Business Method Patents and U.S. Financial Services
The Payment Cards Center of the Federal Reserve Bank of Philadelphia has published a Working Paper by Robert M. Hunt titled "Business Method Patents and U.S. Financial Services" 
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From the abstract:
"A decade after the State Street decision, more than 1,000 business method patents are granted each year. Yet only one in ten are obtained by a financial institution. Most business method patents are also software patents. Economist Robert M. Hunt addresses the question of whether these patents have increased innovation in financial services and reviews a number of important federal court decisions that will affect how business method patents are obtained and enforced. He also reviews a number of proposals under consideration in the U.S. Congress."
Perhaps a good addendum to this report would be to review the ways BMPs have encouraged patent trolls to prevent industries from progressing.
Companies, especially in the immediate aftermath of State Street, had every incentive in the world to grab as many BMPs as possible and then use those to become a company whose only business lies in litigating against “infringers.” An excellent example is the company DataTreasury out of Plano, TX. This company was once involved in bio-technology, but immediately after State Street nabbed several very generically worded business method patents on the process of scanning checks electronically. After Congress passed a law in 2003, The Check 21 Act, which sought to make the entire financial industry switch from paper check processing to electronic processing and transfer, DataTreasury pulled out their patents, fired 98 of their 100 employees, hired the largest law firm in Texas, and ever since their only business has been in suing banks who are trying to comply with Congress’ wishes. I use this specific example because 1) it is a textbook case of the practical and policy-side problems with BMPs in the financial sector, 2) Congress recently requested a GAO review of DataTreasury. This is a clear sign DC is considering acting again at least on this specific case.
There was a Politico article a couple of weeks ago on this review: http://www.politico.com/news/stories/0608/10808.html#replyform
This is another angle on the issue anyway. Overall an interesting report. Worth reading.
Posted by: Mar Jacobs | June 23, 2008 at 08:54 AM
I just read the Politico story about Data Treasury and after looking at it, it is hard to deny that it is a text book example of how a company can use BMP as a weapon. Clearly, BMP encourage patenting but not innovation. Our public policy should do just the opposite and Congress desperately needs to re-think the legislation that allows patent trolls like Data Treasury to use BMP like this. There is even an 2004 article from the NY Times about Data Treasury that concludes that its only business is suing banks! Obviously this is needs to be addressed with some massive patent reform.
Posted by: Ronald | June 24, 2008 at 08:50 PM