Business Method and Software Patents
Business method patents have been around since the Federal Circuit's decision in the State Street case. [30] Software patents have been around since the Diehr case in 1981, but are only recently becoming a widespread problem. [31] While these two decisions only interpreted the §101 statutory subject-matter limitation to include business methods and software, there are significant problems with the other facets of patent examination (specifically, novelty and nonobviousness). These decisions have been widely criticized by both academics and industry members. [32]
Along the business method front, Amazon.com and Priceline.com have had some of the most exposure. Amazon.com successfully patented its "1-click" purchasing method with United States Patent No. 5,960,411. In October 1999, Amazon.com sued Barnesandnoble.com for infringing the 1-click patent, and after a protracted legal battle, [33] privately settled the case in March 2002. [34] The case brought Amazon.com so much bad press that even Jeff Bezos, the CEO of Amazon.com, called for a reform of the patent system and the Patent Office's procedures for examining business method and software patents. [35]
The primary problem is that innovation in these two areas does not generally leave a mark in an easily searchable fashion. A secondary problem is that, due to the intense competition and rapid innovation in these areas, the patent term of 20 years can be a significant obstacle for later innovators. This debate is still ongoing, and due to the tremendous economic incentives on both sides, will probably last for awhile.