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The Rise and Fall of Business Method Patents

April 8, 2015
Attorney at Law Magazine - Twin Cities Edition
Author: Courtland Merrill

A reversal of fortune has occurred concerning business method patents.

Historically, patents were awarded in connection with tangible things, not ways of doing business or marketing concepts. Until the second half of the 20th century, it does not appear that anyone seriously believed that one could patent a method of organizing human activity. Things changed.

In the 1990s, the United States Court of Appeals for the Federal Circuit – the federal appellate court with exclusive jurisdiction over patent cases – upheld the validity of a patent on software involving methods of conducting business. Thereafter, the patent office allowed patents on thousands of inventions covering methods of doing business, in particular inventions relating to computer software and methods of conducting business over the Internet.

The rise of business method patents continued until reined in by a series of U.S. Supreme Court decisions beginning in 2010, and including the court’s 2014 decision in Alice Corp. v. CLS Banks. 134 S.Ct. 2347 (2014). In Alice, the court struck down a patent covering a method of exchanging financial obligations between two parties using a third-party intermediary to mitigate settlement risk. The Supreme Court’s decision in Alice is the latest in an about-face concerning the patentability of methods of doing business that is occurring, ironically, at a time when software and doing business via the Internet dominate modern commerce.  Read more.