UnIP (UnIntellectual Property): Business Method Patent for an Investment Tool

A business method patent may be subject to patent protection when it is tied to the physical world. We are starting to see what that means, thanks in part to the recent case involving a business method patent. At issue was an investment tool method designed to allow property owners to complete real estate transactions in compliance with Section 1031 of the IRS Code (commonly known as a 1031 Exchange). The method aggregates the real property into a real estate portfolio, encumbers that property into a real estate portfolio with a master agreement, and then uses deedshares to divide title before re-aggregating after a certain amount of time. The Federal Circuit Court acknowledged that the method was tied to the physical world in the form of deeds, contracts, and real property. However, the Federal Circuit Court ultimately held that the method of creating a tax-deferred real estate investment instrument did not warrant patent protection under 35 U.S.C. 101 because it was only based upon mental processes and abstract intellectual concepts.

While business method patents remain eligible for patent protection under Section 101, this case confirms that the requirements, so to speak, of In re Bilski have subjected such claims to far greater scrutiny and far greater difficulty.

Fort Properties Inc. v. American Master Lease LLC, 101 USPQ2d 1785 (Fed. Cir. 2012).


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