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BUSINESS METHOD PATENTS

In State Street Bank & Trust Co. v. Signature Financial Group, Inc., the United States Court of Appeals for the Federal Circuit categorically and unceremoniously did away with what had previously been come to be known as the business method exception to patentability. Essentially, the business method exception precluded patent protection for any method of doing business. The Federal Circuit, however, pointed out that the business method exception had never been invoked by either the Federal Circuit or its predecessor court, the United States Court of Customs and Patent Appeals (“CCPA”). Furthermore, the case frequently cited for establishing the business method exception did not ultimately rely on that exception to deny patentability, meaning it was nothing more than dicta. Hence, the Federal Circuit 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."

The importance of State Street Bank is that business methods are now considered patentable subject matter. It is, however, necessary for the claimed invention to accomplish some practical application. In other words, in order for a business method to be patentable it must produce a "useful, concrete and tangible result." The purpose of this requirement is 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, or is simply a staring point for future investigation or research.

The mere presence of a mathematical algorithm in a claim is not grounds for a rejection under 35 U.S.C. §101. Instead, the patent examiner must review the claims to determine if the claimed invention produces a "useful, concrete and tangible result." If the answer is yes, then the claimed invention has a practical application and satisfies the utility requirement of 35 U.S.C. §101. Thus, it is vitally important that the specification is complete and clearly identifies any practical application for the claimed invention.

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