Nearly ten years ago, the US Court of Appeals for the Federal Circuit (CAFC) made its ruling in the State Street Bank case, effectively allowing patents on business models and greatly expanding the scope of software patents in one single move. While there are many problems with the patent system, this one decision made for a lot more bad patents very quickly -- and many of the ridiculous lawsuits you see today wouldn't even exist if this decision had gone the other way. While we've seen the Supreme Court suddenly get religion on fixing the patent system in the past few years, it hasn't really touched on the question of software or business model patents.

On one case that could have addressed the issue, the court dismissed the case on a technicality, rather than digging into the actual issue, though in the dissent, some Justices made it clear they weren't comfortable with the State Street ruling. Last year, some folks tried to sneak the issue of software patents into another Supreme Court patent case, but that seemed like a stretch, since the case really had little to do with software patents directly. The decision in that case did set things up, though, so that the Supreme Court later could reject software patents.

Now we have another important case to watch. As pointed out by the Toll Tracker, CAFC has agreed to a full court hearing to examine the scope of what can be patented. It may sound like a technicality, but it could be a very big deal. Going back on the earlier State Street ruling could effectively knock out many business model patents and software patents, restoring at least some (though, certainly not all) sanity to the patent system, especially in the technology world.

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