Two Congressmen have proposed a bill which would allow public access to applications for business method patents and allow the public to challenge those patents by submitting evidence to the Patent and Trademark Office (PTO). Congress will probably not act on the bill because the current session ends soon while the drafters admit it is a work in progress submitted to create discussion.
Business method patents cover financial and management data processing methods. For example, a Priceline.com business method patent covers the “reverse” action. Priceline.com also owns exclusive rights to the name-your-price process for purchasing airline tickets, groceries and other goods over the internet. These patents differ from traditional patents which cover more physically substantive inventions such as a manufacturing process or a chemical composition.
Controversy has surrounded business method patents because some feel many of the patents do not meet the novelty and non-obvious requirements. Further, the broad nature of the patents may discourage innovation and allow patent owners to profit unfairly. Proponents of business method patents argue that patent law is simply conforming to the information age where the new breed of internet companies needs protection from those who would steal their ideas if not protected.
Critics charge that when the PTO examines a business method patent application, it fails to find the relevant prior art needed to reject or limit the scope of an application. The bill would allow the public to submit relevant prior art themselves. Once granted, a patent can be subsequently invalidated, but the bill’s proponents feel it is cheaper and easier for the public to challenge the application prior to approval.
The bill will surely attract debate. Treating a class of patent applications differently could cause a number of problems. It may conflict with international treaties. The PTO would have to start extensive pre-examination of applications or inventors themselves would have to distinguish their patents as either standard applications or business method patents. Proponents of the bill note that the process will strengthen the patent owner’s claims, but does that mean a stronger presumption of validity for applications that successfully run the examining gauntlet? Critics of the idea note that publishing the applications so early before the inventor has any legal protection might allow theft of ideas.
The PTO has already stepped up scrutiny of business method applications. Relative to other applications, a lower percentage of business method applications have been allowed, but the number of such applications has grown exponentially over the last few years. Also, the American Inventors Protection Act of 1999 provides a new defense for infringers of business method patents. If an alleged infringer has, in good faith, actually reduced to practice the method or process in question one year prior to the date the application was filed and commercially used the method or process, the infringer is protected from liability. Requiring the infringer to reduce to practice a year before filing may limit the effectiveness of the defense due to rapidly changing internet technology. Also, the infringer carries the burden of proving the elements of the defense. Another idea supported by people such as Jeff Bezos, CEO of Amazon.com, would limit business method patents to a three-to-five year term rather than the regular 20.
Although the proposed bill probably will not result immediately in new law, it will surely spark the debate it seeks to start. Future Congressional action may still be needed to settle the controversy.
Julia Angwin The Wall Street Journal, October 3, 2000, p. B1.
www.wsj.com; The Wall Street Journal.
www.uspto.gov; Patent office web site. Site contains an article in response to general criticism concerning business method patent criticism and a searchable patent database.
Part of the Patent and Trademark Office’s response to criticism over business method patents.
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