In 2014, I had occasion, together with a client, to visit a US patent firm regarding the question of enforcing a patent issued in the US. The patent was a so-called business method invention, and had been also granted in Japan. Global eligibility for business method inventions and understanding the country -specific differences is of great importance.
The client wanted to do licensing business in the United States, so the purpose of the visit was to discuss with US patent attorneys how to enforce the right. Frankly speaking, the purpose of the licensing business was to look for companies that might be infringing patents, send warning letters based on patent rights, and conduct licensing negotiations.
Before the visit, I informed the patent attorney of the patent number, and the purpose and requested a preliminary review, but I was surprised when he first said, “It is better not to enforce the patent rights”. When I asked why, he said, the Supreme Court has just rendered a very severe decision on business method inventions, it was said to be “the Alice decision.” When enforced, it will be disadvantageous to the patentee, including the invalidity of the patent.” The decision was the decision which was rendered by the CAFC (U.S. Court of Appeals for the Federal Circuit hears all appeals involving patent law from the courts of first instance and the PTO) about Alice Corporation vs CLS Bank International case.
I was truly struck by what I learned at that time. I did not know about the Alice decision, which was just rendered in June 2014 – as mentioned, I visited the United States for this case shortly after.
After that, I encountered the reference to the Alice decision many times when handling U.S. cases, and it became clear to me that, indeed, “times have changed.”
I forgot about the case until I recently I am once again involved, and experiencing its impact in a case where the above-noted client is currently filing in the U.S. Specifically, Article 101 (patent eligibility/invention eligibility) of the U.S.Code, as well as Article 102 (novelty) and Article 103 (difficulty) of the USC are included in the grounds for refusal of the US application. Therefore, it reminded me of the Alice decision.
Section 101 of the USC stipulates that “a method, machine, manufacture or composition of matter shall be patent eligible.” Patent eligibility can be granted by judicial precedent. We note that abstract inventions including business method are not stipulated.
On the other hand, in the Japanese Patent Law, due to revisions of the law, Article 2, Paragraph 3 of the Patent Law, which stipulates invention eligibility, clearly states that “programs, etc. are also considered inventions.” Therefore, regarding the corresponding Japanese patent application, there is no problem with the feasibility of the patent: the novelty and inventive step are examined, and the discussion of comparison with the cited documents is underway.
Regarding the rejection of invention eligibility (patent eligibility) of the US application, we are responding to the rejection by changing to a device invention – by amendment. Issuing this notice of refusal with respect to the case pointed out the fact that USPTO practice is still under the influence of the Alice decision.
Globally, business method inventions were first permitted in the United States in 1998, due to the “State Street Bank case” decision. After that, business method inventions were gradually permitted as subject matter for patents in Japan.
Currently, the JPO has enacted “Examination Standards for Computer Software-Related Inventions”, and it has clearly stated for eligibility of the invention, the claim is to be expressed as “the software is realized through hardware resources”.
In contrast, I recall that once in the U.S., a very wide range of business method invention patents was granted: I actually heard that a patent was granted for an invention called “how to swing a swing.” This patent was filed by a US Patent Attorney for his child as a birthday gift.
Around the time this U.S. patent was issued, I attended the WIPO Substantive Patent Law Treaty (SPLT) meeting as a representative of the Japan Patent Attorneys Association. There was intervention by the U.S. delegates that “the provision of SPLT should broadly recognize patent eligibility for software and business-related inventions”. One representative of a developing country said in response to the intervention by the U.S”.
On hearing this, I was reminded again of the U.S. patent situation noted above. The Alice decision seems to be a reversal of the situation, and I have again realized deeply that times had changed.
Currently, the JPO has come to accept the eligibility of business method inventions more broadly than the USPO. However, there is information that the patent invalidity rate based on the USC 101 has declined due to the advent of the decision to change the trend of the Alice judgment in the U.S. So, there is the possibility that this situation will change.
In Japan, the patent-granting rate is generally about 70%, whereas the rate for business method inventions is about 80%. We are able to say that, in Japan, now is a good time to obtain business method inventions.
Kimura’s recent Japan IP News pieces are available here.
Global eligibility for business method inventions and understanding the country -specific differences is of great importance.
