TRADING TECHNOLOGY EU PATENTS: I received a question recently regarding TT's EU patent portfolio, and in particular the comments of Steve Borsand during an interview with "Futures & Options Week" magazine (UK). Of particular interest was Steve's repeated denial during the interview that TT's patents were "business method patents":

Q: Some claim that TT's patents will not hold up in Europe because business method patents are not permitted there and because of Espeed's argument that there was a prior use of the invention before the patents were filed. What are your views on that?

A: The patents are, in fact, not business method patents. Business method patents cover a way of carrying out a business process, such as a way of processing a loan or a particular trading strategy. TT’s patents cover a tool or device used for order entry, not a business process. The commercial embodiment of the device happens to be implemented in software. The fact that the patents do not relate to business methods is evidenced by the patents TT obtained in Europe, where business method patents are not permitted.

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[responding to a question regarding USPTO examination]

The criticism has more merit for patent applications that truly relate to business methods. An example of that would be a patent directed to a business process. As I mentioned before, TT’s patents are not business method patents.

I got a good chuckle out of that. First and foremost, the interview was done in conjunction with litigation currently pending between TT and just about the entire trading community in the US. Also, it is no great secret that TT is casting askew glances overseas to establish new licensing opportunities, particularly in the EU. Steve's a smart guy (I've heard him speak at a conference here in Chicago) - this interview was nothing more than the equivalent of an "Entertainment Tonight" or "Access Hollywood" type interview, where hunks and starlets wax eloquent on how "great" their lives and careers are, and all the new and wonderful projects they will be undertaking in the future. Steve knows that every opposing counsel will be watching his every word to try and catch him in an admission to use against him in court. As such, he's putting as much spin as possible on the TT portfolio for the interview.

Now, regarding the "business method" comment - he's splitting hairs, and he knows it. It is absolutely true that business method patents per se are not allowable in the EU. However, 99.99% of patent applicants almost never claim a bald business method, since everyone conducts business via computers nowadays. Accordingly, disclosures will invariably recite an "interface" or "computing process" or "automated system" (you get the idea) that essentially performs the business method, and effectively cloaking the method in "technical" language (anyone that drafted patents prior to State Street knows that old trick). Fortunately for Steve, the US, while allowing "pure" business methods, has never actually defined what a business method actually is (even the congressional record for the 1999 AIPA is silent there), so technically he's correct. And the EU Patent Office is still in flux on determining what a "technical effect" is, so that provides him with lots of wiggle room to pitch his applications.

But I don't think Steve's comments are intended for a US audience, but rather for the EU community. He knows that the EU Patent Office will jump all over TT's European patent applications like a monkey on a cupcake if they conclude that the claims are indeed "business methods." Take, for instance, this claim in this UK application:

1. A method of displaying market information relating to a commodity being traded in a market on an electronic exchange having an inside market with a highest bid price and a lowest ask price using a graphical user interface, the method comprising:

dynamically displaying a first indicator in relation to a first price level on a common price axis, the first indicator being associated with the highest bid price available in the market;

dynamically displaying a second indicator in relation to a second price level on the common price axis, the second indicator being associated with the lowest ask price available in the market; and

displaying an order entry region comprising a plurality of locations, each location being associated with a different price level on the common price axis and each location being arranged to receive a command to send an order to the electronic exchange at the associated price level;

wherein at least one of the first and second indicators moves relative to
the common price axis when the inside market changes.

Not a business method, eh? If you really wanted to put him on the spot, I would have asked the following questions:

(1) "Why would one skilled in the art NOT consider this a business method? What is your reasoning for this?"

(2) "Should financial processes conducted via computers EVER be considered business methods? Why or why not?"

(3) "Could you give me specific examples of patents you would consider 'business methods'? How are they different from yours?"

I could go on and on. But all this aside, one very important thing to keep in mind is that, while the EU has slipped through business method patents over the years (prohibition notwithstanding), I am not aware of a SINGLE instance where these patents have been actually enforced in EU courts. I've spoken with a number of EU practitioners, and they are unaware of any cases as well. Now, maybe TT is planning to blaze a new litigation path in the EU (Lord knows they may soon have the money to do it). But it's going to be a while before the political climate is right to pull that kind of action.