The June 2012 edition of Intellectual Property Forum magazine contains an interesting article by Ben McEniery, Barrister and Senior Lecturer of the Faculty of Law Queensland University of Technology, entitled “An Empirical Study of Business Method Patent Applications Filed in Australia 2000-2009″ (not available online, extract here).
On the background to business method patents:
The push to patent business methods began in earnest worldwide after the United States Court of Appeals for the Federal Circuit handed down its decision in State Street Bank & Trust Co. v Signature Financial Group, Inc. in 1998. In thate case, the revered Judge Giles Rich categorically rejected the notion that business methods are a class of subject matter that is excluded from patent eligibility. Rich J’s view in this regard has since been adopted as good law in Australia.
On the motivations for the study:
Despite the controversy, and in some quarters, the outright opposition to business method patents, we know very little about business method patenting practices…
One of the principle motivations behind this study was to identify the number of patent applications for business methods filed during the sample period that satisfy the physicality requirement introduced into Australian law in 2006 in [Grant v Commissioner of Patents] …
While a New Zealand court has not yet ruled whether the Grant requirement for a “physical effect” applies in New Zealand, IPONZ draft guidelines suggest that it should (another paper by Ben on the Grant decision is here).
An interesting part of the study is whether the Australian Patent Office has been enforcing the requirement for a physical effect:
Perhaps the most interesting observation to be made from the data is the number of applications that do not involve a physical effect. Of the 200 business method patent applications considered, 75 contain non-physical claims – that is, either solely non-physical claims (59) or both physical and non-physical claims (16). In other words, more than one-third of the applications considered contain claims that do not conform to the physicality requirements established in Grant.
The legal requirement for a physical effect is clear, yet one third of the business method patents were granted by the Patent Office despite failing to meet this simple requirement. The author states (rather diplomatically):
The applications that contain non-physical claims should all be rejected, either in whole or part, by the Patent Office. The survey results, however, suggest this is not happening.
But even more interesting is this:
The remaining 125 applications contain physical claims only as a consequence of having been implemented in computer software. That is, the only physical effect of these methods is a physical transformation taking place as a result of a change in state or information in a part of a machine.
So, of the 200 business method patents studied, at least 184 had either no physical effect, or only had the dubious “physical effect” of changing 1’s and 0’s in a computer. No doubt, the patent applications omitting any claimed physical affect could easily be amended to assert informational changes in a computer as the necessary physical effect (i.e. cliché of the “… but on a computer!” patent).
Business method patents are a close cousin of software patents, and in some cases the underlying “invention” could be dressed as one or the other, making the study relevant to the software patent debate:
- If changing the state of information in a machine is a legally sufficient “physical effect” to support a business method patent, or is routinely considered so by the Patent Office, then the requirement may as well be done away with;
- The requirement is routinely ignored anyway;
- It highlights the tenuous theoretical basis on which many business method patent applications rest (asserting that informational changes are “physical”);
- It highlights the need for clear legal guidelines (preferably legislative, otherwise judicial/administrative); and
- It demonstrates the difficulties for patent examiners in processing business method patents making highly abstract, metaphysical claims, resulting in questionable patents being granted.