On the Feasibility of Improving Patent Quality One Technology at a Time: The Case of Business Methods

In its 1998 State Street Bank decision, the U.S. Court of Appeals for the Federal Circuit held that business methods are eligible for patent protection.1 The decision was quickly followed by a dramatic increase in the number of applications for and grants of business method patents.2 During the ensuing two years, these patents received an unprecedented amount of criticism from academics, journalists, and politicians. The criticisms focused on both the policy of allowing patents on such subject matter and the perception that the business method patents issued were of uniquely inferior quality in comparison with patents in other fields.3 Two of the business method patents frequently cited by critics as being of questionable legitimacy were Amazon.com’s patent on its “one-click” technique for more efficiently ordering merchandise on-line4 and Priceline.com’s patent on the reverse auction technique for buying airline tickets on the internet.5 Although patents in other areas of technology have brought forth complaints from various quarters,6 the magnitude of adverse commentary and reportage on business method patents was unprecedented.7