The Software IP Report

Business Methods Claims Sua Sponte Held Patent-Eligible

By Charles Bieneman

Categories: Patent Eligibility, Software Patents, The Software IP Report

The court sua sponte held business method patent claims patent-eligible under 35 U.S.C. § 101 in Applied Innovation v. Commercial Recovery Corp., No. CV-11-00330-JPH (E.D. Wash. Aug. 14., 2013). The claims of US Patent No. 7,167,839 were directed to “[a] method for allowing selective access by a client of a collection agency to information from debt collection by the collection agency.” (Claim 1 of the ’839 patent is reproduced below.) The court thought that these claims were not abstract, and were patentable under Section 101.

The plaintiff had brought a motion for summary judgment that the claims of the ’839 patent were invalid as anticipated and obvious, but did not argue for invalidity based on unpatentable subject matter. The court nonetheless stated its intent “to grant summary judgment sua sponte on this issue because Plaintiffs failed to timely raise it and, even had they done so, the method in dispute is not abstract.” Accordingly, under Federal Rule of Civil Procedure 56(c), plaintiffs were given 10 days notice of the court’s intent to enter summary judgment on the issue of whether the ’839 patent recited patent-eligible subject matter.

In support of its conclusion that the claims of the ’839 patent were not abstract, the court cited the Federal Circuit’s recent Ultramercial decision. The court also cited the Supreme Court’s Bilski decision for the proposition “that the patent laws would be given wide scope.” There are, the court noted, only three categories of patent-ineligible subject matter: “laws of nature, physical phenomena and abstract ideas.”

Here, the court said, the disputed method was not abstract. It involved multiple steps executed by “sophisticated software.” The steps could not be performed purely as a mental process. Issued patents are presumed valid. Further, before the ’839 patent issued in 2007, the Board of Patent Appeals and Interferences had found that the claims recited patent-eligible subject matter.

As an editorial comment, the Patent Office’s issuance of this patent, and any decision concerning patent-eligible subject matter made before January 2007, came well before Bilski and its progeny, including the recent CLS Bank decision. One has to doubt that the last word has been spoken on patent-eligibility and Section 101 in this case.

Claim 1 of US 7,167,839:

1. A method for allowing selective access by a client of a collection agency to information from debt collection by the collection agency, comprising:

storing a plurality of account data items in a database, each data item being associated with an account belonging to the client of the collection agency, the plurality of data items including information relating to debt owed to the client by one or more debtors;

processing database access requests with a network server from a user process controlled by a remote user;

processing credentials to authenticate the remote user as a client representative; andprocessing data access requests in accordance with a defined access scheme such that the client representative can access only data items associated with an account belonging to the client to allow remote review and reporting of the account data items.