Bridges smashed between USPTO and EPO in landmark business method decision - Oligopoly/Lundgren

In a significant affirmation of the liberal attitudes in the US to the question of what should be patentable, the Board of Patent Appeals and Interferences in the US Patent and Trademark Office has decided that there is no test for whether an invention falls within the "technical arts" in the Oligopoly (Ex parte Lundgren) case.

The Board of Appeal in a 3 to 2 majority decision has followed the teachings of the well known Court of Appeals of the Federal Circuit decisions of State Street Bank as applied in AT&T v Excel which state that a process claim that applies a mathematical method is patentable if it "produces a useful, concrete and tangible result".

In the Oligopoly case, a well known economist, Dr Carl Lundgren, sought protection for a method of rewarding managers who control prices in a market place within acceptable benchmark levels thereby to help prevent creation of any oligopoly; in other words a method to help prevent a market dominated and influenced by a small number of companies in an unwritten cartel.

Prior to the Oligopoly decision in the USPTO, there had been speculation that the Examiners there had been finding favour with the EPO's test for patentable subject matter to comprise technical character. This requirement is the first step in obtaining at least a prior art search at the EPO before they consider whether a technical contribution is made by the invention, (the latter often being summarised as determining whether the invention solves a technical problem with a technical solution as set down in the Hitachi Dutch Auction decision (T 0258/03)).

The technical character test in the EPO is however straightforward and it was stated in the Hitachi decision that the level of banality of the technical character was not important and even the use of a pencil in a process lent that process a technical character sufficient to lift it out of the trap of being deemed non-patentable subject matter under the European Patent Convention exclusions (Article 52 EPC).

No such test is required in the USPTO and accordingly the objections raised by examiners against many pending applications having claims directed to pure business methods which were bereft of any technical features, such as a computer, a processor or memory, should now be dropped.

No doubt the collaboration between the EPO and USPTO will continue to address areas of difference in the future and possibly areas of agreement will be found for example in relation to a grace period for disclosure of inventions prior to filing patent applications, but for now the gulf between the US and EPO on the subject of business methods is wide open.

A copy of the Oligopoly/Lundgren decision (Ex parte Lundgren of the USPTO) is attached as a Word document below.

 Lundgren Case

Karl Barnfather
Copyright Withers & Rogers LLP 2005