Justice Department Joins Lawsuit on Business Patent Challenges

The Department of Justice is intervening in a lawsuit that claims a Patent and Trademark Office proceeding for challenging financial or e-commerce-related patents is unconstitutional.

Trading Technologies International Inc. is questioning the legitimacy of covered business method patent reviews, which applies to inventions of business methods, such as technology that allows hedge fund trading.

The department filed a motion to defend the process created under the 2011 America Invents Act. Trading Technologies does not oppose the U.S. government’s request to join the lawsuit, according to the motion.

The lawsuit could set the stage for another showdown over the constitutionality of patent office review procedures. The Patent and Trademark Office in April successfully defended a constitutional challenge on inter partes reviews, another type of patent validity challenge that covers a broad range of patented inventions.

The patent validity review process is supposed to be a faster and cheaper alternative to court proceedings. But patent owners say the proceedings unfairly take away their rights. Business method patent reviews are of particular interest because they target software, financial, and business-related patents that critics say are more likely to be asserted in frivolous lawsuits.

Trading Technologies appealed a 2017 decision by the Patent Trial and Appeal Board to invalidate Patent No. 6,766,304 covering graphic user interfaces designed to improve electronic commodities trading. TradeStation Group Inc. had successfully killed the patent using a covered business method review challenge.

Business method reviews allow for more ways to attack a patent. A challenger in an inter partes review can argue only that a patent is anticipated or obvious in light of prior research. A challenger in a business method review can argue the patent covers ineligible subject matter, such as an abstract idea.

The case is TradeStation Group, Inc. v. Trading Technologies Int’l., Fed. Cir., No. 17-01732, motion to intervene 7/9/18.

To contact the reporter on this story: Malathi Nayak in Washington at mnayak@bloomberglaw.com

To contact the editor responsible for this story: Rebecca Baker at rbaker@bloomberglaw.com