Academic journal article ABA Banking Journal
Is Your Bank Violating a "Business Methods Patent"?
We are still at the dawn of the age of internet financial services. Yet, already, a risk peculiar to the internet age has come up: Much of the business methods technology that is critical to maintaining internal and online systems can be the subject of patent claims by obscure patent holders the bank has never done business with.
That was the case with State Street Bank & Trust Co. a few years ago. The bank was preparing to implement a new mutual fund asset allocation system. One of State Street's competitors, Signature Financial Group, claimed to have developed a similar system and had obtained a patent for its business method, known as "Data Processing System for Hub and Spoke Financial Services Configuration." An appellate court agreed with Signature that business methods could be patented, and that State Street would have to come to terms with Signature before deploying systems it had developed on its own.
The U.S. Patent and Trademark Office (USPTO) took note of the State Street ruling, and created a special class for patent applications: "Class 705: Automated Business Data Processing Technologies." Since creation of the patent class in 1997, the number of applications received by USPTO in this category has risen from a few hundred to an estimated 6,000 in FY 2000. This is a small fraction of the more than 300,000 applications the USPTO expects to receive this year, but Class 705 covers virtually every aspect of doing business electronically.
Every business process patent issued by the patent office becomes a potential licensing or infringement claim for competitors to be concerned with.
Meanwhile, it has become clear that many of the business method patents cover practices that have been in widespread use for years. For example, one group of patent holders circulated licensing letters last year relating to a software "windowing" method for date functions. A wide variety of "windowing" methods have been used for years, developed by programmers as nimbly as budget managers might customize a spreadsheet. …