Patents are essential to the health of businesses that rely on research and development because they give the inventor the right to exclude others from making, using or selling the invention. This right to exclude others enables a company to have a corner on a particular market. All patents include claims, which precisely define what is novel about the invention. One type of claim -- the business method claim -- remains controversial among inventors, patent attorneys and courts.
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Business method claims define a particular way of doing business. They include inventions pertaining to business cryptography, postage metering, incentive programs, coupons, e-shopping, inventory methods and other common business practices. This type of claim was very popular during the tech boom in the late 1990s when electronic shopping carts, electronic auctions and "one click" methods of doing business were new.
The validity of business method claims has been debated in the U.S. Congress, federal courts and the European Patent Office. This area of law is complex and different authorities have different opinions. If you want to patent an invention that solely concerns a method for doing business, you need to consider whether such a method is patentable in a particular jurisdiction. While business methods can be patented in the U.S., they are not patentable in nations that are signatories to the European Patent Convention.
A House of Representatives subcommittee report noted that business method patents can have a chilling effect on business. One speaker characterized many of these patents as little more than "age-old business practices" that took on a new gloss simply because they were conducted over the Internet. Another speaker warned that these patents would have the effect of foreclosing entire markets to competition. These speakers expressed concerns about the long-term validity of business method patents.
A paper from the University of Santa Clara Law School notes that one justification for business method patents is that businesses need this patent protection to take full advantage of new developments. Granting the right to exclude others from using an invention gives the patent holder the time to restructure a business in a time of rapid change. The U.S. Patent and Trademark Office continues to grant business method patents. Therefore, they remain vital business assets that can be used to prevent others from practicing the patented business method.
References & Resources
- Santa Clara Computer & High Technology Law Journal: Are Business Method Patents Bad for Business?
- U.S. Patent and Trademark Office: All About Patents
- Subcommittee on Courts, the Internet, and Intellectual Property: Business Method Patents
- CNET: Supreme Court Hedges on Business Method Patents
- U.S. Supreme Court: Bilski v. Kappos
- European Patent Convention: Article 52
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