Business Method Patents Survive Alice at Federal Circuit

A recent Federal Circuit case demonstrates that reports of the death of business method patents may be exaggerated, even if not greatly. In Trading Technologies Int’l., Inc. v. CQG, Inc., 2016-1616 (Fed. Cir. Jan 18, 2017) Judge Newman, joined by Judges O’Malley and Wallach, affirmed a district court holding that patent claims directed to “a method and system for the electronic trading of stocks, bonds, futures, options and similar products” are patent-eligible under 35 U.S.C. § 101.

The patents-in-suit, U.S. Patent Nos. 6,772,132 and 6,766,304 shared a common specification; their claims, including claim 1 of the ’304 patent, which was discussed as representative, can be seen at the foregoing links. The court succinctly described the patents as follows:

The patents are for “[a] method and system for reducing the time it takes for a trader to place a trade when electronically trading on an exchange, thus increasing the likelihood that the trader will have orders filled at desirable prices and quantities.” ‘132 patent, Abstract; ‘304 patent, Abstract. The patents describe a trading system in which a graphical user interface “display[s] the market depth of a commodity traded in a market, including a dynamic display for a plurality of bids and for a plurality of asks in the market for the commodity and a static dis-play of prices corresponding to the plurality of bids and asks.” ‘132 patent col. 3, ll. 11-16; ‘304 patent col. 3, ll. 15-20. In the patented system bid and asked prices are displayed dynamically along the static display, and the system pairs orders with the static display of prices and prevents order entry at a changed price.

Applying the first step in the Alice patent-eligibility test, the district court had rejected arguments that the claims were directed to an abstract idea. Instead, the district court had found the patent claims directed to improvements in graphical user interfaces [GUIs] without a non-electronic analog, and to “recite more than” simply selecting and/or displaying data on the GUI.  The Federal Circuit panel here agreed that “the graphical user interface system of these two patents is not an idea that has long existed” because what was claimed was “a specific, structured graphical user interface paired with a prescribed functionality directly related to the [GUI’s] structure that is addressed to and resolved a specifically identified problem in the prior state-of-the-art.”

The Federal Circuit panel here also agreed with the district court’s alternative findings, under step 2 of the Alice test, that the claims recitation of a “static price index” was “an inventive concept that allows traders to more efficiently and accurately place trades using this electronic trading system.” Accordingly, the ’132 and ’304 patent claims also would have survived under Alice step 2.

Lessons for Practice

As I noted in writing about a recent District Court case in which a business method patent was held ineligible under Section 101, many judges, both at the District Court and Federal Circuit level, routinely treat business methods as patent-ineligible. But not all judges do so, as this opinion shows. The court designated this opinion as non-precedential, but nonetheless, I suspect the PTO will see it oft-cited. The bottom line is that Section 101 jurisprudence remains fairly gray (maybe not charcoal, but close enough), and for every invalidation of a business method patent, there are enough cases like this one to keep hope alive for applicants and patent owners.

And finally, note the members of this panel. Judge Newman, of course, has been outspoken in her skepticism about patent-eligibility challenges before, during, and after Alice. Other panels may not have reached a similar result, or at least may not have done so unanimously.

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