Legal Definitions - business-method exception

The term "business-method exception" refers to the traditional belief that methods of doing business are not protected by intellectual property laws. In the past, it was established that "pure methods of doing business" were not eligible for patent protection. However, in 1998, the Federal Circuit ruled in State St. Bank & Trust Co. v. Signature Fin. Group that business methods can be patented if they meet the requirements for a valid patent.

For example, a company may develop a new method for processing credit card transactions that is faster and more efficient than existing methods. If this method meets the requirements for a valid patent, the company may be able to obtain patent protection for it, even though it is a method of doing business.

The European Patent Convention, on the other hand, specifically excludes business methods from patent protection.