Still More, On The Limited Value Of Business Method Patents

Given that at least four patent applications were filed by Mattersight (then eLoyalty) back in the middle of the last decade, in order to yield these two 2012 method patent grants, I thought I'd offer a little more background on why spending the resources to win such patents may well not be of much practical benefit to the shareholders of Mattersight -- to whom Mr. Conway owes his highest duties. [Side Note: the image, at right, is from a patent actually issued in 2009 -- a paperclip, bent and mounted to a small plastic finger ring -- to swat flies! Don't believe me? Take a look at US Patent No. 7,484,328.]

Where was I? Oh, right. In Bilski v. Kappos, 561 U. S. ____ (2010), the United States Supreme Court came within a whisper (one vote, on one part of a concurring opinion) of deciding that business method process patents aren't really patents at all. That is, the Court is deeply skeptical about whether they embody any novel, useful invention at all.

It is thus, in my personal opinion, also pretty clear that the Court would be loathe to let a holder of such a patent (a business method patent like the ones Mattersight now holds) win an infringement suit for money damages, or win an injunction -- against other market participants who were also simply analyzing call center data for useful customer service patterns and learnings. That, I think, would be the proverbial bridge too far, for the current Supreme Court.

So, let's turn to the actual language of Bilski, shall we? It is replete with warning lights, here:

. . .With ever more people trying to innovate and thus seeking patent protections for their inventions, the patent law faces a great challenge in striking the balance between protecting inventors and not granting monopolies over procedures that others would discover by independent, creative application of general principles. . . .

[The Patent Act, at] §273 appears to leave open the possibility of some business method patents, it does not suggest broad patentability of such claimed inventions. . . . The Information Age empowers people with new capacities to perform statistical analyses and mathematical calculations with a speed and sophistication that enable the design of protocols for more efficient performance of a vast number of business tasks. If a high enough bar is not set when considering patent applications of this sort, patent examiners and courts could be flooded with claims that would put a chill on creative endeavor and dynamic change. . . .

[From the four-Justice concurring opinion, then:]. . .But I would take a different approach. Rather than making any broad statements about how to define the term “process” in §101 or tinkering with the bounds of the category of unpatentable, abstract ideas, I would restore patent law to its historical and constitutional moorings. For centuries, it was considered well established that a series of steps for conducting business was not, in itself, patentable. . . .

Since at least the days of Assyrian merchants, people have devised better and better ways to conduct business. Yet it appears that neither the Patent Clause, nor early patent law, nor the current §101 contemplated or was publicly understood to mean that such innovations are patentable. Although it may be difficult to define with precision what is a patentable “process” under §101, the historical clues converge on one conclusion: A business method is not a “process.” And to the extent that there is ambiguity, we should be mindful of our judicial role. . . .

Indeed, the introduction of the “useful, concrete, and tangible result” approach to patentability, associated with the Federal Circuit’s State Street decision, preceded the granting of patents that “ranged from the somewhat ridiculous to the truly ab-surd.” In re Bilski, 545 F. 3d 943, 1004 (CA Fed. 2008)(Mayer, J., dissenting -- citing patents on, inter alia, a “method of training janitors to dust and vacuum using video displays,” a “system for toilet reservations,” and a “method of using color-coded bracelets to designate dating status in order to limit ‘the embarrassment of rejection’”). . . .

And so -- whatever else may be said of Mr. Conway's two patents -- it is clear that they are method or process patents, and to the extent that they embody an invention, the invention is a novel way of doing business. The new method of doing business is to extract tiny bits of useful information, from much more voluminous audio-recordings of telehone interactions between company representatives, and company customers. After Bilski, it is increasingly clear that the highest court in the land takes a dim view of these sorts of patents, at least insofar as they might be used as a monopolists' bludgeon -- to keep other businesses off of the same playing field, without paying Mr. Conway and company a license fee.

In sum, the patents are -- intrinsically -- thus worth very little. On the other hand, I am sure Mattersight (and eLoyalty before it) paid into the high-single digit millions in legal fees to procure the two patents, from at least four separate patent applications filed by the parties in this arena.

I just hope no one is paying the inventors any license fee, out of Mattersight coffers -- for the supposed patent rights owned by Conway, and his co-inventors. That would be sensless.