,782 that were filed that year. However, the table does illustrate the point that very few financial services patents are making it through to issuance.

John Love is director of TC 1600, the center that handles class 705 patent applications.  A couple of years ago, John, along with Wynn Coggins, produced a white-paper outlining their view on "Successfully Preparing and Prosecuting a Business Method Patent Application."  The paper is a nice read and has some useful tips for avoiding unnecessary delays in prosecution.  Some highlights:

  1. If you are concerned about a lengthy pendency (we are), consider filing a Petition to Make Special under 37 CFR 1.102. (more on this later)
  2. Include a clear description of the invention.
  3. Identify any practical application of the invention.
  4. Do a search and discuss the best known prior art that is related to the invention.
  5. Ask a colleague to review the claims without reading the specification.
  6. Use "Jepson-type" claim construction. I.e., "the improvement comprising . . . "
  7. Do not hesitate to call the Technology Center Director if your questions or problems are not being resolved.

Be careful with some of John’s suggestions.  Jepson-type claims and full discussion of the prior art both come with potential risks.  A mischaractarization of the prior art, for instance, may run the risk of invalidating the patent.  However, other suggestions are great! Of course, write clearly and fully describe the invention. 

For today, I would add three more practices that help to reduce pendency:

Do not be the cause of delay: Often, delay at the patent office is due to something that the applicant failed to do.  In reviewing file histories, there were many cases where the applicant did not pay the filing fee, did not file a proper declaration, or did not promptly respond to a request from the Office. 

In class 705, you will not receive an office action on the merits when you have outstanding problems or missing parts.  Once you get those parts in, your application will likely return to the tail end of the queue.  Make it your practice to file complete applications when you file business method patent applications.

Provisional Applications May be A Waste of Time: Your application doesn’t even get to the end of the line until you file a utility application. 

Business Method Patents are Easy to Write but Hard to Prosecute: The technology is usually easy to understand but it is often difficult to get around prior art references.  And, it takes time and diligence to pursue these claims.  Bottom line — prosecution of these types of applications will be more expensive than the preparation. Have a loose enough budget to allow your attorneys to call the patent office to chat up the examiner or TC director.


How to Jump-Start your Business Method Cases: Part I

Is anyone still waiting for a first office action? If you have applied for patents that relate to financial services (business methods) then the chances are that your application has not yet felt the flow of a patent Examiner’s red ink.  A Patently-O Blog newsletter reader recently wrote in:

Would you be willing to do a post on the ridiculous pendency (even to first office action) for financial services business method patents?  We are seeing something like 42 months to first OA.  Rumors (from sources inside TC 3600) are that the allowance rate is less than 10%.  The process is totally broken!

Technology Center 3600 is the USPTO department that handles business method patents such as those classified as Class 705.

Class 705 involves Financial, Business Practice, Management, or Cost/Price Determination.  This is a "generic class" for inventions that perform data processing operations uniquely designed for processing financial data, calculating the charge for a good or service, or cryptography.

The popularity of business method patent applications exploded after the famous State Street decision and the dot-com explosion.  In response to a perceived lack of quality in issued patents (i.e., Amazon’s One-Click), the PTO instituted several measures to improve the examination to ensure that bad patents did not issue.  One measure is the ”second pair of eyes” review of all allowed patents, this second review has come at a cost—the cost of ever longer pendency of business methods patent applications.

I poked around for about five minutes on the USPTO’s Patent Application Information Retrieval (PAIR) site and was easily able to find a number of business method type applications that have been pending for +/- 4 years without seeing a single office action or substantive response from the PTO.  Essentially, the queue has outpaced the system.  Here is a table of five applications that I found with their filing date and the number of months they have been pending without receiving an examination:

Publication Number

Filing Date

Months On File Without First Office Action


February 20, 2001

47 Months


May 25, 2001

44 Months


March 19, 2001

46 Months


June 5, 2001

43 Months


December 8, 2000

49 Months

We would all like to see patents move more quickly through the system.  At the same time, no one wants patents to be passed through the system without a substantive and critical review by a skilled examiner.  The PTO’s increased budget and new leadership may help focus energy on the issue as a whole. 

However, in the short term, there are a number of strategies that may help you improve your place in the queue.  See parts II, III, and IV throughout the week for the details. I am not promising a panacea, or to release all my secrets, but I’m sure that you will find the hints helpful.

Feel free to add your comments!

To be continued …