Until late 1990’s, business methods were not considered patentable. The gaining prominence of e-commerce, however, brought with it a paradigm shift. New practices, processes, methods and business models that had never been experienced before came into being. In fact, they became the new norm with sophisticated IT related processes replacing the mechanistic models. With this, it continually presented a challenge determining whether a particular computer-implemented invention was a business invention or a technological invention.
Case after case was brought to the court of a company allegedly copying another’s business model. An example of such a case was AT&T Corp. v. Excel Communications, Inc. This 1999 case where it was decided that AT&T had failed to claim statutory subject matter. Eventually, it was agreed that the US Patent and Trademark Office (USPTO) should add business methods patent as similar to any other invention. As a result, business methods are now patentable.
Which business methods are patentable and which are not?
After USPTO allowed patenting of business methods on equal footing with other inventions, there was a widespread registration of patents. Patents issued for business methods increased from a mere 1000 in 1997 to a whopping 11,000 in 2007. A majority of these methods were vague and a duplication by paraphrasing an existing method. A review was needed at this point to specify a business method that was eligible for patenting.
For a business method to be patent-eligible, the business method claim must either be tied to a particular machine or be a method that transforms physical matter such as vulcanizing rubber or smelting ores. The Supreme Court has clarified that the machine or transformation test is not the sole test for patent method eligibility. The test is merely one criterion, though key, not the solely available test to determine patent-eligibility. This has been left open thus far, and any contentious method is subject to advanced scrutiny to determine its legibility.
According to USPTO ‘claims drawn to a method of doing business should not be categorized as a business process’. This is especially the case for a modification of an existent business model. Unless the method is central to a business process, it is not eligible.
Another form of unpatented business idea is abstract ideas. When a business is merely expressing an abstract business idea without the actual implementation plan, it is then not eligible for patenting. A business method should clearly communicate implement ability.
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