Following a landmark decision in 1998
by the Federal Circuit Court of
Appeals, the business method patent was officially born. As its name suggests, a
business method patent grants its holder
exclusive rights to a particular way of
doing business. Since inception, however,
there has been an on-going debate as to the
extent such patents should be granted —
especially when the solution doesn’t
involve the use of technology.
It can take as long as 54 months to go
through the business method patent approval process and, at one point, the U.S.
Patent and Trademark Office (USPTO)
was only approving 11 percent of the applications it received, says Richard E. Campbell, partner and head of the Patent
Prosecution and Counseling Group at
Procopio, Cory, Hargreaves & Savitch LLP.
While the current business method patent
approval rate is now up to 20 percent,
CEOs still need to be judicious about what
types of business processes they submit
for approval.
Complicating matters further is the fact
that so many businesses today operate, or
plan to operate, globally, so protecting the
output that results from your firm’s intellectual prowess on a worldwide basis will
take substantial investments of time and
resources. However, if successful, patents
absolutely equate to increased company
value.
“The term ‘business method patent’ is
more misleading than helpful,” says
Campbell. “From a patent standpoint, companies should focus on what their employees are creating and whether it is cost
effective to obtain patent protection for
those innovations.”
Smart Business spoke with Campbell
about what CEOs should consider before
applying for a business method patent.
What business methods are patentable?
Businesses that employ creative people
who are designing solutions to problems
should consider business method patent
protection for their unique ideas and innovations. Companies that hire engineers,
information technologists or other technical professionals should conduct regular
reviews of newly created solutions to
make certain they aren’t overlooking a valuable competitive advantage that they
don’t want to make available to competing
firms. Sometimes the term ‘invention’ causes people to think that patenting is only
applicable to inventions such as Thomas
Edison’s light bulb, which simply isn’t true.
To uncover all of the potential patentable
business processes in your company, ask
yourself: What problem has my team
solved and what competitive advantages
has it created?
For example, Amazon.com devised a
method for expediting online orders,
known as the ‘One-Click’ system. The
method allows a repeat customer to
bypass address and credit card data entry
forms, and they were granted a patent for
this process in 1999. That system solved
the customer problem of repeating data
entry and created a competitive advantage
by delivering a better shopping experience.
What evaluation criteria should CEOs use to
decide if applying for a business method
patent makes sense?
You should definitely do a cost-benefit
analysis and you should consider how
valuable the solution is to your business.
Going through the patenting process can
be expensive and the cost goes up depending upon the complexity of the application and the number of countries where you’ll
need to apply. Filing the patent application
should be completed before rights are lost
through public disclosures or sales activity.
Ask yourself how damaging it would be if
your competitor had the same process.
Ask yourself how much better off you are
if you have exclusive rights to the process
or system. Keep in mind that having
patents and patent applications definitely
adds value to your company, and early
stage firms often garner higher valuations
because they have patents and patent
applications on file.
Must technology always be a factor?
Generally speaking, yes. The process or
business methods that have been patented,
particularly outside of the U.S., have been
driven by technology or included a technology component. In Europe, for example, you can’t get a patent on business
processes that solve an administrative problem. Although, there have been processes
that were patented that focused on creating a unique user experience, such as an
online catalogue experience. Additionally,
business methods have been patented in
the areas of financial models, data analysis,
tracking and measurement, system and
process automation, software implemented solutions, and many other areas.
What’s the best advice for CEOs to assure
success with the business method patent
application process?
Success is a function of the creativity of
your team and your attorney’s skill and
experience. Identify potential areas for
protection by identifying what problems
your team has solved and what business
advantages it has created. Analyze the
potential value of each item so you can perform a cost-benefit analysis. Not all ideas
are worth protecting. However, do not
undervalue patent applications directed to
what you think are business methods.
They are often protectable, and they can be
very valuable.
RICHARD E. CAMPBELL is a partner and head of the Patent
Prosecution and Counseling Group at Procopio, Cory,
Hargreaves & Savitch LLP. Reach him at [email protected] or
(619) 515-3289.