The document discusses business method patents, which protect novel ways of conducting business. It provides examples of business method patents, such as Amazon's 1-click ordering patent. It outlines the requirements for a business method patent, including being useful, novel, and non-obvious. The legality of business method patents varies by jurisdiction, with the US allowing them but India and the EU prohibiting patents for business methods or algorithms alone.

1. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
BUSINESS
METHOD PATENTS
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
Shelley E.
EMAIL
info@altacit.com
WEBSITE
www.altacit.com

2. INTRODUCTION
CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
•
‘Business method patents are part of a larger family of patents
known as utility patents, which protect inventions, chemical
formulas, processes, and other discoveries.
•
A business method is classified as a process, because it is not a
physical object like a mechanical invention or chemical
composition.
•
Business method patents are a class of patents which disclose
and claim new methods of doing business.
•
This includes new types of e-commerce, insurance, banking,
tax compliance etc.
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com

3. BUSINESS METHOD PATENT
CHENNAI
3rd Floor, ‘Creative Enclave’,
•
In the recent past, an increasing number of patents have been
issued to software and Internet companies that have devised
novel ways of doing business.
•
For example, new online ordering processes or a unique
Internet advertising scheme.
•
These patents, which usually combine software with business
methodology, are commonly referred to as business method
patents or Internet patents.
•
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
These patents are important because any company that
develops or acquires such a patent can stop others from using
the patented business method and, of course, the owner of the
patent can exploit it by licensing the method.
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com

4. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
• For example, Amazon.com devised a method for
expediting online orders, known as the "1-Click" system.
• The method allows a repeat customer to bypass address
and credit card data entry forms, because Amazon can
access that information directly from the customer's
account.
• Amazon was granted a patent on this business method in
September 1999 (U.S. Pat No. 5,960,411).
EMAIL
info@altacit.com
WEBSITE
www.altacit.com

5. Legal Requirements for Getting a
Business Method Patent
CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
•
In order to qualify for patent protection, a business method or
software must meet four requirements:
– The method or software must fall within the classes of
patentable subject matter. Anything that is created by
humans falls within these classes;
• laws of nature, natural phenomena, and abstract ideas
do not.
– The method or software must be useful. This requirement is
fairly easy to satisfy because any functional purpose will
suffice.
• A business need only demonstrate that its method or
software provides some concrete tangible result.
• For example, the Amazon 1-Click patent provides a
tangible result -- an expedited purchase.

6. Cntd…
CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
• The method or software must be novel. This
requirement means the method must have an aspect that
is different in some way from all previous knowledge and
inventions.
• The method or software must be nonobvious, meaning
that someone who has ordinary skill in the specific
technology could not easily think of it.

7. JURISDICTION
CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
Whether a business method is regarded as
patentable subject matter depends on the legal
jurisdiction.

8. USA
CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
• Business methods were historically unpatentable until the late
1990’s , claiming that a process could not be patented if it was
simply an abstract idea.
• Then that position changed rather dramatically, most famously
with the 1998 US Court of Appeals for the Federal Circuit
decision in State Street Bank & Trust Co. v. Signature Financial
Group, Inc. 149 F.3d 1368 (Fed. Cir. 1998) cert denied 119 S. Ct.
851 (1999).
• The federal court ruled that patent laws were intended to protect
any method, whether or not it required the aid of a computer, so
long as it produced a "useful, concrete and tangible result."

9. Cntd…
CHENNAI
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
•
In the six months following the ruling, patent filings for
software/Internet business methods increased by 40% .
•
The USPTO created a new classification for applications:
"Data processing: financial, business practice, management or
cost/price determination."
•
This happened, notably, through judicial interpretation and
not by legislative intervention.
•
3rd Floor, ‘Creative Enclave’,
Whereas this gave way, soon, to a torrent of business method
patent filings before the USPTO, the backlash it created was
felt far more strongly in other countries.
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com

10. INDIA
CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
•
India like European Union does not allow patents for inventions
related to mathematical or business method or computer
programme “per se” or algorithms.
•
The 1970 Act, as amended up to 1999, had not provided one
way or the other - which means that business method patents
were, at least in theory, available to be granted.
•
But the amendment of 2002 changed all that and how. Act 38 of
2002, viz. The Patents (Amendment) Act, 2002, with effect from
May 20, 2003 specifically declared
– ‘a mathematical or business method or a computer
programme per se or algorithms, as not being an ‘invention’
within the meaning of the patent statute.
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com

11. Cntd…
CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
The relevant provision under the Indian Patents Act reads as under:
BANGALORE
INVENTIONS NOT PATENTABLE
• 3. What are not inventions.- the following are not inventions
within the meaning of this act,-• (k) a mathematical or business method or computer programme
per se or algorithms;
• The Section makes it amply clear that algorithms are not
patentable in India. Though as per the Indian Patent Act,
mathematical method, business method or computer
programme per se are not allowed.
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com

12. Cntd…
CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
Section 2 (j),
• even as amended by the same amending Act of 2002, defines
an invention as meaning a new product or process involving
an inventive step and capable of industrial application.
•
Section 2 (ja) also inserted by that very amendment, defines an
inventive step as meaning a feature of an invention that
involves technical advance as compared to the existing
knowledge or having economic significance or both and that
makes the invention not obvious to a person skilled in the art.
•
A large number of business method patents are, in the
meanwhile, being filed in India.
•
Most are by way of national phase of PCT applications.
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com

13. Case Laws
CHENNAI
3rd Floor, ‘Creative Enclave’,
•
Recently in the case of Yahoo v controller of Patents,
Yahoo sought to patent an invention titled “A method of
operating a computer network search apparatus”.
•
This was a case relating to business methods.
•
The court invalidated Yahoo’s claim and held that the claimed
‘invention’ “is nothing but doing the advertisement business
electronically.
•
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
Even the technical advance that is claimed over the existing
art is only an improvement in the method of doing business
and S.3(k) is clear that business method cannot be patented,
the fact that there is an advance has not improved the case”.
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com

14. Cntd..
CHENNAI
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
•
Many business methods are still being granted protection in
India.
•
A Patent, which assesses creditworthiness, was granted to
Punjab National Bank (Patent No. 240258) for a method to
compute the credit risk rating of a client by analyzing the
business operations of the said individual.
•
3rd Floor, ‘Creative Enclave’,
The analysis includes scrutinizing the past transactions of the
client in order to predict the individual’s future prospects in the
industry in which he operates.
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com

15. Cntd…
CHENNAI
3rd Floor, ‘Creative Enclave’,
•
Another interesting example of a business method patent that
was granted was Afton Chemical Corporation’s patent
(Patent No.240258).
•
The patent was granted for “a method of enhancing fuel value
of used or waste lubricating oil”.
•
The patent protected not only the method of enhancing fuel
value but also protected a business method for distributing and
using waste oils.
•
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
Though the patent over the method of increasing fuel value
may still be legitimate, protection for the method of sale of
this fuel is questionable.
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com

16. Cntd…
CHENNAI
3rd Floor, ‘Creative Enclave’,
•
As Per Section 3(k), business methods are not patentable per se
However they are patentable if a new method solves a
"technical" problem and an apparatus/system is involved.
•
All these patents are pure business method patents since they
seek to achieve business efficiency and profitability.
•
Though many of them are executed by computer programs,
these programs arguably have no technical application and
produce no tangible or concrete result.
•
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
Even if it is assumed that these programs do have some
‘technical effect’, the ‘inventions’ are prima facie business
methods and regardless of the result of the software they should
not be granted protection.
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com

17. CONCLUSION
CHENNAI
•
Granting monopoly power to businesses runs counter to
existing laws in India like the Competition Act, 2002.
•
Though this Act makes an exception to ‘reasonable’
monopolies created due to ownership of intellectual property
right, a patent to a business method in itself contradicts the
very principles that the Competition Act is based on and hence
may not be considered ‘reasonable’.
•
3rd Floor, ‘Creative Enclave’,
Moreover, capturing markets and business opportunities with
broadly worded patent claims, can result in eradication of small
entrepreneurs and start-ups.
•
This will naturally affect economic growth of the nation.
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com