Business Method Patent

Business method patents claim new methods of doing business such as new and non-obvious types of e-commerce, insurance, banking, tax compliance, and other types of business methods. The first judicial validation of business method patents occurred in State Street Bank & Trust Co. v. Signal Financial Group, Inc., 149 F.3d 1368 (Fed. Cir.1998), cert denied, 119 S.Ct. 851 (1999) wherein the court ruled that patent laws were intended to protect any method, whether or not it required the aid of a computer, so long as it produced a “useful, concrete and tangible result.”

Recently the U.S. Supreme Court upheld the validity of business method patents in Bilski v. Kappos, 130 S. Ct. 3218 (2010), ruling that lower court’s machine-or-transformation test (limiting patentable processes to only those tied to a machine or to an article’s transformation) is not the sole test to determine the patentability of a process, but rather is “a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under [CFR] § 101.1.” At issue in Bilski was the patentability of an investment strategy (method) which hedged against losses in the energy industry by making investments in other segments of that industry. The court determined the hedging strategy to be an abstract idea, based upon mathematical principles, capable of being applied in many industries and thus upheld the Patent Board’s (and lower court’s) rejection of the patent application.



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