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“Technical Arts” Rejection Eliminated for U.S. Business Method Patent Cases
On October 17, 2005, the Board of Patent Appeals and Interferences (“Board”) at the United States Patent Office eliminated the “technological arts” requirement long used by U.S. Patent Examiners to reject business method patent applications that did not claim technological means such as computers.
In the decision (Ex Parte Lundgren (Appeal No. 2003-2088)), the majority opinion stated:
Our determination is that there is currently no judicially recognized separate “technological arts” test to determine patent eligible subject matter under §101. We decline to create one. Therefore, it is apparent that the Examiner's rejection cannot be sustained.
The patent application at issue in Lundgren was directed to a method of rewarding managers based on absolute and comparative performance measures. The U.S. Examiner rejected the claims on the basis that they were “outside the technical arts, namely an economic theory expressed as a mathematical algorithm without the disclosure or suggestion of a computer, automated means, apparatus of any kind, [and] the invention as claimed is found non-statutory.”
The Board considered the decisions cited by the Examiner in support of the “technological arts” requirement, namely In re Musgrave, In re Toma, and Ex Parte Bowman. The Board concluded that there is no separate “technological arts” requirement when determining whether an invention is considered patentable under 35 U.S.C. §101, which states that U.S. patents can cover a process, machine, manufacture, or composition of matter.
Prior to Lundgren, U.S. Examiners were routinely rejecting business method applications that did not include technological means, such as computers, processors, or memory on the basis of this “technological arts” requirement. This practice prevailed even though it was not legally supported by existing case law such as the 1998 U.S. Federal Circuit Court of Appeals decision in State St. Bank & Trust Co. v. Signature Financial Group, Inc. that eliminated the business method exception and established that a process claim that applies a mathematical method is patentable if it "produces a useful, concrete and tangible result".
The State Street decision and others that followed it, made no mention of a "technological arts" requirement. The State Street decision ushered in an era that saw a vast increase in the number of business method applications filed in the United States. However, Examiners began to apply the “technological arts” requirement to reject business method applications if they did not involve technological means, even if they produced a useful, concrete and tangible result. As a result of the recent elimination of the "technological arts" requirement, United States Patent Office practice will now be more in line with the approach articulated in key decisions such as State Street.
This decision has eliminated a barrier to business method patents that was instituted by the U.S. Patent Office. Many pending applications that were rejected on this basis will now be reconsidered. Commentators agree that this result will likely lead to an increase in both the number of business method applications that are filed as well as the number of business method patents that are issued in the United States. However, it is possible that the Lundgren decision be appealed to the United States Federal Circuit and the “technological arts” requirement further considered.
For more information on business method patents, or any other intellectual property matter, please feel free to contact Sam Frost at sfrost@bereskinparr.com, or at 905.817.6100.
Ebad Rahman
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