Business Method Patents: Allowed or Not


With the digital age and the advances in the methods of doing business, particularly in electronic commerce and the Internet, a lot of growth has been seen in developing new and innovative business methods. Business methods are being developed by IT companies, banking corporations and the proprietors of online market and auction sites. Business methods include automated business data processing technologies. Many corporations and businesses are trying to protect their developed business methods by use IP means, such as patents.

Many countries had previously barred business method patents. However, with the role of these imminent technologies in the modern digital era, some countries have gradually softened its stance on providing protection for business methods.

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Some of the rules and laws governing the protection granted to business method related technologies, are explained below:

  • United States did not allow any method of doing business to be granted patent protection before 1998. This was known as the business method exception to patentability. However, in 1998, the United States Court of Appeals for the Federal Circuit ruled in State Street Bank & Trust Co. VS Signature Financial Group that “since the 1952 Patent Act, business methods have been, and should have been, subject to the same legal requirements for patentability as applied to any other process or method.” It was after the ruling in “State Street Bank & Trust Co.” allows which for business methods to be granted patent protection under the US patent law.
  • Europe has one of the strictest requirement for obtaining a business methods patent. Article 52(2) of the EPC states that methods for doing business, mathematical methods, presentations of information, and programs for computers shall not be regarded as inventions. That said, however, many patent applications related to business methods technologies have been filed and granted at the EPO. This has been achieved because such applications were carefully drafted to meet Article 52(3) of the EPC. It is to be noted that Article 52(3) EPC states that although methods for doing business are explicitly excluded from being patented, “a product or a method which is of a technical character may be patentable, even if the claimed subject-matter defines or at least involves a business method.”  Patents
  • In other countries, like Japan, a technology related to business method may be considered patentable if the said method may include a technical aspect that is tangible in some sense.
  • In Indian Patent Act, section 3 deals with inventions which are considered not patentable. Section 3 of the Indian patent act says “mathematical method or business method or a computer program or algorithms are not patentable”. Further, per Chapter II, Section 3, part (k) of the Indian Patent Act, business methods are not patentable per se. However, they are patentable if a new method solves a “technical” problem and an apparatus/system is involved.

Thus, to understand whether the business method is patentable or not, one has to understand the specific local laws of the jurisdiction in which the person intends to file patent for such invention.


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