If you’ve invented a new way of doing business — a smarter pricing model, a novel financial process, a unique way to match buyers and sellers — you’ve probably asked yourself: can I patent this? The answer is yes, but it depends heavily on how your invention is described and claimed. The law in this area has shifted dramatically since 2010, and a lot of outdated advice is still floating around online.
Here’s what the law actually says today.
The Starting Point: Bilski v. Kappos (2010)
For years, the U.S. Patent and Trademark Office used a strict “machine-or-transformation” test to decide whether a business method could be patented. Under that test, your invention had to either be tied to a specific machine or transform a physical article into a different state.
In 2010, the Supreme Court loosened that standard in Bilski v. Kappos. The Court confirmed that business methods are not categorically excluded from patent protection. However, it also ruled that the specific method at issue in that case — a way of hedging risk in commodity markets — was too abstract to be patentable. The machine-or-transformation test survived as a useful tool, but no longer as the only test.
That ruling opened a door. Then, four years later, another Supreme Court decision nearly slammed it shut.
The Game Changer: Alice Corp. v. CLS Bank (2014)
The most important patent case for business method inventors in recent history is Alice Corp. v. CLS Bank International (2014). The Supreme Court struck down patents on a computerized system for settling financial transactions, ruling the claims were directed to an “abstract idea” and therefore not eligible for patent protection under 35 U.S.C. § 101.
Alice created a two-step framework — now called the Mayo/Alice test — that examiners use to evaluate every method claim, including business methods:
- Step 1: Is the claim directed to a patent-ineligible concept — an abstract idea, a law of nature, or a natural phenomenon?
- Step 2: If yes, does the claim contain an “inventive concept” — something significantly more than the abstract idea itself — that transforms it into a patent-eligible application?
In plain terms: if your business method is just an abstract idea implemented on a generic computer (“do X, but on the internet”), it is very likely to be rejected. Simply adding “using a computer” or “using software” to an otherwise abstract process is not enough.
The fallout from Alice was enormous. The USPTO rejection rate for business method and software patents spiked. Many patents that had already been granted were later invalidated in court under this new framework. For more background on how the USPTO analyzes these claims, see my post on the USPTO Report on Patent Eligible Subject Matter.
What Business Methods Can Still Be Patented?
Despite the headwinds created by Alice, business methods absolutely can still be patented — if they are drafted correctly. The Federal Circuit (the appellate court that handles patent appeals) has issued dozens of decisions since 2014 clarifying what passes and what fails.
Business method claims are more likely to survive § 101 scrutiny when they:
- Improve computer or network functionality itself — not just use a computer to do something abstract. In Enfish, LLC v. Microsoft Corp. (2016), the Federal Circuit upheld software patents because the claims improved how a database was structured, not just what it did.
- Apply specific, concrete rules — rather than broad concepts. In McRO, Inc. v. Bandai Namco Games (2016), claims using a defined set of rules to automate animation were found eligible.
- Are tied to a specific technological implementation — the more your method is bound to a particular technical architecture, the better.
- Include unconventional combinations of steps — generic steps arranged in a non-obvious way can sometimes satisfy the “inventive concept” requirement under Step 2 of Alice.
For a broader look at what types of inventions qualify, see What types of ideas can be protected by a patent? and Can I get a patent on my invention?
The 2019 USPTO Guidance: A Shift Toward Clarity
In January 2019, the USPTO issued revised guidance for its examiners on how to apply the Alice framework. The guidance organized “abstract ideas” into three defined groupings: mathematical concepts, certain methods of organizing human activity, and mental processes. Importantly, the guidance told examiners to look at whether the claim as a whole is directed to one of those categories — not just whether it involves one.
This was a meaningful shift. It gave patent practitioners more tools to argue that a claim is eligible even when it touches on abstract subject matter. Examiners are now required to identify the specific abstract idea being claimed before rejecting a patent application — they can’t just wave their hands at the concept of “abstractness.” If your application is rejected under § 101, there are real strategies available to fight back. See my post on strategies to overcome a patentable subject matter rejection for more on that.
How to Give Your Business Method Patent Application the Best Chance
The biggest mistake inventors make is describing their business method invention at a high level — as a concept — rather than as a concrete technical implementation. Here’s what I recommend to clients:
- Focus on the technical problem your invention solves. What specific inefficiency, error, or limitation in existing systems does your method address?
- Describe how, not just what. The more specific you are about the technical steps, data structures, and system interactions involved, the stronger your application will be.
- Avoid purely functional language. Claims that just describe a result (“a method for optimizing transactions”) without explaining how that result is achieved tend to fail.
- Consider a software or system claim alongside your method claim. Sometimes the same invention is easier to protect as a system claim rather than a pure method claim. My post on software means and methods as patent eligible subject matter covers this in more detail.
- File sooner rather than later. The United States is a first-to-file system. Disclosing or marketing your invention before filing can create a bar to protection. Learn more about those risks in Why Test Marketing Your Invention Before Filing Puts Your Patent at Risk.
The Bottom Line
Business methods are still patentable in the United States — but the standard is meaningfully higher than it was before 2014. A general business concept or process implemented on a generic computer will face serious obstacles. A specific, technical, non-obvious implementation of a new business process has a real path to protection if it is drafted strategically from the start.
This is an area of patent law that rewards working with an experienced patent attorney early. The way your invention is described in the application — the specific language used, the order of claim elements, how the technical problem is framed — can be the difference between an issued patent and years of costly rejections.
If you have questions about whether your business method invention is patentable, I invite you to contact me at (949) 433-0900 or [email protected]. As an Orange County Patent Attorney, I serve inventors throughout Irvine, Orange County, Los Angeles, San Diego, and beyond.