Business method patent

Prior to 1998, several judicial opinions could arguably be read to hold that a business method patent could not be granted. For example, in the 1908 opinion in Hotel Security Checking Co. v. Lorraine Co., the court considered “a method of and means for cash-registering and account-checking” designed to prevent fraud by waiters and cashiers. At one point the court stated that a “system of transacting business disconnected from the means for carrying out the system is not, within the most liberal interpretation of the term, an art” that could be patented. However, the court also explained that the invention claimed in the patent “would occur to anyone conversant with the business” and that it was “unable to discover any patentable improvements. . . .” As a result, it was unclear whether the court meant to establish a categorical rule that business methods were not patentable subject matter, or merely state that the particular invention before the court would have been obvious.

In any event, the USPTO issued numerous patents that were arguably directed towards business methods during its long history. This long period of ambiguity over the patentability of business methods ended with the 1998 opinion of the U.S. Court of Appeals for the Federal Circuit in State Street Bank & Trust Co. v. Signature Financial Group.

Under USPTO practice, business method patents are organized within class 705, titled “Data Processing: Financial, Business Practice, Management, or Cost/Price Determination.”