Obtaining a Business Method Patent
A company that develops a new way of conducting e-commerce may be able to prevent others from using it for almost two decades.
Since 1998, an increasing number of patents have been issued to software and Internet companies that have devised novel ways of doing business -- for example, new online ordering processes or a unique Internet advertising scheme. These patents, which usually combine software with business methodology, are commonly referred to as business method patents or Internet patents.
These patents are important because any company that develops or acquires such a patent can stop others from using the patented business method for approximately 17 years. And, of course, the owner of the patent can exploit it by licensing the method -- that is, charging a fee for others to use it.
For example, Amazon.com devised a method for expediting online orders, known as the "1-Click" system. The method allows a repeat customer to bypass address and credit card data entry forms, because Amazon can access that information directly from the customer's account. Amazon was granted a patent on this business method in September 1999 (U.S. Pat No. 5,960,411).
Protection for Business Methods
Business method patents are part of a larger family of patents known as utility patents, which protect inventions, chemical formulas, processes, and other discoveries. A business method is classified as a process, because it is not a physical object like a mechanical invention or chemical composition.
While the U.S. Patent and Trademark Office (USPTO) did not used to grant business method patents, claiming that a process could not be patented if it was simply an abstract idea, in 1998, a federal court ruled that patent laws were intended to protect any method, whether or not it required the aid of a computer, so long as it produced a "useful, concrete and tangible result." State Street Bank & Trust Co. v. Signal Financial Group, Inc.
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