Skip to content

Federal Circuit Rejects Business Method Patents

The Court of Appeals for the Federal Circuit (CAFC) is pretty much the “supreme court” of patents. While the real Supreme Court has granted certiori to a handful of cases appealed from the CAFC, that is certainly the exception, rather than the rule. Earlier today, the CAFC handed down its most momentous decision since it granted its blessing to business method patents in the State Street Bank case back in 1998.

What the CAFC gave in 1998, it appears to have taken back today in large measure. In the case entitled In re Bernard Bilski (In re Bilski), the CAFC ruled that business methods, such as the Amazon “One-Click” purchase, cannot be patented. The CAFC ruled that to be eligible for patent protection, an invention must fall into one of two categories: (1) it must be tied to a particular machine or apparatus, or (2) it must transform a particular article into a different state or thing. The court went on to note that business method claims are subject to the “same legal requirements for patentability as applied to any other process or method.” The CAFC declined however, to toss out software patents as a whole.

This ruling will certainly come as a shock to the thousands of companies in possession of the over 50,000 business method patents the United States Patent and Trademark Office has already granted. These companies have spent hundred of millions of dollars on these patents, with many staking their entire livelihood on these government granted monopolies. This obviously comes as good news to competitors seeking to enter these previously patent-protected markets.

Checking the betting line on when the cannibalistic feeding frenzy begins, I see that it is too close to post to place a bet. Brace yourselves for what amounts to overnight deregulation of online business practices. Companies once stagnated by the morass of online business method patents will now begin an era of expansion not seen since the the dot com boom of the last century.

Brett Trout

Related posts

Posted in Internet Law. Tagged with , , , , .