In 1998, the United States Court of Appeals for the Federal Circuit, in State Street Bank & Trust Co. v. Signature Financial Group, Inc., did away with what had previously been come to be known as the business method exception to patentability. The Federal Circuit, per Judge Giles Sutherland Rich (shown left), pointed out that the business method exception had never been invoked by either the Federal Circuit or its predecessor court, the CCPA. Judge Rich explained that “[s]ince 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.”
Although the United States Supreme Court did away with that test when it issued its decision in Bilski v. Kappos, it is still nevertheless illustrative and the best test that is out there. Simply stated, in order to have a patentable business method, it is necessary for the invention to accomplish some practical application. In other words, in order for a business method to be patent eligible, it must produce a “useful, concrete and tangible result.” Judge Rich was correct to point this out and the Supreme Court has made a horrible mess of the law as it applies to business methods and computer-implemented innovations because it fails to understand what Judge Rich really meant.
If you really understand what Judge Rich meant by “useful, concrete and tangible result,” you come to the inescapable conclusion that it is the appropriate test. Indeed, those drafting patent application would do well to really target the description of the invention to satisfy the test.
The purpose of the “useful, concrete and tangible result” requirement was to limit patent protection to inventions that possess a certain level of “real world” value, as opposed to subject matter that represents nothing more than an idea or concept (which is not patentable), or is simply a staritng point for future investigation or research. The unfortunate aspect of the test was that it used two terms that really have no place in the patentable subject matter equation; these are “useful” and “result.”
Starting with “useful,” the patent statute already has a utility requirement embedded therein. Inventions are only patentable if they are useful, which has always been considered to be a separate and distinct requirement when compared with the patent-eligible subject matter requirement. Thus, it was truly unnecessary, unfortunate and perhaps a bit misleading for Judge Rich to have included “useful” in the test. The presence of the word “useful” confusingly led people to believe that the term “useful” in the test had to be referring to something other than utility. But what could that be?
Moving on to “result,” it is likewise unfortunate that this term found its way into the test because if the focus is on the result in any way, then the process becomes nothing more than a meaningless black box. With business-method inventions, however, the process is everything. Today, the process and how technology is used to facilitate the process is everything. Thus, having the term “result” modify “useful, concrete and tangible” lead to a test that largely was incoherent and could not be evenly applied with any meaningful consistency. If you were predisposed to believing the invention was patentable, it was patentable, and if you were predisposed to believing no patent should be awarded, you could find that as well. So the State Street test ultimately wound up no better over time than the tests it sought to replace.
If you stand back and try to figure out what one is trying to determine with respect to whether a business method is patentable, the core of the inquiry is to determine whether there is in fact an innovation…an invention that we recognize as one that can and should be patented if it is novel and nonobvious. So the key to the “useful, concrete and tangible result” test of State Street is the “concrete and tangible” part of the test. That part of the test must be referring to whether an invention has been articulated sufficiently so that, if it is novel and nonobvious, a patent could be appropriately awarded.
The right approach to patentability of methods, whether they are business methods or computer-implemented methods, is to push through the 101 patent eligibility analysis to get to 112 to determine whether there is any innovation described with enough specificity to say that there is an invention and not just an idea. If there is an invention, then the subject matter should be patent eligible. It is a mistake to make 101 the coarse filter it is becoming.
Tags: business method, business methods, computer implemented methods, Software, software patent, software patents
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