Wynn Coggins Director 3620, 3680B, 3690 (Business Methods) 3620 Workgroup

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1 Business Methods XI INTELLECTUAL PROPERTY AND TECHNOLOGY COMMERCIALIZATION MEETING October 20-22, 22, Rio Othon Palace Hotel, Copacabana, Rio de Janeiro, Brazil.

2 Group 3620, 3680B, 3690 Class 705 Wynn Coggins Director 3620, 3680B, 3690 (Business Methods) 3620 Workgroup AU Business Cryptography, Andrew Fischer, SPE AU Incentive Programs/Coupons, Eric Stamber, SPE AU Operations Research/Voting, Beth Van Doren, Acting SPE AU E-shopping, Jeffrey Smith, SPE AU Health Care/Insurance, Christopher (Luke) Gilligan AU Point-of-Sale/Inventory/Accounting, of F. Ryan Zeender, SPE AU Cost/Price, Reservations, Transportation John Hayes, SPE AU 3629 Business Processing, John Weiss, SPE

3 Group 3620, 3680B, 3690 Class 705 Wynn Coggins Director 3620, 3680B, 3690 (Business Methods) 3680B Workgroup AU Point-of-Sale/Inventory/Accounting, Matthew Gart, SPE AU Incentive Programs/Coupons, Vacant, SPE AU Business Processing, Janice Mooneyham, SPE

4 Group 3620, 3680B, 3690 Class 705 Wynn Coggins Director 3620, 3680B, 3690 (Business Methods) 3690 Workgroup (Finance and Banking) AU Finance & Banking, Alexander Kalinowski, SPE AU Finance & Banking, Kambiz Abdi, SPE AU Finance & Banking, James (Jay) Kramer, SPE AU Finance & Banking, James Trammell, SPE AU 3696 Finance & Banking, Tom Dixon, SPE

5 Search Experts in Class Workgroup 705/50-79 AU 3621 Jalatee Worjloh KNX 5A71 705/14 AU 3622 Yehdega Retta KNX 5D79 705/7-12 AU 3623 C. Michelle Tarae KNX 5A29 705/ 26, 27 AU 3625 William Allen KNX 5C25 705/2-4 AU 3626 Robert Morgan KNX 5A35 705/15-25, AU 3627 F. Ryan Zeender KNX 5D39 705/5-6, 13, AU 3628 Igor Borissov KNX 5D15 705/1, 500 AU 3629 Traci Casler KNX 5D85

6 Search Experts in Class B Workgroup 705/15-25, AU 3687 Elaine Gort KNX 5D31 705/14 AU 3688 Raquel lalvarez KNX 5D79 705/1, 80, 500 AU 3689 Dennis Ruhl KNX 5D89

7 Search Experts in Class Workgroup (Finance and Banking) 705/35, AU 3691 Narayanswamy Subramanian KNX 5A51 705/35, AU 3692 Susanna Meinecke-Diaz KNX 5A59 705/35, AU 3693 Stefanos Karmis KNX 4A35 705/35, AU 3694 Mary Cheung KNX 5A79 705/35, AU 3696 Ella Colbert KNX 4A21

8 Filing Trends in Class 705 Business Methods Filing History Applic cations Filed Fiscal Year Note: Filings in FY indicate response to the internet bubble.

9 Pendency in Class 705 (At Mid-year 2008) Pendency to First Action = 40 months Down from 44 months at mid year 2007! Direct result of hiring efforts. Pendency to Issue/Abandonment = 56 months Up from 54 months at mid year 2007 The number of refiles (RCEs) in 705 contributed to this increase. Approximately 25% of filings in 2007 were RCEs.

10 Allowance Rate Trends in Class 705 FY 2001 = 45% FY 2002 = 44% FY 2003 = 16% FY 2004 = 11% FY 2005 = 11% FY 2006 = 19% FY 2007 = 22% Mid year 2008 = 17%

11 Allowance Rate Trends in Class 705 Note: an increase in the allowance rate from FY 2004 to mid year 2008 is significant. We have gotten through h the bubble cases that were filed in FY 2000 that contained very broad claims that were not allowable. The cases the examiners are now working on have noticeably narrower claims.

12 Assignees for Patent Grants in Class 705 ( ) 2006) IBM = 201 PITNEY-BOWES = 98 FUJITSU = 52 NCR = 48 HP = 42 SONY = 42 HITACHI =41 WALKER DIGITAL = 41 MICROSOFT = 36 CONTENTGUARD = 33 MATSUSHITA ELECTRIC = 30

13 Examiner Growth Year FY 01 FY 02 FY 03 FY 04 FY 05 FY 06_ FY_ 07 FY 08* Number of Examiners Patents ,191 1,330 Issued Allowance 45% 44% 16% 11% 11% 19% 22% 17% Rate *Mid-year data

14 Growth in Business Methods We will be adding 9 new art units in FY new art units are already in place 5 still to be formed. For a total of 21 art units dedicated to business methods. 77 examiners in FY 01 has grown to 300 in FY 08.

15 Business Methods Web Site Examples of what is posted: Filings and Issue Data ( ) Updated annually Business methods Allowance Checklist Very helpful for applicants Indicates what examiners must verify prior to allowing an application Guidelines on when an electronic document is considered prior art. Overview of Interim Guidelines for Subject Matter Eligibility 103 rejection examples Class 705 core databases and classification definitions Revised MPEP 2106 Examination guidelines for business methods The paper Successfully Preparing and Prosecuting a Business Method patent Application

16 Quality Enhanced Technical Training We have worked aggressively to identify examiner educational needs in the business method areas, and we have solicited Industry to provide technical training on business methodrelated topics. Examples of our recent participating organizations: ABA Section of Taxation ABA Section of Real Property, Probate, and Trust New York State Bar Tax Section IRS CheckFree Travelers Insurance The Federal Reserve Sensory Logic Microsoft

17 Quality Enhanced Technical Training (cont.) We have expanded the after-hours technical training program to include business related courses. Examiners can take classes in topics like finance, insurance, tax, and operations research. Examiners can ultimately achieve their MBA.

18 Quality We have developed d in-house training specific to Business methods. Examples: Improving skills in identifying patentable subject matter. Restriction training with specific examples. Board of Patent Appeals and Interferences (BPAI) common red flags. Claim interpretation. Search techniques and using the 705 search template. KSR training examples specific to business methods

19 Prior Art The USPTO is always looking for ways to ensure that examiners have the best prior art as early as possible in the examination process. Our data shows that when examiners have the right art in front of them, they make the right decisions.

20 We Need Your Help! We need industry input on prior art resources. Let us know about: Databases Books, Technical Reports, and Conference Proceedings, Journals Web-based Resources

21 Quality Improving How We Get Prior Art to the Examiners Examiner s Electronic Digest Examiners can submit art for scanning into this database for others to search. NPL Webpage Business methods has it s own NPL webpage that is a collection of links specific to the technology of business methods. Links include databases (Dialog, ProQuest etc.) websites, daily newspapers, dictionaries, books and journals. Recommended internet sites to search. Web reference tools. i.e. the Wayback machine which provides a mechanism to date web sites

22 Quality Improving How We Get Prior Art to the Examiners Text search strategy tool which provides: Thesaurus and like terms tool i.e. input financial instruments ; output = stocks, bonds, futures Helpful for examiners to identify known and used terms of art and broaden their search business/computer terms for text searching have been loaded. It can be dynamically updated through direct examiner input.

23 Quality Improving How We Get Prior Art to the Examiners A frequently used patents database has been developed. It has identified and documented for reference: Foundational patents Good overview patents Ground breaking patents State of the art patents

24 Quality Allowance Conferences and Appeal Conferences have become the focus. Results in better and immediate feedback to examiners. Case reviewed at time of Case reviewed at time of allowance or appeal.

25 Pre-Appeal Brief Conferences Pre-Appeal Brief Conferences Examiner, supervisor, and Appeal Practice Specialist participate. Formal review before the appeal brief is filed. Allows applicant the opportunity to have rejections believed to be clearly wrong reviewed prior to the filing of an appeal brief. Potentially eliminating the cost of preparing appeal briefs through early recognition that an application is not ready for appeal.

26 Appeal Conferences Appeal Conferences Examiner, supervisor, and Appeal Practice Specialist participate. Mandatory in all cases where an acceptable appeal brief has been filed. Substantive review of issues prior to forwarding appeal to the Board of Patent Appeals and Interferences (BPAI). Potential time savings in cases where issues can be resolved prior to forwarding to the BPAI.

27 Legal Update Ex Parte Bilski Informative Opinion issued 09/26/06 The opinion is available at: Currently on Appeal to Federal Circuit it USPTO s supplemental brief filed at CAFC March, 2008; Oral arguments held May 8 th, Both for en banc consideration

28 Legal Update USPTO s interim 101 Guidelines are still operative, with some modification. Official 101 clarification memo issued May 15, A copy of memo is included in your materials.

29 Legal Update The clarification memo has been provided to assist examiners in determining whether a method claim qualifies as a patent eligible process under 35 USC 101.

30 Legal Update Based on Supreme Court precedent 1 and recent Federal Circuit decisions, the Office s guidance to examiners is that a 101 process must be either: 1. Tied to another statutory class (such as a particular apparatus); or 2. Transform underlying subject matter (such as an article or materials) to a different state or thing. If neither of these requirements is met by the claim, the method is not a patent eligible process under 101 and should be rejected as being directed to non-statutory subject matter. 1 Diamond v. Diehr, 450 U.S. 175, 184 (1981); Parker v. Flook, 437 U.S. 584, 588 n.9 (1978); Gottschalk v. Benson, 409 U.S. 63, 70 (1972); Cochrane v. Deener, 94 U.S. 780, (1877)).

31 Legal Update An example of a method claim that would not qualify as a statutory yprocess would be a claim that recites purely mental steps.

32 Prior User Rights for Business Method Patents - Defense to Infringement 35 U.S.C. 273 In the American Inventors Protection Act of 1999 (AIPA), Congress created a defense to infringement suits with respect to any subject matter that would otherwise infringe one or more claims for a business method in the patent being asserted against a person, if such person had, acting in good faith, actually reduced the subject matter to practice at least 1 year before the effective filing date of such patent, and commercially used the subject matter before the effective filing date of such patent. This defense alone does not invalidate the patent itself simply allows the accused infringer i relief against an infringement suit. We are not aware of any decision on a 273 defense.

33 Hiring Pilot For the Finance Art Units The USPTO currently has a proposal before the Office of Personnel Management that would allow the USPTO to pilot hiring patent examiners with specific backgrounds in finance, tax and insurance. This is an important initiative that would allow us to hire outside the current OPM guidelines which h require a science or engineering background to qualify as an examiner. Currently have preliminary approval from OPM. Waiting for final approval.

34 Tax Strategy t Patents t Recently, subclass 36T in Class 705 has been established and dedicated to tax strategies. We have identified 65 issued patents related to tax strategy. Further, 110 published applications, not yet examined, relate to tax strategy. This is a very small area of business methods. To put it in perspective, over 11,378 applications were filed last year in business methods, while only approximately 175 patents and patent publications exist in the tax strategy area to date.

35 Tax Strategy Patents: USPTO Outreach Efforts To gain knowledge and improve our examination of applications relating to tax strategies, the USPTO developed two significant relationships. The USPTO has partnered with the IRS and is currently developing a partnership with the American Bar Association's Section of Taxation (ABA) to pursue training and information exchange opportunities. The partnership with the IRS has resulted in training by the IRS for our finance examiners on financial products, wealth transfer, and pensions.

36 Top Issues that Lead to Prosecution Delays 1. Overly broad claims and a refusal to narrow. 1. Testing the market by filing multiple RCEs significantly slows prosecution. 2. Disclose cited prior art in related applications. 1. Over 50% of our filings are RCEs, continuations or divisonals, and examiners spend a significant amount of time ensuring prior art between related applications is properly considered and made of record. 2. Also be sure to include clear references to related applications. 3. Do not overburden the examiner with irrelevant and only marginally pertinent e t prior art. 1. Explain what you think is relevant and why. This is very helpful! 4. Fully disclose all that is known about an invention. 1. We don't send out a lot of 105 requests, but when we do, it can cause prosecution delays. 5. Clean up all direct translations from before they are filed. 1 It can be extremely difficult to understand the inventive concept and claim 1. It can be extremely difficult to understand the inventive concept and claim scope before applicant cleans up the language so the initial Office action is often not as productive.

37 Muito Obrigado!