March 1, 2011
There is no clear definition of what constitutes "business method patents". However, it may generally be described as patents which are granted for methods of carrying out business activity. Business method patents have been obtained for credit and loan processing, billings, clearing houses, tax processing, investment planning (financial services), derivatives, valuation (financial instruments), advertising management, catalogue systems, coupon redemption (marketing), electronic auctions, shopping carts (e-commerce), human resource management, accounting, inventory monitoring, voting systems, gaming, gambling and other miscellaneous day-to-day processes. There are many interesting examples, such as the "1-click patent" granted to Amazon in the USA (YS 5,960,411). The patent claimed the method of allowing customers to make online purchases with a single click, with the payment information needed to complete the purchase entered by the user previously. When it was filed in 1997, it attracted a lot of criticism as to whether the subject matter of the patent was really patentable. Another amusing patent is one that was granted for exercising a cat with a laser pointer (US 5,443,036). A business method patent application filed by IBM referred to a method for reserving office restrooms, but it was eventually withdrawn. Patents like these make the public question the boundaries of patent eligible subject matter. Patents for such processes burden patent offices by creating a huge backlog of applications waiting to be examined. It was no surprise that many called for an end to business method patents.
Patents were traditionally granted for methods and apparatus which consisted of technical processes. In fact, legislation in many jurisdictions specifically excluded from patentability subject matter such as mathematical methods, schemes, rules and methods for doing business, programs for computers, and presentation of information. However, although business methods may have been excluded from patentability, a method may be patentable if the claimed subject matter has a "technical character" even though it involves a method of doing business or a computer program. In the United States, there is no specific legal provision excluding methods of doing business from being granted patents. However, case law has established various tests as to whether a method of doing business is patentable.
A major milestone that gave a boost to business patents in the United States is the 1998 case of State Street Bank v Signature Financial Group. In that case, the court rejected a general ban on business method patents, and stated that such patents should be upheld if they produced a "useful, concrete and tangible result" and met all the other criteria of patentability, including novelty and inventiveness. As a result of this case, innovations in software and the growth of the internet, the number of business method patents granted in the United States grew.
The test of patentability of business methods in the United States was examined again recently in the case of Bilski v Kappos, which concerns a system to hedge energy prices using weather projections. Unfortunately, the U.S. Supreme Court could not agree on a general prohibition for business method patents, dashing the hopes of those who wanted the end of the scourge of so-called business patents.
At present, applicants who wish to obtain patents for business methods have to bear in mind that different jurisdictions treat business method patents differently with the result that the same invention may be granted a patent in one jurisdiction and not in another. In Singapore, business method patents are not excluded from patentability, but many other jurisdictions, including Japan and the European Community, require the invention to have some technical aspects before it qualifies for protection.