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In the wake of State Street Bank & Trust Co. v. Signature Fin. Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998) cert. denied 525 U.S. 1093 (1999), the number of Internet and business-method patents has skyrocketed. The U.S. Patent and Trademark Office issued well over three thousand Internet-related patents last year alone. These patents are quickly finding their way into the Federal Courts. The State Street Bank case has, by now, received widespread attention especially in the intellectual property community. The patent at issue involved a novel way of pooling the assets of a number of small mutual funds to achieve the economies of scale typically enjoyed only by relatively larger mutual funds. Id. at 1371. The district court declared that this type of business-method patent does not fall within the bounds of subject matter protected by the patent laws because it would foreclose competition for the claimed financial-services product. Id. at 1376-1377. The Federal Circuit, however, reversed the district court and took the opportunity to announce in clear terms that innovative business methods may receive the benefits of patent protection. According to the Federal Circuit, patentability requires that the invention is useful and that it wasn't obvious at the time of invention. Id. at 1377. If an innovative business method meets these statutory requirements, it may be protected under the patent laws. Id. For many dot-com companies, this decision came at an opportune time - just as they were developing new ways of selling goods and services over the Internet. A patent application typically takes at least two years to issue, and Internet-related patents are only just beginning to flow out of the U.S. Patent and Trademark Office and into the Federal Courts. To name just a couple that have been widely reported in the news media, Amazon.com brought an action against their business competitor, Barnesandnoble.com, for infringing their so-called one-click patent. Only two months after Amazon.com's patent issued, they won a preliminary injunction that forced Barnesandnoble.com to redesign their web-site during the Christmas rush. Amazon.com, Inc. v. Barnesandnoble.com, Inc., No. C99-1695 (W.D. Wash., December 1, 1999). In another case, Double Click, one of the leading Internet advertising companies, brought an action against their business competitor, L90, for infringing their patented method of serving a banner advertisement on a web page. Double Click brought this action only two months after their patent issued and the case is scheduled for trial in the Eastern District of Virginia (a.k.a. the rocket docket) this summer. Double Click, Inc. v. L90, Inc., No. 2:99-1914 (E.D. Va., 1999). Although some commentators contend that the broad monopolies granted by Internet and business-method patents hinder competition and the development of new technologies, the Commissioner of Patents and Trademarks, Q. Todd Dickenson, takes a different position. According to him, "it is no coincidence that the United States has both the strongest patent system and strongest economy in the world. Our patent system has nurtured this country's evolution from an agrarian economy, through the industrial revolution, and into today's information age." The Federal Circuit appears to agree. In a more recent decision, AT&T Corp. v. Excel Communs., Inc., 172 F.3d 1352 (Fed. Cir. 1999), a different panel of Federal Circuit judges reaffirmed the holding of State Street Bank and explained the court's outlook on the expansion of patent rights. According to that panel, the Federal Circuit "struggl[es] to make [its] understanding of the scope of [patent protection] responsive to the needs of the modern world." Id. With this kind of support, patent rights are likely to play an increasing role in the development of electronic commerce. While many battles will be fought in cyberspace, many will also be fought in the Federal Courts.
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