Patent Reform Legislation Targets Certain Business Method Patents

September 19, 2011, 05:47 PM

In addition to its provisions undercutting patents on tax avoidance strategies, the patent reform legislation just passed by Congress (S.23/H.R. 1249) — now called the America Invents Act, formerly the Patent Reform Act of 2011 — includes provisions that will make it more difficult to enforce any business method patent that claims a method or corresponding apparatus for performing data processing operations utilized in the practice, administration, or management of a financial product or service. The effect of this section of the Act when it becomes law (which is a virtual certainty) will be to help banks and other financial institutions deal with accusations of patent infringement, particularly in the area of electronic payment processing, by allowing them to institute review proceedings in the U.S. Patent and Trademark Office with regard to the patents they are accused of infringing. Whether this provision (Section 18 of the Act) is viewed as special interest legislation to help big banks, or as a well-intentioned impediment to patent troll activities, it will shift the balance in future legal battles between financial institutions and holders of patents arguably infringed by them. It is also indicative of the dual nature of the Act some genuine patent reform, but also some help for particular industries and constituencies. –Robert E. Smartschan