Origin
and Evolution - Business data processing has followed an unbroken
evolutionary path from mechanical technology up to today's software controlled
microprocessors. Automated business data processing itself dates back
over a hundred years. The business method claim format has been used in
various forms throughout that period. The increase in its use today is
an inevitable end result of our progress over the last century.
Class
705 (Modern Business Data Processing) - This class contains numerous
small groupings and four major groupings directed to specific and general
business data processing machines and methods. These machines and methods
still heavily reflect the electrical and computer engineering that underlay
them. Class
705 saw about 1% of the total patent applications filed at the USPTO
in FY 1999. Its 2658 applications did not even place it among the top
five Communications and Information Processing technologies.
Resources
In Transition - In 1998, the State
Street decision triggered an awareness of the "business method
claim" as a viable form of patent protection. We are at the beginning
of a change in the approach to how inventors choose to describe their
inventions. This change is in turn driving a shift in the required examiner
knowledge base for the examination of Class 705 inventions. As it has
for over a century, the USPTO is responding appropriately and is adapting
its knowledge base as the needs of the business technologies evolve.
Improving
Quality - It is universally agreed that high quality examination by
USPTO Patent Examiners must be ensured. Quality initiatives are continuously
updated. This white paper highlights initiatives in place prior to March
2000, as well as, quality initiatives announced in March by Q. Todd Dickinson,
Under Secretary of Commerce for Intellectual Property and Director of
the United States Patent and Trademark Office.
Customer
Partnerships - These are important to improving quality as the USPTO
gauges the future needs of Class 705. Customers will know first the future
evolution of business data processing technology. Customers' application
filings will control the transition of patent application format towards
the "business method form" and any future shift that will be required
in the knowledge base of Class 705 examiners. They are also in a unique
position to assist in providing training needed as part of adapting the
knowledge base.
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I.
INTRODUCTION
On
September 23, 1975, Ivan E. Sutherland of the Rand Corporation received
the 1975 Award for Outstanding Accomplishment of the Systems, Man, and
Cybernetics Society. In his acceptance address entitled "Computerized
Commerce" (Footnote 1),
Mr. Sutherland states "What we should be building is a system of
computerized commerce: a "smart" communications network which
can remember, process, forward, remind and schedule as well as merely
communicating". Mr. Sutherland continues "Computers will become
the repositories of manufacturing know-how. Parts lists, purchasing specifications,
lists of qualified vendors, design information, fabrication directions,
and production history will all be stored in computers. Individuals will
be free to take on new tasks more easily than ever before, because the
instructions required for those tasks will be available through a variety
of on-line computer terminals".
In
the mid-1990s, Mr. Sutherland’s proposed "smart" communication
network, now called "Electronic Commerce" or "e-commerce"
began finding its niche in the business world. In recent years, the growth
of the business technologies, especially the electronic commerce business
industry has been phenomenal. This growth has resulted in an increase
of business technology patent application filings. Concomitant with this
increase in filings there has been a marked increase in public attention
to the operations of Workgroup 2760 of the United States Patent and Trademark
Office (USPTO) currently responsible for examining patent applications
in business related data processing methods and technologies, Class 705.
One
prominent portion of business method patents is the area of "Automated
Financial/Management Business Data Processing Method Patents." Such automated
business methods are found in U.S. Patent Class 705..
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II.
ORIGINS OF FINANCIAL/MANAGEMENT BUSINESS PATENTS - PRODUCT, APPARATUS AND
METHOD
The
creation of a patent system was one of the acts performed by the First
Congress of the United States. The first patent statute was passed on
April 5, 1790, by the Congress of the twelve United States and signed
into law on April 10 by President Washington. Rhode Island ratified the
Constitution and joined the Union 49 days later on May 29, 1790. The "Commissioners
for the Promotion of the Useful Arts" granted the first United States
patent on July 31, 1790. The Commission consisted of Secretary of State
Thomas Jefferson, Secretary of War Henry Knox, and Attorney General Edmund
Randolph. This first patent was to a chemical method for making potash
and pearl ash.(Footnote 2)
Financial
apparatus and method patents date back to this period. These early financial
patents were largely paper-related products and methods. The first financial
patent was granted on March 19, 1799, to Jacob Perkins of Massachusetts
for an invention for "Detecting Counterfeit Notes." All details
of Mr. Perkins invention, which we presume was a device or process in
the printing art, were lost in the great Patent Office fire of 1836. We
only know of its existence from other sources. Mr. Perkins was perhaps
our young nation’s most prolific early inventor with nearly 1% of all
patents from our first quarter century. Upon his death in 1849, his obituary
filled three pages of the Commissioner of Patents annual report to Congress.(Footnote
3) The first financial patent for which any detailed written
description survives was to a printing method entitled "A Mode of
Preventing Counterfeiting" granted to John Kneass on April 28, 1815.
The first fifty years of the U.S. Patent Office saw the granting of forty-one
financial patents in the arts of bank notes (2 patents), bills of credit
(1), bills of exchange (1), check blanks (4); detecting and preventing
counterfeiting (10), coin counting (1), interest calculation tables (5),
and lotteries (17).(Footnote 4)
Financial patents in the paper-based technologies have been granted continuously
for over two-hundred years. See Appendix
A for sample Patents.
Automated
financial/management business data processing method patents cannot trace
their origins back to the founding of our nation. However, contrary to
popular view, they did not suddenly spring into being in the late 1990’s.
On January 8, 1889, the era of automated financial/management business
data processing method patents was born. United States patents 395,781;
395,782; and 395,783 were granted to inventor-entrepreneur Herman Hollerith
on that date.(Footnote 5)
See Appendix B for Mr. Hollerith’s
Patents. Mr. Hollerith’s method and apparatus patents automated the tabulating
and compiling of statistical information for businesses and enterprises.
They were acclaimed nationally and viewed as revolutionizing business
data processing. The protection of his patents allowed his fledgling Tabulating
Machine Company to succeed and thrive. In 1924, Thomas J. Watson, Sr.
changed the company name to International Business Machine Corporation.
Hollerith manual punch cards (IBM punch cards) and his methods for processing
business data were still being used up until the birth of the personal
computer era.(Footnote
6)
The
financial/management business data processing method patents of today
are more numerous and more sophisticated than those of 1889. However,
this is not a function of the business method ingenuity of our forebears.
Rather, this is directly a function of high cost, low speed, and limited
availability of automated data processing machines in the 1890’s versus
the low cost, high speed, and wide spread use of today’s computers. Put
another way, we invented some automated business data processing methods
over the last one hundred years, but we spent the bulk of that time perfecting
the automated business data processing machines upon which we will run
the methods. It is only recently that data processing systems have become
sufficiently developed to begin to allow us to fully tap our ingenuity
in the business method arts.
The
development of today’s business data processing systems follows an unbroken
evolutionary path back to simple manually operated mechanical registering
devices that predate electrically controlled Hollerith type machines.
See Appendix C - 1870 to 1905.
Purely mechanical business data processing reached its zenith in the early
20th century. For about $100 ($2000 today), a 1909 merchant
could purchase a cash register system that even now is one of the most
sophisticated mechanical devices ever constructed. See Appendix
D - 1906 to 1920. Unfortunately, business data processing was simplistic
in even the most powerful of these totally mechanical registering systems.
None were able to match the data processing power of the electrical-mechanical
systems such as the Hollerith tabulator. However, manufacturing cost was
a key issue and it was not until the 1930s that electrical-mechanical
superseded purely mechanical in day-to-day business data processing systems.
See Appendix E - 1921 to 1940.
The
full arrival of electricity as a component in business data processing
system was a watershed event. Electrical-mechanical devices provided far
more business data processing power than their mechanical predecessors
did. By the 1930s it was cost effective to build far more complex data
processing systems. A pattern was set that has repeated itself in successive
evolutionary steps since the 1930s. Electrical-mechanical switches were
replaced by individual transistors. Individual transistors were replaced
in turn by small-scale integrated circuits which were replaced by large-scale
integrated circuits. Each new generation resulted in increased business
data processing power and new inventions. However, one key thing was not
significantly improved by each of these generations. Even with the arrival
of larger-scale integrated circuits, each data processing system had to
be individually designed at the transistor level and hard-wired to perform
the correct business data processing functions. The time from innovation
through design and manufacturing to market was too long and needed to
be improved. The replacement of specific function large-scale integrated
circuits by software controlled microprocessors allowed this to occur
and was the latest evolutionary step to bring us to the business data
processing systems of today. See Appendix
F - 1941-1995.
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