Intellectual Property

Why the CBM Patent Program Should Expire

Today I testified about the Transitional Program for Covered Business Method Patents (CBM Program) before the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet. Prompted by a recent report from the US Government Accountability Office, the hearing sought to assess the effectiveness of the CBM Program ahead of its scheduled sunset in 2020.

BSA encouraged committee members to allow the CBM program to end, as Congress originally intended, and as the US Patent and Trademark Office (USPTO) has recommended.

Patents on true inventions provide an important incentive for research and development. On the other hand, overly broad or obvious patents chill innovation and increase prices for consumers. It is therefore important that review mechanisms are in place that cost-effectively and efficiently weed out the mistakes. The 2011 America Invents Act (AIA) created post-grant review and inter-parties review to do just this for patents on a non-discriminatory basis. By contrast, the CBM Program, which the AIA also created, applies only to technology areas within the “covered” definition.

Between two federal cases in 1998 and 2010, the USPTO issued a number of patents on methods of doing business in the financial sector. The CBM Program was enacted in 2011 as a transitional – in other words, temporary – measure to evaluate and potentially invalidate patents issued during that time that are not valid under current standards. Congress determined that eight years would be sufficient to address the problem.

While use of the CBM Program has declined in recent years, demonstrating that Congress was correct about the sunset, it also imposes unintended costs on the software industry. The program wasn’t intended to apply to core software innovations, but, in some instances, it has been.

Today, the CBM Program puts the software industry, especially small companies and inventors, at a disadvantage because it makes it easier to challenge patents on software-related inventions versus other kinds of inventions. It is effectively picking technology winners and losers. And while the software industry is impacted this time, we would have the same concerns with a patent program that discriminated against manufacturing, agriculture, or any other industry sector.

BSA and its members remain committed to maintaining tools that deter abusive litigation and improve patent quality. We urge Congress and the USPTO to allow the CBM Program to expire, however, because it discriminates based on the type of technology.

Thank you to Chairman Darrell Issa, Ranking Member Hank Johnson, and the Members of the Subcommittee for inviting me to be part of the discussion. You can read my full testimony here and watch a recording of the hearing here.

Learn more about the CBM Program here.

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