Business Model Patent Applications
The following publication
is the most recent information Published by the United States Patent
& Trademark Office on the Subject of Business Model Patents.
We have reproduced it here for our visitors information and convenience.
Successfully Preparing and Prosecuting
a Business Method Patent Application
Presented at AIPLA Spring 2001
By John J. Love Wynn W. Coggins
I. EXECUTIVE SUMMARY
There has recently been a marked increase in public attention to
the operations of the United States Patent and Trademark Office
(USPTO), and specifically, areas that examine patent applications
related to business method inventions. There has been some confusion,
however, in the patent community over what constitutes a business
method claim. “Business method” is a generic term that
has been used by many to describe various types of process claims.
The Federal Circuit has not yet defined what it is that specifically
characterizes a business method claim and separates it from other
process claims. The Court has, however, stated that claims drawn
to a method of doing business should not be categorized as a “business
method” claim, instead they should be treated like any other
process claim. State Street Bank & Trust Co. v. Signature Financial
Group, Inc. 47 USPQ2d 1596, 1604 (Fed, Cir. 1998).
The one area in particular that receives the bulk of the public
attention related to business method-type applications is the workgroup
responsible for examining patent applications in automated business
data processing technologies, U.S. Class 705. This area has experienced
substantial growth recently in response to rapidly developing technologies
related to e-commerce and the Internet. The majority of business
method related applications are filed in this area since the methods
claimed in these applications are somehow related to financial data
processing. However, not all business method claims are classified
in Class 705. For example, methods of teaching are classified in
Class 434, Education and Demonstration. Methods of playing games
are classified in Class 273, Amusement Devices, Games. Methods of
improving crop yields are classified in Class 47, Plant Husbandry.
These are only a few examples. Other process claims which may be
labeled a “business method” are classified and examined
according to their technology.
On March 29, 2000, the USPTO announced an Action Plan for business
method patents to improve the quality of the examination process
in technologies related to electronic commerce and business methods.
These initiatives have provided a forum through which mutual concerns,
problems and possible solutions are being discussed, and USPTO operational
efforts in this technology area are being shared. Feedback on prior
art resources is also being gathered and input on expanding non-patent
literature (NPL) information collections and databases is being
solicited. There has been active discussion on these initiatives
since their inception, and they will not be the focus of this paper.
Instead, this paper defines the specific technologies that are
examined in Technology Center 2100, explains the specific business
method topics that are examined in Class 705, discusses the definition
of Class 705, and gives guidance on successfully preparing and prosecuting
a business method application classified in Class 705. Back
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II. KNOW THE ORGANIZATION
As with any large group or organization, knowing the right contact
point is critical to getting questions answered and problems resolved.
Table 1 illustrates how Technology Center (TC) 2100 is divided by
technology and assigns the individual TC Directors to their areas
of responsibility. Table 2 illustrates how workgroup 2160 ("business
methods") is divided by technology and assigns the individual
Supervisory Patent Examiners (SPEs) to their areas of responsibility.
Technology Center 2100Computer Architecture, Software and Electronic
Peggy Focarino - Director (703) 306-5484
¨ Workgroup 2120 - Miscellaneous Computer Applications
¨ Workgroup 2170 - Graphical User Interfaces
John Love - Director (703) 306-5484
¨ Workgroup 2130 - Cryptography, Security
¨ Workgroup 2160 - Electronic Commerce
Allen MacDonald - Director (703)305-9700
¨ Workgroup 2150 - Computer Networks
¨ Workgroup 2180 - Computer Architecture
Group 2160 - Class 705
¨ AU 2161 - Business Cryptography/Postage Metering
SPE - Jim Trammell (703) 305-9768
¨ AU 2162 - Incentive Programs/Coupons
SPE - Jim Trammell (703) 305-9768
¨ AU 2163 - Operations Research
SPE - Tariq Hafiz (703)305-9643
¨ AU 2164 - Finance & Banking
SPE - Vincent Millin (703) 308-1065
¨ AU 2165 - E-shopping
SPE - Vincent Millin (703) 308-1065
¨ AU 2166 - Health Care/Insurance
SPE - Tariq Hafiz (703)305-9643
¨ AU 2167 - Point of sale/Inventory/Accounting
SPE - Robert Olszewski (703)308-5183
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III. CLASS 705 - DEFINITION
The title of Class 705 is "Data processing: financial,
business practice, management, or cost/price determination."
The definition of Class 705 is "machines and methods for performing
data processing or calculation operations in the: 1) practice, administration
or management of an enterprise; 2) processing of financial data;
or 3) determination of the charge for goods or services."
Thus, only computer-implemented processes related to e-commerce,
the Internet and data processing involving finance, business practices,
management or cost/price determination are classified in Class 705.
All other applications that may be labeled a "business method-type
application" will be classified, assigned and examined according
to their technology.
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IV. STEPS TO CONSIDER PRIOR TO FILING THE APPLICATION
If pendancy is an issue, an applicant may consider filing a
Petition to Make Special under 37 CFR 1.102. See MPEP 708.02. While
new applications are not ordinarily taken up for examination out
of the order of their effective United States filing dates, certain
exceptions can be made by way of petition under 37 CFR 1.102, which
may be applicable to applications classified in Class 705. For example,
if infringement is an issue or accelerated examination is desired,
applicant may petition the Office to grant special status for advancement
of the application under 37 CFR 1.102. See MPEP 708.02 for examples
of other instances in which an application may qualify for special
Applicant is encouraged to conduct a preliminary search and file
an Information Disclosure Statement to comply with their duty of
disclosure and advance prosecution of patent applications not only
in Class 705, but in all other Classes at the USPTO as well. In
doing so, avoid submitting irrelevant documents and only marginally
pertinent information. Also, avoid lengthy submissions if possible,
but if they are necessary, highlight the most pertinent information.
Additionally, don't assume that the examiner of a particular application
is aware of other applications belonging to the same applicant or
assignee. It would be helpful to identify such applications to the
examiner to streamline the examination process. Applicant can avoid
further time delays by ensuring that prior art or other pertinent
information in one application is cited to the examiner in other
related applications. See MPEP Chapter 2000 for more information
on applicant's duty to disclose.
When submitting a foreign origin specification, it is recommended
that applicant file a preliminary amendment that complies with USPTO
examination practice. Quite often, literal translations of foreign
applications are filed that do not comply with U.S. patent examination
practice and procedure. This can lead to many problems concerning
the adequacy of the disclosure and the written description requirement.
Additionally, poorly drafted original claims can limit applicant
to only one opportunity to amend by right during prosecution in
the event that the second Office Action on the merits is made final.
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V. APPLICATION CONTENTS - THE SPECIFICATION
Identify the Practical Application
The claimed invention as a whole must accomplish a practical application.
It must produce a "useful, concrete and tangible result."
See State Street Bank & Trust v. Signature Financial Group Inc.,
149 F.3d 1368, 47 USPQ2d 1596 (Fed. Cir. 1998). The purpose of this
requirement is to limit patent protection to inventions that possess
a certain level of "real world" value, as opposed to subject
matter that represents nothing more than an idea or concept, or
is simply a staring point for future investigation or research.
See MPEP 2106. The mere presence of a mathematical algorithm in
a claim is not grounds for a rejection under 35 U.S.C. 101. Instead,
an examiner must review the claims to determine if the claimed invention
produces a "useful, concrete and tangible result." If
the answer is yes, then the claimed invention has a practical application
and satisfies the utility requirement of 35 U.S.C. 101. Thus, it
is vitally important that the specification is complete and clearly
identifies any practical application for the claimed invention.
The applicant is in the best position to explain why an invention
is believed useful. Applicant should in the specification:
1. include a clear description of the invention;
2. describe the problem being solved;
3. identify the best mode of the invention;
4. clearly identify any practical application asserted for the invention
by identifying how the claimed invention produces a “useful,
concrete and tangible result” (See State Street);
5. as noted earlier, discuss the best known prior art that is related
to the invention.
Note: Items 1 and 3 are requirements of 35 U.S.C. 112. These are
tips for avoiding unnecessary delays in examination.
Written Description Requirement
Applicant must be able to convey with reasonable clarity to one
skilled in the art that applicant had possession of the claimed
invention at the time the application was filed. Possession may
be evidenced by actual reduction to practice, by clear depiction
in detailed drawings, or through written description describing
sufficient relevant identifying characteristics. Note here that
what is conventional or well known to one skilled in the art need
not be disclosed in detail. This is another example of how to avoid
unnecessary examination delays in both Class 705 and throughout
Patent applicants can assist the Office by preparing applications
that clearly set forth the following aspects of a computer-related
¨ clearly identify what the programmed computer does when it
performs the processes dictated by the software, i.e. identify the
functionality of the programmed computer.
¨ identify how the computer is to be configured to provide
that functionality, i.e. identify what elements constitute the programmed
computer and identify how those elements are configured and interrelate
to provide the specified functionality.
¨ if applicable, identify the relationship of the programmed
computer to other subject matter outside the computer that constitutes
the invention i.e. explain how the computer is to be integrated
with other elements that are a part of the invention such as machines,
devices and materials; or explain how the computer is to be used
in a claimed process.
¨ Where software constitutes a part of the best mode of carrying
out the invention, a description of such best mode is satisfied
by a disclosure of the functions of the software. However charts
or source code listings are not a requirement for adequately disclosing
the functions of the software. (Fonar Corp. v. General Electric
Co., 107 F. 3d 1543, 1549, 41 USPQ 2d 1801, 1805 (Fed Cir. 1997)).
Note: Disclosure of a software program is not necessary to satisfy
the best mode requirement where the functions of the software program
were readily apparent from the specification and one skilled in
the art could generate the necessary software program to implement
the disclosed functions.
When rendering a patentability determination, the USPTO may not
disregard structure disclosed in the specification that corresponds
to means (or step) plus function language. In re Donaldson Co.,16
F.3d 1189, 29 USPQ2d 1845 (Fed. Cir. 1994). Thus, if means (or step)
plus function limitations are recited in the claims, applicant must
clearly identify in the specification the corresponding structure,
material, or acts for performing the function. A means (or step)
plus function limitation should be interpreted in a manner consistent
with the specification disclosure. If the specification defines
what is meant by the limitation for the purposes of the claimed
invention, the examiner should interpret the limitation as having
that meaning and its equivalent. If no definition is provided, judgment
will be exercised in determining the scope of the limitation. See,
e.g. B. Braun Medical, Inc. v. Abbott Labs., 124 F.3d 1419, 1424,
43 USPQ2d 1896, 1900 (Fed. Cir. 1997). Thus, applicant is encouraged
to include or exclude from the means (or step) plus function language
what is desired. Again, phrases and terms used in the claims should
be clearly supported by the specification, and with computer-related
inventions, conventional programming need not be supplied - use
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VI. COMPLYING WITH 35 U.S.C. 101
35 U.S.C. 101 reads:“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 therefor,
subject to the conditions and requirements of this title.”
The Supreme Court has stated that Congress intended statutory subject
matter to “include anything under the sun that is made by man.”
See Diamond v. Chakrabarty, 447 U.S. 303, 309 (1980). The Supreme
Court has also specifically noted exceptions to this and identified
three categories of unpatentable subject matter. They are: “laws
of nature, natural phenomena, and abstract ideas.” See Diamond
v. Diehr, 450 U.S. 175, 185 (1981). Further, the Supreme Court has
held that mathematical algorithms per se are not patentable subject
matter to the extent that they are merely abstract ideas. See Diamond
v. Diehr. In Diehr, the Court explained further that certain types
of mathematical subject matter, standing alone, represent nothing
more than abstract ideas until reduced to some type of practical
application, i.e., “a useful, concrete and tangible result.”
See State Street, 149 F.3d at 1373, 47 USPQ2d at 1601-02.
Thus, practical application is achieved when the claimed subject
matter produces a useful, concrete and tangible result. This is
the test for identifying statutory subject matter not only in computer-related
inventions classified in Class 705, but throughout the Office. However,
once identified to be statutory, inventions are still subject to
the patentability requirements of 35 U.S.C 102, 103 and 112.
Note that an applicant may assert more than one practical application,
but only one is necessary to satisfy the utility requirement under
35 U.S.C. 101.
Claims define non-statutory processes if they:
¨ Consist solely of mathematical operations without some claimed
¨ Simply manipulate abstract ideas without some claimed practical
application e.g. the court held that a method of conducting a real
estate bidding process was a mere manipulation of an abstract idea
In re Schrader, 22 F.3d 290, 293-94, 30 USPQ2d 1455, 1458-59 (Fed.
Cir. 1994). The Court also held that a method for controlling the
motion of objects and machines is simply a manipulation of abstract
ideas; and the steps of "locating" a medial axis and "creating"
a bubble hierarchy describes nothing more than the manipulation
of basic mathematical constructs. In re Warmerdam, 33 F.3d 1354,
1361-62, 31 USPQ2d 1754, 1760 (Fed. Cir.).
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VII. APPLICATION CONTENTS - THE CLAIMS
Office personnel are to give claims their broadest reasonable
interpretation in light of the supporting disclosure. In re Morris,
127 F.3d 1048, 1054-55, 44 USPQ2d 1023, 1027-28 (Fed. Cir. 1997).
Limitations appearing in the specification but not recited in the
claims are not read into the claim. So be specific. Each claim limitation
must be expressly, implicitly, or inherently supported in the originally
filed disclosure, and each claim must include all elements which
applicant has described as essential or critical.
Claim Drafting Suggestions
¨ Use “Jepson-type” claim construction when appropriate
i.e., "the improvement comprising
¨ Limit claims to a reasonable number, drawn to a single invention
¨ Make sure claims have proper antecedence in the specification
¨ Start with broad claims and then narrow them
¨ Range within a range normally raises 112, 2nd paragraph issues
¨ If it is desired that patentability be based on specific ranges,
must have a showing of criticality
¨ Be aware of 101 issues:
· data streams per se (not patentable per se)
· non functional data (not patentable per se)
¨ Ask a colleague to review claims without reading the specification
Be careful with:
¨ statements of intended use
¨ “able” or “adapted for” clauses
¨ “whereby” and “wherein” clauses
These phrases may raise a question as to the limiting effect of
the language in the claim i.e., the scope of the claim may be unclear.
See MPEP 2173.
Treatment of Means or Step Plus Function
There are three requirements for a claim limitation to invoke 35
U.S.C. 112, 6:
(1) Claim limitation must use the phrase “means for” or
(2) The “means for” or “step for” must be modified
by functional language; and
(3) The phrase “means for” or “step for” must
not be modified by sufficient structure, material, or acts for achieving
the specified function.
Note that the use of the phrase “step for” in a method
claim raises a presumption that 35 U.S.C. 112, 6 applies, whereas,
use of the word “step” by itself or the phrase “step
of” does not invoke a presumption that 35 U.S.C. 112, 6 applies.
Examining Procedure under 35 U.S./C. 112, 6th Paragraph
The Federal Circuit recognized that it is important to retain the
principle that claim language should be given its broadest reasonable
interpretation . In re Donaldson, 16 F.3d 1189, 29 USPQ 2d 1845
(Fed. Cir. 1994). Thus, the application of a prior art reference
to a means or step plus function limitation requires that the prior
art element perform the identical function specified in the claim.
However, if a prior art reference teaches identity of function to
that specified in the claim, then under Donaldson an examiner carries
the initial burden of proof for showing that the prior art structure
or step is the same as or equivalent to the structure, material,
or acts described in the specification which have been identified
as corresponding to the claimed means or step plus function. See
MPEP 2182. Additionally, means (or step) plus function limitations
will be interpreted in a manner consistent with the specification.
So it is important that consistency is maintained between the claims
and the specification disclosure.
Making a Prima facie Case
If the examiner finds that a prior art element (1) performs the
function specified in the claim, (2) is not excluded by any explicit
definition provided in the specification for an equivalent, and
(3) is an equivalent of the means-(or step-) plus-function limitation,
the examiner should provide an explanation and rationale in the
Office action as to why the prior art element is an equivalent.
Factors that will support a conclusion that the prior art element
is an equivalent are:
(1) the prior art element performs the identical function specified
in the claim in substantially the same way, and produces substantially
the same results as the corresponding element disclosed in the specification
(Kemco Sales, Inc. v. Control Papers Co., 54 USPQ2d 1308, 1315 (Fed.
Cir. 2000); Odetics, Inc. v. Storage Tech. Corp., 185 F.3d 1259,
1267, 51 USPQ2d 1225, 1229-30 (Fed. Cir. 1999)).
(2) a person of ordinary skill in the art would have recognized
the interchangeability of the element shown in the prior art for
the corresponding element disclosed in the specification (Al-Site
Corp. v. VSI Int’l, Inc., 174 F.3d 1308, 1316, 50 USPQ2d 1161,
1165 (Fed. Cir. 1999); Chiuminatta Concrete Concepts, Inc. v. Cardinal
Indus., Inc., 145 F.3d 1303, 1309, 46 USPQ2d 1752, 1757 (Fed. Cir.
1998); Lockheed Aircraft Corp. v. United States, 553 F.2d 69, 83,
193 USPQ 449, 461 (Ct. Cl. 1977)).
(3) there are insubstantial differences between the prior art element
and the corresponding element disclosed in the specification (IMS
Technology, Inc. v. Haas Automation, Inc., 206 F.3d 1422, 1436,
54 USPQ2d 1129, 1138 (Fed. Cir. 2000); Valmont Indus. v. Reinke
Mfg. Co., 983 F.2d 1039, 1043, 25 USPQ2d 1451, 1455 (Fed. Cir. 1993)).
(4) the prior art element is a structural equivalent of the corresponding
element disclosed in the specification (In re Bond, 910 F.2d 831,
833, 15 USPQ2d 1566, 1568 (Fed. Cir. 1990)).
A showing of at least one of the above-noted factors by the examiner
should be sufficient to support a conclusion that the prior art
element is an equivalent. The examiner should then conclude that
the claimed limitation is met by the prior art element. In addition
to the conclusion that the prior art element is an equivalent, examiners
should also demonstrate, where appropriate, why it would have been
obvious to one of ordinary skill in the art at the time of the invention
to substitute applicant’s described structure, material, or
acts for that described in the prior art reference. See In re Brown,
459 F.2d 531, 535, 173 USPQ 685, 688 (CCPA 1972). The burden then
shifts to applicant to show that the prior art element is not an
equivalent of the structure, material, or acts disclosed in the
application. See In re Mulder, 716 F.2d 1542, 1549, 219 USPQ 189,
196 (Fed. Cir. 1983).
Related Issues under 35 U.S.C. 112, First and Second Paragraphs
Invocation of 35 U.S.C. 112, sixth paragraph does not exempt applicant
from compliance with 35 U.S.C. 112, first and second paragraphs.
While 35 U,S.C. 112 sixth paragraph does permit a certain form of
claim limitation, it does not create an exception to the description,
enablement or best mode requirements of the first paragraph or the
definiteness requirement of the second paragraph of 35 U.S.C. 112.
In re Knowlton, 481 F.2d 1357, 1366, 178 USPQ 486, 493 (CCPA 1973).
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VIII. TIPS TO STREAMLINE THE PROCESS
It is important that the lines of communication between the
USPTO and the applicant are open and productive. Thus, don’t
hesitate to contact the examiner for an interview at any time after
first action. Also, with CPAs and RCEs, an interview before first
action may be helpful. Contact the SPE with questions or problems.
Additionally, don't hesitate to call the Technology Center Director
of a particular area if questions or problems are not being resolved.
Should you wish to discuss your idea in person, please feel free
to contact Donn Harms
at our Office at (858) 509-1400 or by using our convenient
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