NCPA - National Center for Policy Analysis

Should One Be Able To Patent A Business Method?

March 21, 2001

The U.S. Patent Office has drastically reduced the pace of issuing controversial business-method patents. The patents allow a person to protect a new way of doing business and bar others from using it, just as if it were a new design for a carburetor or computer chip.

Critics charge that many business methods being patented simply computerize activities that are obvious and have been done with paper and pencil in the past. An appeals court validated business-method patents in 1998.

  • Since it typically takes the patent office 26 months to rule on a patent application, the effects of the 1998 decision have only recently become apparent.
  • In the year ended Sept. 30, 2000, the number of business-method patent applications rose to 7,800 from 2,821 the year before.
  • But about a year ago, new policies instituted by the Patent Office mandated a second review for those types of patents, along with other requirements.
  • So in the quarter ended December 31, 2000, the office granted just 36 percent of the business-patent applications it studied -- down from 56 percent in the quarter ended March 31, 2000.

The Patent Office issued 899 business-method patents in fiscal year 2000, which ended Sept. 30.

In addition to a second review, the office's new procedures include sending examiners on "field trips" to a number of corporations in an industry to determine which processes are routine and obvious and wouldn't qualify for a patent.

Source: William M. Bulkeley, "Fewer Patents on Methods Get Clearance," Wall Street Journal, March 21, 2001.

For text (WSJ subscribers)


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