Plenty of businesses rely on third-party payers: parents often pay for college; insurance companies pay most health care bills. Reaching out to potential third-party payers is hardly a new or revolutionary business practice. But someone should tell the Patent Office. Earlier this year, it issued US Patent No. 9,026,468 to Securus Technologies, a company that provides telephone services to prisoners. The patent covers a method of “proactively establishing a third-party payment account.” In other words, Securus patented the idea of finding someone to pay a bill.
It’s been an interesting few weeks for Securus. First, the FCC announced that in response to price gouging by the industry, it would impose per-minute price caps on prison calls. Then The Intercept reported on a massive hack of recorded Securus calls: 70 million recordings, including many calls made under attorney-privilege, were leaked through SecureDrop. We’d like to add November’s Stupid Patent of the Month award.
Securus’ patent has a single independent claim with three steps. These steps are: 1) identifying a “prospective third-party payer”; 2) detecting a “campaign triggering event” (this can be something like an inmate being booked into a facility); and 3) “initiating a campaign to proactively contact” the prospective third-party payer using an “interactive voice response system.” In other words, when an inmate gets booked into the local jail, Securus robocalls a family member to ask if they are willing to set up a pre-paid phone account.
There are two serious problems with this patent. First, the claims are directed to a mind-numbingly mundane business practice and should have been rejected as obvious. Obvious uses or combinations of existing technology are not patentable. Second, the claims are ineligible for patent protection under the Supreme Court’s 2014 decision in Alice v. CLS Bank—this is a recent Supreme Court decision that holds that an abstract idea (like contacting potential third-party payers) doesn’t become eligible for a patent simply because it is implemented using generic technology. That the system failed to register either of these defects shows deep dysfunction.
In a sane world, a patent examiner would apply common sense and reject Securus’ application out of hand. It includes no technological innovation (it notes that all of the relevant phone technology already exists); instead, it simply describes a basic set of steps for contacting potential third-party payers. Unfortunately, the Federal Circuit has essentially beaten common sense out of the patent system. For example, it recently overruled an examiner who had relied on common sense for the basic fact that electrical plugs have prongs. This repudiation of common sense is how we get patents on filming a yoga class or white background photography.
To the patent examiner’s credit, he did originally reject all of Securus’ claims as obvious based on a combination of earlier publications regarding third-party payment accounts. Securus appealed that rejection to the Patent Trial and Appeal Board (PTAB). The PTAB overruled (PDF) the examiner. In a victory of hyper-formalism over rationality, the PTAB said that the examiner had not provided sufficiently explicit reasons for combining the teachings of prior publications.
What about Alice v. CLS Bank? Securus’ claims are just an abstract idea implemented on generic technology. They should therefore have been found ineligible under the Supreme Court’s new standard. In fact, when it overruled the examiner on obviousness grounds, the PTAB explicitly noted (in a footnote) that the examiner “may wish to review the claims for compliance under 35 U.S.C. § 101” in light of the Alice decision. Yet the Patent Office ignored this suggestion and rubber stamped the claims.
We have repeatedly urged the Patent Office (here, here, and here) to do a better job applying Alice to pending applications. It is very disappointing to see patents like this one being granted months after the Supreme Court’s ruling. Even invalid patents are very expensive to defeat in court after they’ve issued. Securus already has a captive market for its services. It does not need the monopoly power of a stupid patent as well.
