A Changing trend of the USPTO in rejecting patent applications in the domain of finance art units has become something of concern to US patent attorneys. One can say “Everything under the Sun is now clearly not patentable in the US”. Now and then it has been reported that the USPTO usually does not consider any improvement to a computer-implemented financial process anything more than an abstract idea, and that too without even paying heed to the underlying novelty and sophistication it possesses. Following the Alice test laid down in a landmark decision of the US Supreme court in Alice v. CLS Bank, it was expected that the decision would put an end to the confusion and debate on patentable subject matter, but the extent to which the desired objective has been attained is yet another debatable issue.
This debate has once again gained ears in response to a recent judgment of the New York federal court in the case of Island Intellectual Property LLC v. Stonecastle Cash Management LLC et al. The dispute in this case pertained to the infringement of patents (US 8719157, US 8359267, US 8712911, US 8150766, and US 8655689) and misappropriation of trade secrets.
The aforesaid patents relate to the financial subject; the first four patents deal with systems and methods of investing public deposits, while the fifth one deals with system, method, and program product for modeling fund movements. The plaintiff accused the defendant of infringing the patent rights by offering federally insured cash accounts to local government entities. The Alice test was applied by the court, wherein the first step involved checking if the subject matter of the patent falls in any of the exceptions as mentioned under Section 101 of the US code 35. As a result, the first four patents were found to have failed the test. Therefore, the court in its ruling held that the patents were essentially directed to an abstract idea of using a multibank depository program to stay within insurance limits and accordingly refused the contentions of the plaintiff. The court reiterated the decision in the Alice case that the idea of dividing and transferring funds to stay within insurance limits is a fundamental economic practice and doesn’t qualify to be patented. Further, the fifth patent, though found to be not falling under any of the exceptions, failed the second step which involved checking if the additional elements added to it made it inventive. Particularly, as per the court’s findings, the additional elements were a mere verbose recitation of otherwise quotidian and manually executable bookkeeping practices. In simple words, it was considered as automating of manual bookkeeping process and so devoid of any inventive concept at all. What added to the misfortune of the plaintiff was the court’s finding that the trade secret was in fact not a secret.
An important development post Alice decision is the application of a big NO for computer-related inventions. The exception of “abstract idea” has now brought several other subjects within its ambit. and financial patents are no exception to the rule. As a consequence, these patents are now failing almost every time they take the Alice Test.
The absence of any clear guideline for the term “abstract” in the first step of the test is disturbing the applicants. The action of the court invalidating a number of patents by holding them to be a mere abstract idea implemented in a conventional way and without even embracing any inventive concept clearly seems to be an effort to restrict almost every computer-implemented invention from being protected as patents.
Not only this, but the above motion is also somewhere indicating an adverse retrospective effect of the Alice test on the patents granted before this test was brought into existence. As we can see, the Alice judgement came somewhere in June 2014 and has acted as a barrier to the patentability of applications received post the judgement. However, now the applications granted before the judgment are also being affected. But, the actual effect of the Alice test on these pre-Alice granted patents is yet to be seen.
Let’s see if Alice actually forces other patents to vacate their wonderland.