Patenting Business Methods - American and European Patent Law After the State Street Case

Abstract: The 1998 State Street Bank &&semic Trust Co. v. Signature Financial Group, Inc. case took American patent law into a new era. A method of doing business is no longer a valid ground for rejection of patent applications, and the words that ''[v]irtually anything is patentable'' echoe in the legal and business societies. By rendering a data processing system configured for management of a mutual fund system as not merely the use of an unpatentable mathematical algorithm, but as a programmed machine that produced a ''useful, concrete, and tangible result'', the Federal Circuit Court has created a storm of applications for patents on business methods, and moreover, a huge controversy. Further awareness of patents for business methods has been raised by high-profile patent disputes - such as the disputes involving Amazon.com's patent for the 1-Click Internet ordering method and Sightsound.com's patent for transmitting digital music files on the Internet. In Europe, on the other hand, the law in relation to business method patents has not changed. A business method as such is still not patentable subject-matter, although a computer implemented business method might be providing that it claims a new, inventive, and technical method of implementing a business method. This development, coinciding with the web-enabled explosion in e-commerce, has perhaps had its greatest impact on the Internet community. But applications for patents for business methods has not only been filed by software manufacturers and on-line merchandisers, but also by financial firms, traditional hardware manufacturers, and even agricultural companies. All eager to protect their ways of doing business, and perhaps assure a significant commercial advantage. As a result, patent strategies are becoming increasingly important. This paper sets out to examine the possible impacts this development may have on the European patent system as it is structured under the European Patent Convention. As a stepping-stone, the theoretical justifications for property in general, and for intellectual property in particular is used. It is in this regard noted that one has to differ between the American patent system, being a national system, and the European, being a system set out to harmonize several patent systems. A conclusion as to how to amend a system has to be in accordance with the theoretical underpinnings, otherwise it risks contradicting the goals the system is set out to achieve. The paper then moves to a closer look at the US and European patent laws as such, with special emphasis on the patenting of business methods. It is in this context concluded that the two systems differ on crucial points. Whereas the American system's driving force is to promote invention and innovation, with an underlying justification of utility, the European system is more concerned with inventions as such. This is made clear by a requirement for technical character in Europe. These differences are argued to make the European system more inclined to resist the patenting of abstract notions, such as business methods, and therefore would also not be subject to the same development as its American counterpart. Furthermore, the problems and dangers of business method patents as they are perceived in the debate and in the literature are examined, followed by several views of how to amend the American patent system in particular, in order to deal with these kinds of patents. This paper holds that a method of doing business should not be patentable as such being, as it is, an abstract method, process, or idea, rather than a tangible result of invention or innovation. It is therefore argued that a requirement of technical character should be incorporated into the US Patent Act as it seems to be the alternative most fit to reject claims concerned with abstract notions. It is also in agreement with the theoretical justifications and it serves to internationally harmonize patent protection. Also, the implementation of the technical character should be combined with the adoption of a system of opposition as used in Europe and increased funding for the United States Trademark and Patent Office. Finally, it is noted that due to the State Street decision and recent European decisions, applications for patents on computer-implemented business methods are increasing in Europe. US nationals are mostly attributed to this increase in applications. In order not to miss important business opportunities, European companies must increase their awareness as to the patentability of business methods and act so that their business methods are patented in so far as possible, or otherwise act so that no one else can patent their methods.