Patents need to be protected in order for a company to have an advantage in a very competitive market. The Internet revolution has seen a massive increase in the long distance purchases made by consumers, as geographical barriers is no longer as important as they were. Protection is needed for those businesses who conduct business in ways other than in person.
A type of industrial property protection can basically be called patents. This type of protection is used to stimulate the innovation and design of new technology. It basically protects the investments made to develop new technology. Patent protection is usually given in terms, mainly about 20 years. In the article “E-Boom or E-Bust? Business Method Patent and The Future of Dotcommerce,” the authors argue that State Street Bank v. Signature Financial Group caused a rush upon the U.S. Patent and Trademark Office (PTO). The evidence clearly supports such an argument.
Before this State Street Bank business methods were unpatentable due to a judicial exclusion of methods of doing business. However, the court in State Street Bank, laid this exception to patent law to rest in 1998 stating that “data structures encoded in computer memory constitute patentable subject matter” (Marsden & Huffman, 2000, p. 18). This had to cause a rush on the PTO. A whole new area of commerce had become available to patent protection; a rush would be the only term sufficient to define the number of patent applications that would descend on the PTO.
The authors next argue that the Internet explosion also was affected by the court’s finding in State Street Bank. The Internet revolves around commerce. Most sites have a way of generating money, whether producing revenue is from one-stop-shopping or advertising. Many of these sites have used or will use business methods that are patentable because of the State Street Bank decision. Companies only gain when they patent their internet business methods.
The third argument concerns the value of the patent. According to Marsden and Huffman,As long as the patent applicant does not overreach by seeking claims so broad that they ultimately render the patent invalid in view of the prior art it can pursue broader and stronger patent rights under the new paradigm of business method patenting than it would previously have expected (p. 19).
They argue that a valid patent has three forms of value. The first form is offensive. This allows for the enforcement of a patent against infringers. If one has the power to make another stop use of an invention, it has control over that invention. The second form of value is defensive. Thus, it deters others from using invention, because of the patent’s existence. And the third form of value created by a patent is value in the financial market. Companies are better able to find financial backing when they are legally able to protect their property. The clearest support of the financial market theory is based upon the fluctuation of stock prices based on valid patents gained or patents lost due to invalidation.
The fourth argument the authors address is the benefits and drawbacks of the broad patent rights. Clearly, the owners of a patent have a benefit. Others believe that broad business method patenting creates a burden on free commerce. The criticisms fall into one of three categories: patents in these fields will create barriers to commerce and innovation that outweigh the purported good of such patents; patents are being issued for trivial or obvious advances, or that are clearly anticipated by prior art; and PTO patent examining resources are inadequate to police the patenting process properly.
The PTO responded to the criticism by making reforms that some feel will not change a thing. They have required such things as additional training, a new training manual, and special training as to prior art. The authors think to determine the benefits of these changes are too soon. They also believe that the area is too important to wait for public policy debates to determine the answer. The PTO must continue to issue patents while the answers are found. Then the PTO can make appropriate adjustments.
The State Street Bank decision changed the way patent lawyers viewed business methods. Before, a lawyer would not even consider a patent application for a business method. But after 1998, business methods became patentable. This had to change the way patent law was practiced and the number of patent applications made to the PTO. This argument naturally flows into Internet applications. It seems natural that patent law should provide protection for those holding patents. After reading this article, the three ways that a patent provides value for the holder, seem clear. It gives one the right to sue for infringement, provides others notice they have the patent, and turn an intangible idea into real property.
The authors do not take a stand on whether they consider the current patent laws to be a benefit or a drawback. I personally think that the most benefit can be gained by over-granting patents rather than turning down patent applications. I would rather the PTO grant a patent, and it later be invalidated due to prior art, than it be denied out of hand. I suppose this argument essentially creates a company policing policy. But it would be necessary to sue if a company needed use of the patented invention. In areas such as business methods and software where changes occurs everyday, I think that there would probably be an alternative method. Companies would have to determine the importance of the invention to them, before they decided to sue.
Patent law provides protection to E-business for their website operations, interfaces, financial management, transactions, and advertising. For an E-business to jeopardize its ability to file for a patent is not very easy. Obtaining a patent and reasons for obtaining one is a process that has to be very clear and precise. The E-business has to show just cause and information in order to obtain the patent.
Marsden, W.J. and Huffman, J.A. (2000). E-Boom or E-Bust? Business Method Patent and The Future of Dotcommerce. Pp. 18-22, 28-29. Retrieved on February 28, 2008 from http://delawarebarfoundation.org/delawyer/Volume18_Number4_Winter2000-2001.pdf