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The Business Method Patent Myth

John R. Allison

University of Texas - McCombs School of Business

Emerson H. Tiller

Northwestern University - School of Law

Berkeley Technology Law Journal, Vol. 18, Fall 2003

Although business methods previously had been patented, the Court of Appeals for the Federal Circuit first gave them formal recognition as patentable subject matter in 1998. Internet business method patents have been roundly criticized by most observers as being singularly inferior to most other patents. Many have even argued that business methods should not be patentable subject matter. As a result, Congress and the Patent and Trademark Office (PTO) singled them out for special treatment. All of these criticisms were voiced without empirical support. We gathered data on most Internet business method patents issued through the end of 1999 and compared them with a large contemporaneous data set of patents in general. We also compared them with patents in fourteen individual technology areas within the general patent data set. Our comparison focused on several metrics that we believe serve as good proxies for patent quality and value.

We found that Internet business method patents appear to have been no worse than the average patent, and possibly even better than most. They also appear to have been no worse, and possibly even better than patents in most individual technology areas. These findings lead us to question the conventional wisdom that these patents were uniquely deficient. We briefly explore some possible explanations for the chasm between the accepted view and what we believe to have been the reality, including the possibility that negative opinions about these patents may have been characterized by an information cascade. More important, we believe that efforts to single out these patents for special treatment not only lacked sound justification in the particular case but also reveal more fundamental problems associated with ex ante definitions to carve out any particular technology area for different treatment.

Number of Pages in PDF File: 93

JEL Classification: K10, K20, O34

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Date posted: July 28, 2003  

Suggested Citation

Allison, John R. and Tiller, Emerson H., The Business Method Patent Myth. Berkeley Technology Law Journal, Vol. 18, Fall 2003. Available at SSRN: http://ssrn.com/abstract=421980 or http://dx.doi.org/10.2139/ssrn.421980

Contact Information

John R. Allison (Contact Author)
University of Texas - McCombs School of Business ( email )
CBA 5.202
University of Texas at Austin
Austin, TX 78712
United States
Emerson H. Tiller
Northwestern University - School of Law ( email )
375 E. Chicago Ave
Unit 1505
Chicago, IL 60611
United States
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