The simple answer is No. You can not patent a business model. A business model patent is a type of utility patent that protects a process rather than a physical product; it either prohibits other companies from using the technique or allows them to license it for a fee. Amazon, for example, received a patent for its 1-click shopping process, US Patent 5,960,411, which protected any e-commerce transaction executed with one click by validating it with stored customer credentials and preventing customers from having to enter and re-enter billing, shipping, or payment information (now expired). Amazon won a lawsuit against Barnes & Noble for using it, and Apple licensed Amazon’s 1-click buy because they believed it would help their iTunes store grow. Priceline’s reverse auction system, US Patent 5,794,207, allows users to its site to specify their price when purchasing airline tickets, hotel rooms, and so on; sellers then bid for the buyers’ business.
However, you may patent the business process as well as the technological innovation necessary to make the business technique operate. As a result, the attention shifts to the technological invention, with the business strategy demonstrating one valuable use of that technological idea.
- What constitutes a patentable business model?
- Why are we seeing a rush to patent business methods now?
- Are you concerned that patenting business methods will ultimately dampen innovation?
- But what about allegations from certain quarters that firms are being granted patents for business techniques that aren't truly new?
- What Kind of Business Model Can You Patent?
- Why Are Business Model Patents Important?
- Can Every Business Model be Patented?
What constitutes a patentable business model?
A business model, which is a broad vision or plan, is distinguished from a business technique, which is a specific manner of doing business. As with every innovation, there is a four-part test in law for the patentability of a business technique. The method of doing business must be beneficial. It needs to be brand new. It can’t be so little that it’s evident to a qualified practitioner. And, during the application process, the disclosure of the invention must be detailed enough for fellow practitioners to grasp it.
Why are we seeing a rush to patent business methods now?
For a variety of causes. The first is a court decision from around two years ago in State Street Bank v. Signature Financial, which stated unequivocally that software that rules business procedures can be copyrighted as long as it generates some meaningful, practical, and tangible outcome. Companies are now much more aware that they can patent software-based business techniques as a result of this judgment. Simultaneously, there has been a general increase in software patents of all sorts, fuelled in part by the Internet’s explosion of the invention. That being stated, let me put it in perspective. Last year, we issued around 161,000 patents. There were 600 software-related business techniques. I anticipate that we will issue another 1,000 such patents this year. Overall, this is a rather little sum.
Are you concerned that patenting business methods will ultimately dampen innovation?
This is not the first time that such an argument has been offered. It was brought up over the phone. When firms sought patents on various monomers and copolymers, it sparked debate in the chemical industry. And it was first asserted with respect to patenting any type of software at all. However, in all of those circumstances, general industry innovation grew.
Patents grant their owners rights to their inventions for a period of 20 years from the day the application is filed. However, patent holders must subsequently make their discoveries public, allowing others to build on them. Historically, and I would say also today, this may provide tiny businesses and entrepreneurs with some parity with major, strong commercial concerns, rather than the other way around.
But what about allegations from certain quarters that firms are being granted patents for business techniques that aren’t truly new?
The patent office doesn’t really grant patents for existing business procedures that have been converted to electronic forms. It is part of our obligation to identify evidence of existing methods—what the patent office refers to as prior art to ensure that this does not occur. We have a pretty strong library of software prior art in a variety of sectors, including business, and we are constantly adding to it. Last year, we convened hearings to ensure that we had access to previous art that existed outside of the patent process, notably in the case of software.
However, it has been pointed out that in the past, when a large amount of software was released, the previous art was not available. Even now, we lack a centralized, comprehensive library of the prior art, a one-stop-shop for software that incorporates business procedures, as we have in other domains. For example, in chemistry, there are Chem Abstracts, and in medical technology, there is Medline. If someone could create it, it would be a huge assistance. However, applicants must be aware that they are legally compelled to disclose all relevant previous art themselves. They risk having their patent invalidated if they do not.
What Kind of Business Model Can You Patent?
Business method patents are a type of patent that discloses and claims innovative business techniques. This encompasses new forms of e-commerce, insurance, banking, and tax compliance, among other things. Business method patents are a relatively new type of patent, and various studies have been conducted to determine the propriety of patenting business techniques. Nonetheless, they have grown to be valuable assets for both independent innovators and large enterprises.
Whatever you sell, if you’re an internet entrepreneur with a distinct way of conducting business, you might be sitting on a valuable, patented product. Will your approach, however, be deemed patentable or only an abstract concept?
Why Are Business Model Patents Important?
Companies frequently think that their business techniques constitute “intellectual property” and, as such, should be protected under patent law. In the late 1990s and early 2000s, successful business method patent applications included a client-server system for delivering online information, access control and monitoring system for network servers, electronic mail systems that display advertisements to remote users, and Amazon’s 1-Click system.
Business model patents, just like other utilities patents, are valid for 17 years and restrict anyone from utilizing specified business processes without authorization from the patent holder.
The story of Netflix, a major online subscription services firm that was issued a patent in 2003 for its computer-implemented technique to rent movies and TV episodes to clients, exemplifies the relevance and value of patenting a business model. Netflix filed a patent infringement complaint against its main competitor, Blockbuster, in 2006. The dispute was eventually resolved outside of court.
Can Every Business Model be Patented?
The United States Patent and Trademark Office maintains stringent categories for patentable business techniques. Financial data processing is the most typical type of business model application (705). Only computer-related procedures involving finance, business practices, management, or pricing determination are eligible under this class. However, there are other classes that are eligible for business model patent applications, such as education (434), gaming (273), and agriculture (47).