Business Method Patents and U.S. Financial Services

By Hunt, Robert M. | Contemporary Economic Policy, July 2010 | Go to article overview

Business Method Patents and U.S. Financial Services


Hunt, Robert M., Contemporary Economic Policy


I. INTRODUCTION

A decade has passed since American courts made clear that methods of doing business could be patented. Since then, the U.S. Patent and Trademark Office (USPTO) has granted more than 12,000 of these patents; only a small share of those were obtained by financial firms. Some firms, typically those outside the industry, have aggressively asserted their patents and have had some notable successes in obtaining licensing revenues. Even central banks have been sued (Table 1). We review a number of important instances of such litigation focusing on the examples of financial exchanges and consumer payments.

TABLE 1
Additional Examples of Patent Litigation Affecting Financial Services

Case/Litigants/Filing Date (a)                  Description

Suits Against Central Banks        Suits Involving Payment Card
                                   Technologies

Document Security Systems, Inc.    DSS sued the ECB for infringing its
v. European Central Bank. Case     patent on a method of incorporating
T-295/05 (European Ct. of First    an anticounterfeiting feature into
Instance August 1. 2005)           bank notesb (EP 0455750B1). The ECB
                                   took legal action to invalidate the
                                   patent in nine countries. The patent
                                   was subsequently revoked in the
                                   United Kingdom and France but upheld
                                   in Germany and the Netherlands

Advanced Software Design Corp. v.  ASD alleges the defendants (Fiserv
Federal Reserve Bank of St.        and the Federal Reserve Banks of
Louis. No. 4:07cv00185 CDP (E.D.   Atlanta, Philadelphia, and St.
Missouri. November 9. 2007)        Louis) are infringing three of its
                                   patents (nos. 6.233.340: 6.549.624:
                                   and 6.792.110) on anticounterfeiting
                                   software (hat encrypts information
                                   from paper checks

Suits Involving Payment Card

Technologies Every Penny Counts.   EPC alleges that BoA's "Keep the
Inc. v. Bank of America. No.       Change" savings product violates its
2:07-cv-42-FtM-29SPC (M.D.         patent (no. 6,112,191) on a system
Florida, January 25, 2007)         and method to distribute excess
                                   funds from consumer transactions

Every Penny Counts. Inc. v. First  In a separate case. EPC has sued
Data Corporation. Inc. No.         First Data. American Express.
8:07-cv-1245 (M.D. Florida, July   MasterCard, and Visa for
17, 2007)                          infringement of this patent and two
                                   others (nos. 5,621,640 and
                                   6,876,971)

Card Activation Technologies;      CAT alleges that the defendants are
Barnes &Noble, No. I:2007cv0l230   violating its patent (no. 6,032,859)
(N.D. Illinois, March 2. 2007)     on gift card activation and
                                   processing. An attempt to invalidate
                                   the patent on grounds of
                                   "indetiniteness" was rejected. CAT
                                   has four other suits pending against
                                   retailers Sears, OfficeMax.
                                   Walgreen's. and TJX Companies. It
                                   reached a settlement with McDonald's
                                   in 2007

H & R Block Tax Services v.        H&R Block alleges that the defendant
Jackson Hewitt Tax Service. No.    is infringing its patents
6:2008cv00037 (E.D. Texas.         (nos.7,072,862 and 7,177,829) on a
February 8. 2008)                  system and method of linking tax
                                   refunds and government benefits to a
                                   spending card

Advanced Card Technologies v. … 

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