State Street Bank Leads to an Explosion of Financial and E-Commerce Patents

Prior to the State Street Bank decision, previous courts held that methods of doing business were nonstatutory subject matter and, thus, not entitled to patent protection. The landmark opinion of Judge Giles Sutherland Rich caused the innovative fires already smoldering in the financial and e-commerce fields to erupt in a blaze of patent-protected innovation. Patents granted under U.S. Patent and Trademark Office (USPTO) Class 705, which contains most of the business model and e-commerce patents, “more than tripled” for several years following the State Street Bank decision.[2] Activity reached its peak of over 8,000 applications in 2001 and leveled off at about 6,000 published applications per year for 2002–2004. However, BMPs that were actually granted following examination ranged only between 900 and 1,000 from 2000 to 2004,[3] following the initial surge.

[2] Stobbs, Gregory A. Business Method Patents (NY; Aspen Law & Business, copyright 2002).

[3] Basis is search of PTO site for 2002–2004 and Wagner’s paper, page 4, 2001.

The Internet-related activity associated with prominent business method protection fueled an enormous increase in the stock price of many venture companies. An article in Forbes painted a picture of Walker Digital’s Jay Walker as a modern-day Edison, heralding his ownership of 12 BMPs with 240 pending. Forbes pointed out that two of Walker’s patents protected the name-your-own-price ...

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