Patents on Methods of Doing Business (CRS Report for Congress)
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| Release Date |
June 1, 2000 |
| Report Number |
RL30572 |
| Report Type |
Report |
| Authors |
John R. Thomas, Resources, Science, and Industry Division |
| Source Agency |
Congressional Research Service |
Summary:
The decision of the United States Court of Appeals for the Federal Circuit in State Street
Bank &
Trust Co. v. Signature Financial Group , 149 F.3d 1368 (Fed. Cir. 1998), held that inventors
may
obtain patents on methods of doing business. Subsequent judicial opinions have confirmed this
holding. Recently issued patents in fields such as architecture, investment, marketing, psychological
analysis and sports methods also suggest that inventions from virtually any human endeavor may be
the subject of proprietary rights through the patent system.
Since State Street Bank , proprietors of patents concerning Internet-based electronic
commerce
concepts have launched enforcement litigation against competitors. Notable among this litigation
is Amazon.com, Inc. v. Barnesandnoble.com, Inc ., 73 F. Supp.2d 1228 (W.D. Wash.
1999), where
a federal district court enjoined the use of one-click ordering system on a website on the eve of the
holiday shopping season. Both Congress, by enacting the First Inventor Defense Act of 1999 ( P.L.
106-113 ), and the United States Patent and Trademark Office, through its Business Methods Patent
Initiative, have also addressed business method patent issues.
The opening of the patent system to inventions outside traditional industrial technologies has
been the subject of an ongoing public debate. Proponents of business method patenting have urged
that the patent system should keep pace with technologies of the Information Age, including
electronic commerce and data processing. Proponents have also observed the difficulty of
distinguishing business methods from traditionally patentable processes. In contrast, detractors have
noted the lack of empirical evidence that economic gains will result from business method patents
and expressed concerns that business method patents will hinder competition. Commentators have
also expressed concerns that many business method patents should not have been granted, stating
that such patents too often appropriate well-known commercial activities rather than inventive
advances over public domain knowledge.
Observers differ on whether a legislative response to the phenomenon of business method
patenting is desirable. Possibilities include amendment of the First Inventor Protection Act to
provide a more detailed definition of the term "method of doing or conducting business." In
addition, possible substantive reforms include imposing a ban upon business method patents,
adoption of an industrial application requirement or a moratorium upon their offensive use. Possible
procedural reforms include provision for an obligatory reevaluation of business method patents prior
to enforcement litigation, as well as improved resources for the United States Patent and Trademark
Office to examine business method patent applications.
