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Special project: Internet Law
  Business Method Patents
    • Introduction
    • Issues & short answers
    • Previous state of the law
    • Discussion
    • Authorities cited
The Internet Business Method Patent
I. Introduction

A "business method" has been broadly defined by the courts as a method of doing business.1 Business methods can range from simple pen and paper bookkeeping 2 systems to complex computer-based data processing systems.3 For years, frequently repeated dicta 4 supported the view that business methods were per se unpatentable under a judicially-created "business method exception" rule.5 However, the Federal Circuit recently rejected "this ill-conceived exception"6 paving the way for Internet business method patents.7

In recent years, the growth of business technologies has been phenomenal.8 This is especially true of the electronic commerce industry.9 According to one study, it is projected that Web-based transactions in the United States will grow to $108 billion by the year 2003.10 Undoubtedly, the potential profits in electronic commerce have caused many companies to seek patent protection to guard their new methods of conducting business online.11

Patent laws derive their authority from the U.S. CONST. ART. 1, § 8, which gives Congress the power to "promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries."12 As an incentive for inventors to research and develop new ideas, patents currently give inventors the exclusive rights to their inventions for 20 years.13 In exchange, the inventor must disclose the invention (i.e. provide detailed specification) to the public.14

After the landmark State Street Bank & Trust Co. v. Signature Financial Group, 149 F.3d 1368 (Fed. Cir. 1998) decision, which abolished the business method exception rule, business method claims are now treated as any other patent claim and must meet the statutory requirements of 35 U.S.C. § 101, § 102, § 103, and § 112. Combined with recent changes in computer technology, the State Street decision has resulted in an increase in both the number of Internet business patents filed and litigation over their validity.15


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