October 2, 2009 | By Fred von Lohmann

In re Bilski: The Supreme Court Takes on Business Method Patents

Today, EFF joined an amicus brief in Bilski v. Kappos, a closely-watched case that will be decided by the Supreme Court later this year. At stake is whether the Supreme Court will limit the patentability of "business methods."

Just over ten years ago, the Federal Circuit Court of Appeals handed down State Street Bank & Trust Co. v. Signature Financial Group, opening the doors to patents for novel methods of doing business. That ruling knocked patent law loose from its historical moorings and injected patents into business areas where they were neither needed nor wanted. The results have been nothing short of disastrous: a flood of patent applications for services like arbitration, tax-planning, legal counseling, charity fundraising, and even novel-writing.

Later this year, the Supreme Court will have the opportunity to resurrect sensible limits on patentability. EFF believes that patents should only be granted for technological processes. Congress never intended the strong protections of the patent monopoly to be available for mere services and methods of doing business. There is already plenty of incentive for innovation in those areas without the need for patents, driven by a variety of forces, such as establishing and maintaining first-mover advantages and establishing reputational capital that cannot be "stolen" by competitors.

It's always worth remembering that granting patent protection where it is not needed comes at a steep price, making it difficult for new players to enter the market. Moreover, expanding patents to business methods has tied up PTO and judicial resources that could be better spent on the kinds of patents that have historically been at the heart of the patent system.

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