A Reasonable View on Business Method Patents

01/20/2009 / Craig Lervick

In 1998, business method patents became very popular when the Court of Appeals for the Federal Circuit (CAFC) decided the State Street Bank & Trust case. Business method patents continue to be a legitimate asset for many organizations, with thousands of business method patent applications filed each year. Despite their popularity, these patents are often criticized for allegedly protecting subject matter which many would not consider true "inventions." In the recent case of In Re Stephen W. Comiskey, the CAFC provided some reasonableness to this topic, finding that the inventor was simply attempting to patent the use of human intelligence in and of itself - a category which is simply unpatentable.

The U.S. patent laws define certain subject matter to be appropriate for patent protection. Generally stated, a patent may be obtained for any "new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof" which is also novel and non-obvious. Thus, for business method patents to be found allowable, the invention must be directed toward a "new and useful process" or "machine."

In the Comiskey case, the relevant claim involved "a method for a mandatory arbitration resolution regarding one or more unilateral documents." These claims were directed toward the process of arbitration and did not require the use a mechanical device, such as a computer. The CAFC found these claims to merely cover a mental process for resolving a legal dispute between two parties by the decision of a human arbitrator. As such, the claims were not appropriate subject matter and not patentable. The court stated that the patent statute does not allow patents on business systems that depend for their operation on human intelligence alone. It is well established that the application of human intelligence to the solution of practical problems is not in and of itself patentable.

The decision from the CAFC should not surprise anyone. A method for conducting arbitration simply does not have the characteristics typically associated with "inventions." In this case the CAFC plainly confirmed this, thus providing reassurance that some amount of reasonableness still exists in the patent system.

-- Originally published as part of Larkin Hoffman's IP/Tech Buzz.