Friday, August 3, 2012

Patent eligible subject matter for a method of managing financial instruments?

Digitech Information Systems sued BMW Financial Services NA, LLC for infringement of U.S. Patent 7,739,180 directed to a method of managing financial instruments, equipment lease derivatives, and other collateral instruments, data architecture, application and process program.  Claim 1 recites:

A method for selecting leases to optimize an investment portfolio comprising
the steps of:
     receiving data regarding an equipment purchase price, an equipment sales price, a number of units, a lease purchase price, a life of lease, a lease acquisition fee, an accelerated depreciation of change, and a yearly payment;
     calculating by computer a total purchase price by adding the lease purchase price to the lease acquisition fee;
     calculating by computer an accelerated depreciation result by multiplying the equipment purchase price by the number of units;
     calculating by computer a rate of return by subtracting from the yearly payment the total purchase price and the accelerated depreciation result and dividing by the lease purchase price; and
     selecting a lease based on the rate of return being greater or equal to a predetermined value and using the selected lease to create lease backed financial instrument derivatives and optimize the investment portfolio.

Months ago, BMW sought and was awarded summary judgment that the '180 Patent is invalid for not being directed to patent eligible subject matter under 35 U.S.C. § 101.  Digitech sought to undo that damage by asking the Court to reconsider.

Motions for reconsideration are tough.  Three main grounds can justify reconsideration: (1) change in the law; (2) new evidence; or (3) a need to correct clear error or prevent manifest injustice.   Digitech argued that all three applied here.  As to a change in the law, a few recent Federal Circuit decisions (CLS Bank Int'l. v. Alice Corp, 103 U.S.P.A.2d 1297 (Fed. Cir. 2012) and Bancorp Services, LLC v. Sun Life Assur. Co. of Canada (U.S.), ___ F.3d ___ (Fed. Cir. 2012)) and  have addressed patent eligibility under § 101.  As to new facts, Digitech brought up some deposition testimony.  As to clear error, Digitech raised some challenges to how the Court had construed the claims.

The Court was not persuaded by any of these arguments.  Regarding the new law, the Court recognized that the test for patent eligibility under § 101 - the abstract idea test -- is not well defined:
This so-called "abstract idea test" is not a concrete test but rather a set of guidelines promulgated in various Supreme Court and Federal Circuit opinions.
True enough.  This has created the unfortunate result that the test for abstractness still works out as "I know it when I see it" reasoning and logic.  Dennis Crouch (a.k.a. Patently-O) recently posted on the CLS Bank and Bancorp decisions.  CLS Bank found computerized stock trading claims patent eligible, while Bancorp found computer related financial claims patent ineligible.  Prof. Crouch aptly concluded his post as follows:
It is simply ridiculous that after 40 years of debate, we still do not have an answer to the simple question of whether (or when) software is patentable.
I would rephrase that comment slightly, as we know that software is patent eligible, but we still have a great lack of clarity as to when.  And it has less to do with the software itself and more to do with how that software is claimed.

The Digitech decision is another example of this theme.  Judge Antoon analyzed the CLS Bank and Bancorp decisions and found Digitech's claims closer-in-kind to Bancorp's.  Accordingly, the '180 patent remains invalid.  We'll have to see what happens on appeal.

Motion for Reconsideration Denied.
Digitech Information Systems, Inc. v. BMW Financial Services NA, LLC, Case No. 6:10-cv-1373 (M.D. Fla. July 30, 2012) (J. Antoon)


  1. Off subject - but why is an examiner required for example to respond to an applicant's response to a non-final office action within "2 months" or they lose points but in 35 USC 154, they can drag their feet for up to 4 months and the patent does not get the time back due to PTO delay?

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