Proposes Expansion of USPTO's Business Method Patent Challenge Proceeding
As I pointed
out last week, Congress is considering fixes to the U.S patent
system are designed to combat the patent troll problem. On May 7, S.866
or the "Patent Quality Improvement Act" was introduced by Senator
Charles Schumer (D-NY) to amend Sec. 18 of the recently passed America Invents
Act (AIA). The Bill proposes to remove the 8-year sunset provision of the
Transitional Program for Covered Business Method (CBM) Patents so that it
becomes permanent. Additionally, the Bill proposes to remove the language "a
financial product or" from the standing definition. In its place, the bill
proposes "an enterprise, product, or." The change would effectively make clear
that any e-commerce patent, even if not related to finances per se,
is subject to a CBM challenge. (Note that the USPTO
has been sued very recently on the importance of this "financial" component of
The Bill essentially seeks to codify Senator
Schumer's commentary provided to the USPTO last year on the appropriate scope
of a CBM. In his
earlier comments to the USPTO, the Senator urged the USPTO to take an
expansive read of a covered business method patent such that e-commerce and
software patents would be covered.
As I have pointed out in the past, CBM challenges are
especially lethal to patent trolls. While the above fix will not apply
to trolls excepted under the "technological invention" component of
the CBM definition, it would almost certainly devastate the business model
for most e-commerce and software patent trolls. Without the leverage of
the high cost of litigation to force settlements, and with the far
less expensive and challenger friendly proceedings of the USPTO, contingency
based legal representation becomes a very dicey proposition.
I expect that this legislation will garner wide support
and become law in the near term.
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