It is a tough environment currently for companies trying to enforce business method patents. First, the America Invents Act of 2011 allows accused infringers to seek review of issued patents before the U.S. Patent Office’s Patent Trial and Appeal Board (PTAB)—the so-called “death squad” of patents. Second, the Supreme Court’s 2014 decision in Alice Corp. v. CLS Bank has led to invalidation of hundreds of business method patents by federal courts finding them improperly directed to an “abstract idea.”
One Minnesota business recently overcame the odds and got its claim for infringement of a business method patent to a jury. Solutran, Inc., a provider of electronic banking transactions, patented a new method of processing paper checks. After filing suit against a competitor, U.S. Bank, for infringement, Solutran managed to survive an Alice-based challenge before the PTAB and in the District of Minnesota. In 2018, Solutran obtained a $3.27 million jury verdict against U.S. Bank.
Solutran’s victory was short lived, however. It too stumbled at perhaps the most difficult hurdle: before the U.S. Court of Appeals for the Federal Circuit. On July 30, 2019, the Federal Circuit concluded that Solutran’s method of processing checks was directed to an abstract idea, and vacated the jury’s verdict.
Solutran’s case typifies the current state of U.S. patent law’s inhospitality to business method patents.
Solutran’s patented method of processing paper checks allows merchants to electronically collect information from a check at a register, credit the customer’s account, and then scan the check at a more convenient time and place to verify the transaction. Older methods required a merchant to either scan the paper check at the register, or to credit an account after the transaction. Both prior methods were less efficient.
Solutran’s invention lacked a technological improvement to the checks themselves, or to the methods of scanning them. However, the invention’s non-technical improvement to the way paper checks had previously been processed saved time and money, and was successfully adopted by customers.
When U.S. Bank began offering a similar check processing system, Solutran sued for infringement in the District of Minnesota. U.S. Bank petitioned the Patent Office’s PTAB to review Solutran’s patent, arguing the invention was directed to an abstract idea, and, therefore, ineligible for patent protection. Solutran’s district court case was stayed pending the PTAB’s review. Read more.