The Patentability of Internet Business
Methods: A Systematic Approach to
Ron Laurie and Robert Beyers
In July 1998, the U.S. Court of Appeals for the Federal Circuit in State Street Bank & Trust Co. v. Signature Financial Group, Inc. (hereafter, State Street Bank) 1 explicitly ended the ban on business method patents. The State Street Bank decision expanded the scope of the “useful arts” that may be patented under the U.S. Constitution to include any process (also referred to as method) that produces a “useful, concrete, and as elsewhere tangible result.” Since that decision, entrepreneurs and e-commerce companies have flooded the U.S. Patent and Trademark Office with patent applications covering a wide range of Internet-based business methods.
It is difficult to find anyone involved in commercial applications of the Internet these days who doesn't have a strongly held view on the subject of business method patents. At one extreme are those who predict that allowing patents on such processes will surely stifle innovation on the Internet; 2 at the other are those who bear personal witness to the fact that a successful e-commerce company would never have attracted the investment capital that gave it life were it not for the existence, or at least the possibility, of a strong proprietary position based in large part on the exclusionary rights provided by patent protection.
When one listens carefully to the impassioned arguments against patenting “business methods” it becomes apparent that the arguments, and the basic intellectual property policy positions that consciously or unconsciously underlie them, can be classified into three categories: (a) patents are bad; (b) business method patents are bad; and (c) bad business method patents are bad.
The first position is most often heard in the halls of academia and raises fundamental social and economic issues that go far beyond