Patenting Business Methods – The Pros and Cons

Meaning

Business method patents as the name suggests are meant to confer protection on any new method of doing business; for instance any innovative form of e-commerce; including sales and advertising. The first financial patent was granted to Jacob Perkins in the United States in as early as 1799 for an invention of “Detecting Counterfeit Notes.” Business enterprises are making increasing use of the Internet to market and sell their products. The introduction of business method patents has received mixed reactions and there seem to be a large number of pros and cons associated with it. The number of business patent applications is on the rise in the United States. The European Patent Convention has however, rejected the idea since they have a requirement of the invention being technical for patent protection.

Criticism

Critics have said that it is sometimes detrimental to other business enterprises if patents are granted for obvious inventions. It would lead to stagnation in the commercial world making it difficult for other businesses to use the same models. Amazon has been granted a business patent for the one-click method of purchase online, in which a customer can make purchases without having to repeatedly feed in his details like credit card number and home address and sued Barnes and Noble for coming up with something similar, the ‘Express Lane’ feature. The dispute was settled between them.

There has been controversy associated with the written descriptions of such patents leading to confusion regarding the scope of the patent. If the patent is written in a vague manner, it will be given a narrow interpretation. 

It is also said that it is difficult to identify prior art in business methods since business methods are confidential and until recently nobody came out with them. Prior art is necessary to determine whether the patent is novel or not.

Patenting business methods may end up being more complex and expensive too. The State Governments may not be well equipped as of now with trained personnel and facilities to assess business methods and complex computer programs. Besides, the question is asked whether is there any need to patent business methods separately since many innovative industrial applications are already patented.

Jurisdiction has also been raised as a defence in many cases thus making it difficult to assess what exactly is the jurisdiction in buying and selling of goods on the Internet.

Necessity

However, law must be adaptable to the changing needs of society. Business methods are becoming more and more complicated; a lot of effort goes into developing them. Protection in the form of a patent will be an incentive for enterprises to come up with more unique and convenient methods of business, benefiting consumers in the process. The patented “electronic shopping cart” belonging to Open Market has made life easier for persons shopping on the Internet. It helps to add up all the purchases before logging off.

Business method patenting would also help to propagate sharing of knowledge as against the erstwhile practice of keeping it secretive. It would also help smaller businesses if they get patents since that will give them an edge in the market.