Business Methods

One of the most important developments in patenting in the last decade is the widespread use of business method claims. Such claims have now been used to protect almost any method imaginable, including methods of advertising, accounting, distributing goods and services, teaching courses, tax avoidance strategies, and most notoriously, selling goods on the Internet. It is even possible, for example, to claim a method of writing a book or a method of drafting a patent application.

Claim 2. A method of authoring a talking book with a memory comprising the steps of: generating a script; providing phrase and sound data; providing a playback program; converting said script and said phrase and sound data to segment tables and configuration tables; assembling said configuration tables, segment tables and playback program to combined binary data and storing said combined binary data in said memory of said talking book .

Claim 10. A method by computer for drafting a patent application having at least sections including claims, a summary of the invention, an abstract of the disclosure, and a detailed description of a preferred embodiment of the invention, said method comprising the steps of:

requesting and storing primary elements (PE) of the invention that define the invention apart from prior technology before drafting the claims;

drafting the claims before drafting the summary of the invention, abstract, and the detailed description of a preferred embodiment of the invention; and

drafting the sections in a predetermined order prohibiting jumping ahead to draft a latter section .

The Federal Circuit first formally authorized Business method claims in the famous State Street case of 1998 . Prior to that time the received wisdom was that business methods were unpatentable . The truth is a bit different, however, and patent attorneys had been drafting business method claims for years. In the early 1990s, for example, I filed claims directed to the selling of annuities by a banking institution. Ordinarily that combination would violate the Glass-Steagall Act of 1933, which mandates separation of banking and insurance activities. But the inventor recognized a loophole in the Act, and our job was to secure a patent on that loophole. A business method claim seemed the best way to proceed.

1. A method of providing an annuity through a bank, comprising:

providing a deposit account at the bank;

depositing funds into the deposit account;

obligating the bank to make at least one future payment as a function of the amount of funds in the deposit account; qualifying the method to provide a tax benefit under 26 U.S.C. § 72; and

utilizing a computer based architecture to implement the method.

There are even business method patents dating back into the 1800s, including what may be the first patent on a method of storing data using punched cards.

1. The improvement in the art of compiling statistics, which consists in first preparing a series of separate record-cards, each card representing an individual or subject; second, applying to each card at predetermined intervals circuit-controlling index-points arranged according to fixed plan of distribution to represent each item of characteristic of the individual or subject, and, third, applying said separate record-cards successively to circuit-controlling devices acted upon by the index-points to designate each statistical item represented by one or more of said index-points substantially as desired.

Patent practitioners should always consider filing business method claims, at least in the United States, for difficult-to-patent technologies. For example, where a bioactive compound is already known, and its use to treat a particular condition is already known, an applicant might still be able to secure a patent by claiming a method of marketing the compound by placing certain claims on the packaging. Similarly, if there is nothing particularly novel about the operation of a computer program, an applicant might still be able to secure a patent for the use of that type of program to increase productivity of workers.

The same cannot be said about foreign patent applications. Unless an applicant is willing to spend a lot of time and money fighting foreign patent offices (or perhaps tilting at windmills, as some would see it), one should probably avoid filing business method claims in most foreign countries. Regardless of novelty and non-obviousness, such claims are routinely rejected in Japan and most or all of Europe on the grounds that there is no "technical contribution" to the field. In those countries it is much better to write the claims in the format of an apparatus, a computer-readable media, a system, and so forth. Interestingly, South Korea does allow business method claims, provided they are stated as being implemented in hardware.

The USPTO is under water in examining business method claims. Time to first office action is now reported at four to seven years, and allowance rate is reported at less than 10%. In 2001 a couple of insiders in one of the examining groups presented a useful white paper on successfully prosecuting a business method patent . In 2005 the Office issued new guidelines intended to streamline the process. Both are worth reading.

It should also be noted that the practice of claiming business methods may be curtailed in one way or another in the coming years. In July 2006 there was quite some discussion with respect to patenting tax avoidance strategies, perhaps triggered by testimony Before the Subcommittee on Select Revenue Measures of the House Committee on Ways and Means. The allowable subject matter of patents is, of course, a policy decision that must be made by Congress. But conceptually, tax avoidance strategies are inventions in every sense of the word, and it difficult to elaborate why patent protection for those inventions should be precluded while patent protection for other methods are allowed, included methods of performing inspections and repairs on railcars , using a laser pointer to exercise a cat , or purchasing an item over the Internet .

The Patent Office did recently issue new guidelines for examination of business method claims. In general, the new guidelines require that "the claimed invention physically transforms an article or physical object to a different state or thing, or if the claimed invention otherwise produces a useful, concrete, and tangible result". It remains to be seen whether those new guidelines will make any difference.