Another Problematic Provision in the America Invents Act Targets Business Method Patents

Submitted by patentadmin on Mon, 07/11/2011 - 13:28

July 11, 2011 – Though it didn’t get as much press as the “first to invent” change, Section 18 of the Senate version of the America Invents Act (S. 23) – a provision making it easier for the banking industry to invalidate business method patents – fueled speculation that Wall Street had bought a favor from Congress.

The provision was introduced by Charles Schumer (D-NY) as a result of the litigation headaches his big bank constituents were suffering from a company called DataTreasury Corporation.

Representative Aaron Schock (R-IL), who tried to strike the provision, said it would allow “the financial services industry to challenge patents that have already been found valid both at the U.S. Patent and Trade Office and in Federal Court.”

Critics of the provision worry that it is too broad, as it covers patents related to “a financial product or service” as well as “corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service.” It may end up affecting not only DataTreasury, but other companies in the banking industry and possibly some high tech businesses as well.

F. Scott Kieff, a professor at George Washington University Law School, senior fellow at the Hoover Institution at Stanford and a consultant for DataTreasury, wrote in a Hoover Institution journal about his concern that the law might have broader implications than many realize.

“When word gets out that intellectual property rights are not being taken seriously in the U.S., especially for any class of patents that can be a convenient political target of powerful, well-heeled interest groups like banks," Kieff said, "our voracious international competitors will pounce.”