US Ruling May Curb Business Method Patents

October 31, 2008

The US has been one of the few jurisdictions which allow methods or ways of doing things to be registered for patent protection. This type of patent might be narrowed significantly by a recent ruling by a US Appellate Court.  We will all be keeping a watch out for the final decision, given that many UK patents are filed with the intention of ultimately being granted as a US patent.

In the case the patent applicant appealed the decision of the USPTO, which had refused to grant a patent for the method of managing risk of sudden movements in energy costs.  The Appellate Court upheld the decision that the method was not patentable using a test given in a previous Supreme Court decision which held that in order to receive a patent a process must either be tied to a machine or result in a transformation.  This case is likely to be appealed to the Supreme Court. The business world will be waiting anxiously for a final decision which will impact the validity of future business method patents as well as ones which have been previously registered as they are now more vulnerable to attack.

Business method patents first became possible in 1998 when the same Appellate Court confirmed their patentability. In recent years there has been an explosion of business method patents being filed. In 1997 the US patent and trademark office only received 120 applications. This number has been rising steadily since then with a record breaking 1,300 filed last year. The most famous of this type of patent is the Amazon one click patent for ordering online.

To view the case click here.