Patent Protection for Business Methods Left in murky waters after Supreme

Court's June Decision

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The nation's top court has issued its long anticipated opinion rejecting the patentability of the controversial Bilski case. The decision is both surprising for what it does and for what it does not do. The Justices did not offer a clear interpretation as to what constitutes patentable subject matter in the narrow classification known as 'business methods.' But they did clarify certain points of the lower court's ruling. Inventors and businesses seeking patent coverage are well advised to study the oracles emanating from the Supreme Court in order to get a patent that can pass muster in the existing case law.

The field of 'business method' patents includes a variety of transactions having to do with commerce, banking, taxation, electronic transaction processing and more. Patents have been granted in this field for at least two centuries before the present case even saw the light of day. However, the policy of the government agency overseeing patents, the United States Patent & Trademark Office (USPTO), has evolved from those earlier grants to one that assumed that patents could not be granted for these very same methods.

Since the advent of the web, a rainstorm of patents claiming financial transaction processing began to arrive at the doors of the USPTO forcing a change in direction. The patent office was compelled by the deluge to examine numerous cases having both a technological application as well as crossing the line into financial processes that it would have preferred not to. As a matter of daily practice, the office simply instructed examiners not to evaluate a patent application to determine if it could be a business method or not. This would change when the Federal Circuit Court decided the landmark State Street Bank decision (1998).

This decision swung open the gates of what could be patented generating a chorus of complaints against State Street even though many informed observers point out that it may not have been entirely responsible after all. In any case, the Federal Circuit did indeed indicate that an invention would be eligible for a patent if it involved some practical application and produced a useful, concrete and tangible result. The US Patent Office responded by making it part of their official policy to require a technological connection for the method to be patentable. In doing so, the agency overstepped the bounds of its constitutional mandate since it could not be proved that these requirements existed in the current body of law (Ex Parte Lundgren, BPAI 2005).  continued... in part 2