Tech Scene: Patent Office Gets a Lesson in Banking

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Bankers seem to be making progress on the issue of pesky patents: A delegation met last week with officials from the federal Patent and Trademark Office and hashed out ways to help patent examiners sniff out and reject applications for technologies already in widespread use. The American Bankers Association requested the meeting after members complained they were blindsided by what amounted to ransom requests: Patent holders demanding licensing fees for basic intellectual property. The patents covered such topics as online banking software, smart card applications, encryption for transactions, and the date functions in software. (The Y2K scare seemed to draw these opportunists out of the woodwork.) "The banks said, 'This really doesn't make sense; these are methods that are fairly obvious,'" said Gordon Glaza, senior counsel at the ABA. The root of the matter was that starting about two years ago, the government started granting patents for business practices -- a potentially broad and tricky category -- and inadvertently gave inventors rights to technology systems that had long been in place at banks. As it turns out, the Patent Office had little understanding of how banks managed payment systems, and it had never occurred to the bankers to volunteer information about technology they took for granted. There was a wide gap between what bankers considered common knowledge and the information that was available to overworked patent examiners. Last Wednesday, eight bank industry representatives sat down with six people from the Patent Office to begin coming up with potential fixes. They made tentative plans for bankers to give regular seminars to patent examiners about the basics of bank technology and maybe some more advanced lessons about the role of computers in financial transactions. The bankers also proposed developing an "on call" network of bank technologists whom the examiners could call or e-mail with specific questions about how things work. Both sides like a third suggestion: a Web site where patent officials could post questions and bankers could post "prior art" -- the raw material that patent examiners review to see whether an idea is already being used in a given industry. The patent officers said they often did not know where to find prior art that related to bank activities; indeed, the bankers said that even though the information they were looking for was about nonproprietary systems, there were few published sources. "We want to have the whole industry providing prior art to the patent office, and we want to create a standard way for that to happen," Mr. Glaza said. The banking delegation included representatives of the ABA, Mellon Bancorp; PNC Bancorp; the National Automated Clearinghouse Association; and BITS, the technology arm of the Financial Services Roundtable. Participants seemed to agree that the patent officials are eager to learn but have a lot to catch up on. "They really have a problem in that this whole area is new to them, and they're trying to catch up to where the financial industry has been," said Steve Schutze, director of e-strategies for the ABA. "We even had difficulty zeroing in on what part of banking they wanted, but we think we may concentrate first on payments. We're going to try to put together a curriculum and give it to them." A second meeting will take place in August or September, participants said. On top of the in-house seminars the bankers offered to hold, the Patent Office said it would consider sending examiners to training courses aimed at bankers and having them visit banks to see how things work. "I asked the question, 'Have any of you ever been to a check processing center?' and they said, 'No,' " Mr. Schutze said. "So immediately that's an area you could start thinking about." Joseph Rolla, the senior Patent Office official at the meeting, called the session "productive" and said the "primary focus was to begin an education process for the examiners. …