Business Method Patents: Technological Change, Not Judicial Activism

Patent Law Blog


The last two decades have seen an extraordinary growth in the number of patent applications for business technologies and methods. Critics of business method patents tend to assign responsibility for this development to judicial activism by the judges of the Federal Circuit especially those responsible for the decision in State Street Bank & Trust Co. v. Signature Financial Group, Inc. For example, Professor Peter Menell points to the State Street decision as one of the “more notable” examples of the Federal Circuit’s “strong pro‑patent bias in the interpretation of patent law.” Professor Leo Raskind describes the State Street decision as “so sweeping a departure from precedent as to invite a search for its justification.” So too, Judge Mayer of the Federal Circuit, in his opinion dissenting from the en banc ruling in In re Bilski, argues not only that the State Street “decision to jettison the prohibition against patenting methods of doing business contravenes congressional intent,” but also that it “launched a legal tsunami, inundating the patent office with applications seeking protection for common business practices;” led to the patenting of “the somewhat ridiculous to the truly absurd;” and “generated a thundering chorus of criticism.” The activism thesis has even entered the political arena, as shown by a 2006 report issued by the Computer and Communications Industry Association (CCIA), which accuses the Federal Circuit of being an “activist court” that “summarily eliminated the judicial rule against business method patents” as a means of expanding the domain of the patent system by “judicial fiat.”

The judicial activism thesis may have a superficial appeal. State Street was a highly visible and prominent pronouncement by the federal court having nationwide jurisdiction over patent cases. It may seem reasonable to attribute tremendous implications to such a famous judicial opinion. Yet the judicial activism thesis suffers from multiple glaring problems and plainly cannot account for the timing of the rise in business method patenting, which plainly began well before State Street.