Should Business Method Inventions be Patentable?

Abstract

In this article, I define business method inventions and provide an economic framework to address the question of patentability raised in Bilski. A business method invention is the discovery of a commercial technique that firms can apply to address market opportunities. The initial implementation of a business method invention by firms is a Schumpeterian innovation. I advance several argu- ments in favor of business method patentability. Business method inventions are an important foundation for entrepreneurship and a channel for the commercial- ization of scientific and technological inventions. IP protections for business method inventions are essential for economic efficiency, including incentives for invention, efficient allocation of inventions, and transaction efficiencies in the market for discoveries. Business method inventions are significant because they are the foundation of what I term the ‘‘Business Revolution’’: the augmentation and replacement of human effort in business transactions by computers, commu- nications systems, and the Internet. I conclude that the patent system should con- tinue to provide intellectual property protections for business method inventions just as it does for other types of inventions. ‘‘The question in this case turns on whether a patent can be issued for a claimed invention designed for the business world.’’ Bilski v. Kappos 561 U.S. ___ (2010).