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Intellectual Property Newsletter

What Constitutes Prior Art for a Business Method Patent?

In 1998, in State Street Bank & Trust v. Signature Financial Group, the Federal Circuit Court of Appeals issued a decision that significantly expanded the patentability of business method patents. Prior to that time, most companies relied on other strategies to protect trade secrets since the U.S. Patent Office generally refused to patent business methods due to their seemingly non-tangible character. However, as a result of the State Street decision, along with the constant growth in business technology, there has been an explosion of patent filings in the area of business methods. In fact, within the six months following the State Street decision, the U.S. Patent Office experienced a 40% increase in such patents.

Business Method Patents and Prior Art

“Prior art” is the public’s knowledge of the novelty and nonobviousness of an invention, as determined by an examination of issued patents, publicly available information and published material at the time a patent application is filed. There are many forms of prior art that patent examiners may consider when trying to determine the patentability of an invention, such as:

  • Pictures and drawings of the invention
  • Previously granted U.S. or foreign patents
  • Published U.S. patent applications
  • Printed publications such as newspapers or periodicals
  • Admissions from the applicant
  • Public use of the invention
  • Sale or offer for sale of the invention

Business method patents present unique challenges with regard to what types of prior art may be considered to determine if the method is new or novel. Since business method patents lack certain physical characteristics, additional forms of prior art beyond those generally considered are reviewed, including electronic documents.

Challenges of the Internet, Electronic Documents and Publication

With the advent of the Internet and the increased development of information technology, the subject matter and reaches of electronic data has increased dramatically. In order for electronic documents to be deemed prior art under 35 USC §102, they must first be classified as a printed publication. This classification does not necessarily mean that the document must be printed. Rather, they are considered printed publications as long as they were accessible to people who are concerned with the field of art to which the document relates. In other words, even documents and information posted on the Internet may potentially qualify as prior art.

Date of the Website

However, certain limitations in 35 USC §102 provide challenges to deeming information posted on the Internet as prior art, challenges not present with non-electronic document publications. Among other limitations, under 35 USC §102, if the subject of the patent was included in a publication, available more than one year prior to the patent application, the subject of the prospective patent is not considered novel, and will be denied. (However, a one-year grace period exists for individuals who can prove that they had the idea for the patent prior to the publication.) Thus, one difficulty with Internet publications is establishing the date of the posting or website. Often, information posted on the Internet does not include the date when it was posted.

Credibility of the Content

Another concern is the reliability of Internet publications. In order for a document to qualify as prior art, the content must be technically accurate and informative. The level of accuracy and technical complexity of Internet content varies significantly. It is easy to establish the credibility of an on-line academic journal, or the accuracy of information contained on a government agency’s website. In contrast, information appearing on a privately maintained website or posted on a public forum website may contain misstatements or even substantial inaccuracies.

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