Will business method patents be put out of business?

"Business method patents" are those that that describe and claim a new method for conducting a business-related operation.  Until 1998, business methods were largely unpatentable.  But in that year, the Court of Appeals for the Federal Circuit (CAFC) declared business methods patentable in State Street Bank & Trust Co. v. Signature Financial Group, Inc., and the court later held that a patentable method need produce only a "useful, concrete, and tangible result" (AT&T Corp. v. Excel Communications, Inc., 1999).  State Street precipitated a flood of business method patent applications and substantial criticism, including from Supreme Court Justice Anthony Kennedy, who noted the patents' "potential vagueness and suspect validity" in eBay Inc. v. MercExchange, L.L.C. (2006).

Last week, the CAFC signaled an intent to review en banc the patentability of business method patents, including possibly reversing course and redefining patentability requirements.  The move highlights the still-evolving definition of patentable subject matter under 35 U.S.C. § 101, including whether the definition actually "include[s] anything under the sun that is made by man" (Diamond v. Chakrabarty, 1980).  The business community and patent practitioners will watch this one closely. Any tightening of patentability requirements will likely generate lawsuits seeking to invalidate existing business method patents.

The case, In re Bilski, is set for hearing in the CAFC on May 8, 2008.