The International Law of Business Method Patents

John M. Conley
Economic Review, Vol. 88, No. 4, 2003

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Before the landmark State Street case in 1998, the courts and the U.S. Patent and Trademark Office (USPTO) had often denied patents to inventions that were no more than methods of doing business. But State Street swept away three decades of complex, inconsistent case law, firmly establishing the patentability of business methods and computer software.

This article reviews the current state of U.S. and international patent law with respect to business methods. After outlining the basic U.S. and international requirements for patentability, the author describes the evolution and current state of both American law and international law, particularly in the European Union, various European countries, and Japan.

After reviewing a number of case histories, the author argues that the differences between U.S. and international law that appear so striking in theory are probably less profound in practice. While the American patent system has seemingly become more lenient in granting business method patents, the USPTO has taken steps to scrutinize such patents more rigorously on certain grounds. In contrast, Europe and Japan, which have apparently more rigorous business method patent standards than the United States does, may in practice be somewhat more liberal than their policies would indicate.

Eventually, the author predicts, U.S. and international business method patent standards will converge, with the United States being more permissive in theory but more demanding in practice and Europe and Japan displaying the opposite tendency.

December 2003