Business Method Patent Myth, The

Intellectual Property and Patents

Article Snapshot


John R. Allison and Emerson Tiller


Berkeley Technology Law Journal, Vol. 18, Fall 2003


This article disputes the notion that business method patents are inferior to other types of patents.

Policy Relevance

The Patent Trademark Office’s (PTO) singling out of business method patents for stricter scrutiny is unnecessary and possibly counterproductive. This study’s empirical data suggests that business method patents are at least on par with general patents.

Main Points

  • Internet Business Method Patents have been criticized widely for being inferior to other types of patents. This is due in large part to the belief that these patents are granted without sufficient consideration for “prior art,” which is the known information about an invention up to the present.
  • Congress singled out business method patents as particularly troublesome at the turn of the century. Subsequently the PTO responded to the pressure and increased the standards for business method patents and instituted more rigorous examinations.
  • Five value indicators for patent value were used in the study to see if Internet Business Method Patents are actually less substantive than general patents:

    • The number of “prior art” references.
    • The types of non-patent “prior art” references.
    • The total number of patent claims for the patent.
    • The number of inventors of the patent.
    • The time spent in PTO before issuance of the patent.
  • The data collected regarding the five value indicators shows that Internet Business Method Patents are not less substantive than general patents and perhaps may have stronger foundations in originality or non-obviousness.
  • Possible reasons for the disconnect between popular opinion and the empirical results are the “information cascade of negative opinion,” which occurs when opinions are swayed by the sheer volume of other opinions, even when those opinions are not true. The psychological notion of “confirmation bias,” that people tend to pay more attention to information that confirms what they already believe, may also be another reason for the disconnect.
  • The definition of “business method” is inherently difficult to tie down; therefore, additional scrutiny by the PTO only opens the door to more creative drafting by attorneys to work around the new standards. Therefore, the singling out of these patent claims is ineffective and could actually end up being counterproductive by creating higher legal costs for patents.


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