There has been recent publicity and concern about the U.S.
Patent and Trademark Office's issuing patents for "business
methods" or "business models." Such patents include
those for accounting methods implemented on a conventional personal
computer. One concern is that companies may obtain patents on
business methods that might otherwise be available to the public,
thereby fettering legitimate competition. Another concern is
that a company may inadvertently develop, and come to rely upon,
an accounting method that is the subject of a patent awarded
to another company. Are these concerns reasonable?
There has been a judicial trend to liberalize subject matter
criteria for patent protection. Prior to 1998, the criteria was
whether the claimed invention related to something physical.
For example, in a case involving a computer programmed with a
software program analyzing electrocardiograph signals, a court
held that the claimed invention was patentable. (footnote
1). Conversely, in a 1994 case involving a computer with
software for bidding on multiple items, a court held that the
claimed invention was not patentable, stating, "the grouping
or regrouping of bids can not constitute a physical change."(footnote 2). Subsequently, in a 1998
decision, called State Street, a court discarded the physicality
criteria and held that an accounting program, implemented with
application software on a conventional personal computer, was
patentable.(footnote 3).
Since the State Street decision, there has been a marked
increase in the number of new applications for electronic commerce
inventions; the U.S. Patent and Trademark Office received 100%
more electronic commerce patent applications in fiscal year1999
than in fiscal year 1998.
Those concerned about this trend to liberalize the subject
criteria for patents may take some comfort in the fact that this
trend has not affected the novelty and nonobvious requirements
of U.S. Patent Law. Thus, although financial processing may now
be proper subject for patenting, a particular patent directed
toward financial processing would only be valid if the claimed
invention were new and not obvious over the prior
art. Thus, for example, a U.S. patent directed to financial
processing would be valid only if the claimed invention were
new and non-obvious over textbooks by others published before
the invention date.
Nevertheless, a legitimate concern is whether the U.S. Patent
and Trademark Office
(USPTO) has an effective procedure for finding prior art when
examining business method patent applications. To address this
concern, in fourth quarter 1999, the USPTO selected fifteen local
law firms having the most business method patent application
filings, for a roundtable session in Arlington Virginia. During
the session, the firms, including the Jackson
Patent Law Office, presented proposals on how the USPTO
should search for prior art when examining business method patents.
