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Business Method Patents

During the recent visit of the Indian Prime Minister to the USA, one of the issues that figured prominently in the talk agenda was IP-related issues. American business community especially those from the pharmaceutical industry had been lobbying with their government to pressurize India to bring the Indian Patent Act and its provisions aligned with global systems so that their investments can be legally protected. As of late India has been looking for increased investment both in infrastructure projects and technology they chose the Indian Prime Minister’s visit as a way to get their concerns addressed.

With the above backdrop, it is natural to look for areas in the IP domain where the Indian Patent Act and its provisions deviate from those of other countries. One issue on which the Indian Patent Act differs from many others the especially the USA is the non-patentability of Business Method Patents in the Indian Patent Act.

Summarized below is the information related to Business Method Patents and policies and practices adopted by different countries in this respect.

Business Method Patents is one of the most amazing topics in the patent industry though in India according to the Indian patent Act and Rules these are not patentable. A business method may be defined as “a method of operating any aspect of an economic enterprise”.First of all, let us have a look at some basic points related to Business Method Patents and how these Patents help in improving/growing business for both independent inventors and major corporations.

Business Method Patents are a class of Patents that disclose and claim new methods of doing business and include new types of e-commerce, insurance, tax compliance, etc. Business method patents are a relatively new species of patent and there have been several reviews investigating the appropriateness of patenting business methods. Every company has its own strategy and goals and accordingly evolves an approach to achieve them. The approach may involve the method of marketing their product, method of giving importance and weightage to their client, method of carrying out business transactions including financial transactions and other such related aspects. Companies invest huge amounts of their resources to innovate and develop new and unique systems. These companies would like to ensure that their innovative methods and approach is being protected. Business Method Patents can be one way of protecting such systems. Hence Business Method Patents help inventors or companies to prevent or stop their competitors or other firms from making use of their unique ideas and work.

A cutting-edge issue in regard to business-method patents is whether they are patent-ineligible because they are not “technological,” regardless of whether they meet the other criteria of patent-eligibility and patentability.

History :

For many years, the USPTO took the position that “methods of doing business” were not patentable. However, with the emergence in the 1980 and 1990s of patent applications on the internet or computer-enabled methods of doing commerce, USPTO found that it was no longer practical to determine if a particular computer-implemented invention was a technological invention or a business invention. Consequently, they took the position that examiners would not have to determine if a claimed invention was a method of doing business or not. They would determine patentability based on the same statutory requirements as any other invention. The allowance of patents on computer-implemented methods for doing business was challenged in 1998. The court affirmed the position of the USPTO and rejected the theory that a “method of doing business” was excluded subject matter. The USPTO continued to require, however, that business method inventions must apply, involve, use or advance the “technological arts” in order to be patentable. This was based on an unpublished decision of the U.S. Board of Patent Appeals and Interferences. However, this requirement could be met by merely requiring that the invention be carried out on the computer.

In October 2005 the USPTO’s own administrative judges overturned this position in a majority decision of the board in Ex Parte Lundgren, Appeal No. 2003-2088 (BPAI 2005). The board ruled that the “technological arts” requirement could not be sustained as no such requirement existed in law.

In light of Ex Parte Lundgren, the USPTO issued interim guidelines for patent examiners to determine if a given claimed invention meets the statutory requirements of being a process, manufacture, composition of matter or the machine. These guidelines asserted that a process, including a process for doing business, must produce a concrete, useful, and tangible result in order to be patentable. It does not matter if the process is within the traditional technological arts or not. A price for a financial product, for example, is considered to be a concrete, useful, and tangible result.

There have been further US supreme court rulings on the subject and as on date, the litmus test for patent eligibility of business processes is: first, processes that transform an article from one state or thing to another are patent-eligible regardless of whether their use requires a machine. Processes involving the transformation of abstract financial data are probably patent-ineligible. Second, processes that do not make patent-eligible transformations are patent-eligible only if they are claimed to be carried out with a “particular machine.

First Business Method Patent was filed in Japan by a software company. United State was the second country to get Business Method Patent in patentable criteria. Since then a number of Business Method Patents have been filled and granted. This indicates the confidence and success which the business companies have in Business Method Patents. [Source: Wikipedia]


Business Method Patents have also been part of international discussions and the same has been included in the WIPO agreement. According to international classification done by WIPO Business Method Patents are divided into a number of classes which basically fall in G06Q class and are defined as :


Business Method Patents in different countries:

  • Business Method Patents in the USA:

The USA is one of those countries in which a large number of business Method Patents have been filed during the last 20 years and many big companies invest large amounts of money and other resources for planning new ideas for doing business which leads to the development of Business.

  • Business Method Patents in Europe:

According to the European Patent Convention Article 52 which deals with the patentable invention, 52(2c) talks that any “schemes, rules and methods for performing mental acts, playing games or doing business, and programs for computers;” are not Patentable.

  • Business Method Patents in Japan:

In Japan, Business methods are well known and come under the patentable subject matter. However, patents are not issued solely for business methods and the business method must invariably contain a technical aspect that is both tangible and real for patents to be awarded.

  • Business Method Patents in India:

According to the Indian patent act section 3, which deals with inventions that are considered not patentable, any “mathematical method or business method or a computer program or algorithms are not patentable”. However, they are patentable if a new method solves a “technical” problem and an apparatus/system is developed from it.


Allowing business methods to be patented or incorporating Business Method Patents into Indian Patent Act could allow investors to have more confidence in our system and thus encourage them to increase their investment in our infrastructure and other projects.

The importance and value of patenting a business method can be illustrated by the case of Netflix, a leading internet subscription services company that was awarded a patent for its computer-implemented approach for renting movies and TV shows to customers in 2003. In 2006, Netflix filed a patent infringement suit against its primary competitor, Blockbuster. The case was later settled out of court.

In my opinion, the Indian patent authority should add Business Method Patents into its patentable category as it will lead to improved business ethics and at the same time will motivate more and more companies from abroad to invest in India. Also, it helps companies who invest large amounts of resources for the growth of the company by way of unique business ideas, to secure themselves and stop competitors from using their ideas/work.

About the Author: Mr. Paras Khurana, Patent Associate at Khurana & Khurana and can be reached at [email protected]

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