Are Business Methods Patentable?

 “Business method” (BM) is a generic term that has been used by many to describe various types of process claims.[1] Business method patents are patents that aim to secure the IP rights associated with a particular method of facilitating business. The Canadian Intellectual Property Office states that business method patents are de facto not patentable.[2] This opinion, however, is not consistent with what is actually happening in the IP world.

 

The US Code: Manual of Patent Exaination Procedure (35 U.S.C. § 101) provides that “any new and useful process, machine, manufacture, or composition of matter” may be patentable subject matter.[3] The business method debate has centred principally around the issue of “…usefull process…”. On May 8, 2008, the Federal Circuit heard en banc oral argument on In re Bilski, which addressed specifically the patent eligibility of business method patents.”[4] Apparently, “courts have traditionally had difficulty in determining whether ‘business methods’ are “processes” within the meaning of the Patent Act.”[5] The contemporary debate on business method patentability re-emerged in 1998 with the precedent setting decision in State Street Bank v. Signature Financial Group, where in the Federal Circuit held that business method claims were not per se unpatentable but instead subject to the same requirements as any other process, and, in particular, patentability was contingent on if the invention produced a “useful, concrete, and tangeable result.”

 

The debate is not new however. Business methods have been patented for years. In 1889, the United States granted patents to Herman Hollerith for his method and apparatus that automated the tabulating and compiling of statistical information for businesses and enterprises.[6] Numerous methods have been patented since, though often in ways that creatively avoid the restrictions laid out by the respective patent offices of strict jurisdictions. At the present time, business methods are patentable in the United States, Australia, Japan, and Korea, but not in Europe including the UK, and Canada.[7] However, many BM patent applications filed in Canada are classified as “electrical digital data processing; digital computing or data processing equipment or methods specifically adapted for specific functions” or as “administrative, commercial, managerial, supervisory or forecasting purposes.”[8] According to the TRIPS agreement of the WTO, neither business methods nor software are specifically excludable subject matter for patentability.[9]

 

This debate seems, in the end, unnecessary and overly lost in the particulars. There is no express restriction against patenting business methods, despite some patent offices insisting on the contrary. The statutory definition of a patentable invention is that it be novel, non-obvious, and have utility.[10] As long as the invention fulfils these criteria, there is no reason why it should not also be eligible for patent.  

 

 

 

 

[1] Wynn W. Coggins, “Prior Art in the Field of Business Method Patents” Presented at AIPLA, Fall 2002, The United States Patent and Trademark Office

[3] Greg Reilly, “Are Business Methods Patentable?” Morrison & Foerster LLP
E-Commerce Times.

[4] Ibid.

[5] Ibid.

[6] USPTO White Paper Automated Financial or Management Data Processing Methods (Business Methods)

[7] Bronwyn H. Hall, “Business Method Patents, Innovation, and Policy” (2003) Department of Economics, University of California, Berkeley.

http://repositories.cdlib.org/iber/econ/E03-331

 

[8] Elliott S. Simcoe, “Filing Business Method Patent Applications in Canada; Applications corresponding to USPTO applications are being filed in Canada” February 28, 2002, Smart & Biggar, Ottawa.

[9] Bronwyn H. Hall, “Business Method Patents, Innovation, and Policy” (2003) Department of Economics, University of California, Berkeley. http://repositories.cdlib.org/iber/econ/E03-331  at 6.

[10] Ibid. at 12.


One Comment
  1. I cannot agree with Essien on his assertion that “there is no express restriction against patenting business methods”. As a matter of fact, in the 1977 British Patent Act it is expressly stipulated that “It is hereby declared that the following (among other things) are not inventions for the purposes of this Act, that is to say, anything which consists of …. a scheme, rule or method for performing a mental act, playing a game or doing business, or a program for a computer.”[1] It is in subordination to this article that BM is regarded as unpatentable in Canada.

    However, this provision applies only to pure methods. As Essien have mentioned, “A business method patent may be patented in Canada if the patent is claimed in a manner which provides that an apparatus is involved.” [2] Indeed that is the real status quo in most of the countries that have granted patents on BMs, including Australia, EU countries, India, and Japan, etc., the only exemption being the US.

    From my perspective, this debate is much similar to the debate on patentability of software. One differentiating criteria is that are BMs and software only abstract ideas rather than actual and tangible inventions? And a major international legislative consensus, I think, is “yes they are, provided that no apparatus or system is involved.”

    [1] Article 1(2)(c) of British Patent Act 1977
    [2] Mark B Eisen, Arts and Crafts: The Patentability of Business Methods in Canada (2001), 17 C.I.P. Rev. 279.

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