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Special
project: Internet Law Business Method Patents Introduction Issues & short answers Previous state of the law Discussion Authorities cited |
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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