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On February 13, 2009, a jury found that certain benefit riders on products sold by Transamerica Life Insurance Company infringed a Lincoln National Life Insurance Company patent. Transamerica Life Insurance Company, et al. v. Lincoln National Life Insurance Company, Case No. 06-CV-00110-MWB (N.D. Iowa Feb. 13, 2009). The Lincoln National patent, U.S. Patent No. 7,089,201 (“the 201 Patent”) was issued in 2006 and is entitled “Method and Apparatus for Providing Retirement Income Benefits.” The patent described a computerized method for administering variable annuity plans, including provisions for guarantees related to retirement income and death benefits in both the accumulation and distribution phases, commonly known as “Guaranteed Minimum Withdraw Benefits” or GMWBs. Finding that the patent was valid, the jury ordered Transamerica to pay Lincoln National $13.1 million for the sale of infringing variable annuity products. The jury based its award upon a .11% royalty on the $11.9 billion in assets derived from Transamerica’s variable annuity products during the period of infringement.
Lincoln National’s 201 Patent is known as a “Business Method Patent” and is classified by the United States Patent and Trademark Office under “Apparatus and corresponding methods for performing data processing operations, in which there is a significant change in the data or for performing calculation operations wherein the apparatus or method is uniquely designed for or utilized in the practice, administration or management of an enterprise, or in the processing of financial data.” While for many years, the United States Patent and Trademark Office held that methods of doing business were not patentable, it changed its position in the 1980s and 90s with the emergence of patent applications on Internet or computer-enabled methods of doing business.
In State Street Bank v. Signature Financial Group, 149 F.3d 1368 (Fed. Cir. 1998), the Federal Circuit held that the U.S.P.T.O. was correct in finding that a computerized accounting system for managing a mutual fund investment structure was patentable matter. Issues concerning business method patents most recently were addressed by the Federal Circuit in In Re: Bilski, 545 F.3d 943 (Fed. Cir. 2008), which the Federal Circuit upheld a ruling by the United States patent and Trademark Office denying a patent for methods of hedging and commodities trading. Bilski reflects a growing tendency among courts to subject patents to increased scrutiny and suggests a return to the pre-State Street views on business method patents.
In January 2009, Bilski petitioned the U.S. Supreme Court for a writ of certiorari seeking review of the Federal Circuit decision. Should the United States Supreme Court grant certiorari, its decision may have a significant impact on business method patents for future inventions and the enforceability of business method patents that have already issued.
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