BUSINESS METHOD PATENTS AND U.S. FINANCIAL SERVICES

Abstract

I. INTRODUCTION A decade has passed since American courts made clear that methods of doing business could be patented. Since then, the U.S. Patent and Trademark Office (USPTO) has granted more than 12,000 of these patents; only a small share of those were obtained by financial firms. Some firms, typically those outside the industry, have aggressively asserted their patents and have had some notable successes in obtaining licensing revenues. Even central banks have been sued (Table 1). We review a number of important instances of such litigation focusing on the examples of financial exchanges and consumer payments. TABLE 1 Additional Examples of Patent Litigation Affecting Financial Services Case/Litigants/Filing Date (a) Description Suits Against Central Banks Suits Involving Payment Card Technologies Document Security Systems, Inc. DSS sued the ECB for infringing its v. European Central Bank. Case patent on a method of incorporating T-295/05 (European Ct. of First an anticounterfeiting feature into Instance August 1. 2005) bank notesb (EP 0455750B1). The ECB took legal action to invalidate the patent in nine countries. The patent was subsequently revoked in the United Kingdom and France but upheld in Germany and the Netherlands Advanced Software Design Corp. v. ASD alleges the defendants (Fiserv Federal Reserve Bank of St. and the Federal Reserve Banks of Louis. No. 4:07cv00185 CDP (E.D. Atlanta, Philadelphia, and St. Missouri. November 9. 2007) Louis) are infringing three of its patents (nos. 6.233.340: 6.549.624: and 6.792.110) on anticounterfeiting software (hat encrypts information from paper checks Suits Involving Payment Card Technologies Every Penny Counts. EPC alleges that BoA's Keep the Inc. v. Bank of America. No. Change savings product violates its 2:07-cv-42-FtM-29SPC (M.D. patent (no. 6,112,191) on a system Florida, January 25, 2007) and method to distribute excess funds from consumer transactions Every Penny Counts. Inc. v. First In a separate case. EPC has sued Data Corporation. Inc. No. First Data. American Express. 8:07-cv-1245 (M.D. Florida, July MasterCard, and Visa for 17, 2007) infringement of this patent and two others (nos. 5,621,640 and 6,876,971) Card Activation Technologies; CAT alleges that the defendants are Barnes &Noble, No. I:2007cv0l230 violating its patent (no. 6,032,859) (N.D. Illinois, March 2. 2007) on gift card activation and processing. An attempt to invalidate the patent on grounds of indetiniteness was rejected. CAT has four other suits pending against retailers Sears, OfficeMax. Walgreen's. and TJX Companies. It reached a settlement with McDonald's in 2007 H & R Block Tax Services v. H&R Block alleges that the defendant Jackson Hewitt Tax Service. No. is infringing its patents 6:2008cv00037 (E.D. Texas. (nos.7,072,862 and 7,177,829) on a February 8. 2008) system and method of linking tax refunds and government benefits to a spending card Advanced Card Technologies v. …