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E-Commerce Software Is On Docket For Supreme Court With Closely-Watched Business Method Patent Case




by:
Kevin S. Sprecher
Strauss Troy Co. L.P.A. - Cincinnati Office

 
January 21, 2014

Previously published on January 20, 2014

Today, you don’t think twice about clicking a button on Amazon or Priceline to make a purchase, but complex underbelly e-commerce engines drive these systems. These software programs are protected by nuanced business method patents that have come under question.

Business methods and computer software programs are significant components of today’s high-tech and innovation-focused economy. However, patent protection for these assets has proven controversial and unpredictable in both the U.S. Patent and Trademark Office and in the federal courts.

The U.S. Supreme Court will hear arguments in a closely-watched case involving e-commerce software patents, Alice Corp. vs. CLS International. As soon as this summer, the Court should provide better guidance on how to determine whether certain business methods and software programs are patentable.

Is Your Business Method Patentable?

In general, a business method patent protects the process of conducting business. Often, it pertains to a business process that is a significant revenue stream for the patent owner. Although patents can be granted for any business method, most business method patents are directed to e-commerce and/or automated business processes.

The courts and the patent office agree that a business method can be patented if it satisfies the statutory requirements of patentability - meaning it’s original, useful and not obvious.

Well-Known Examples Of Business Method Patents

  • Amazon’s “1-Click Shopping” — Amazon owns a patent for a simplified purchasing process that allows online shoppers to buy products by simply clicking on one button on its website. The Amazon site maintains a database that keeps the shopper’s information to perform the transaction.
  • Priceline’s “Reverse Auction” — Priceline was able to obtain a patent on a process that allows customers to enter auction bids on tickets that are not yet available. Once the item is available for sale, the system enters the customer’s bid.

The Value Of Business Method Patents

Patents prevent the competition from using proprietary ideas without authorization or compensation. Patents also permit their owners to sue potential infringers for monetary damages and to seek injunctions to curtail the infringing activity. Business method patents are often essential to the companies that rely heavily on those methods for their business models.

Also, because there is “strict liability” for infringement, ignorance is not a valid defense for infringers. As such, businesses having an online presence should consult with an experienced patent attorney before utilizing new business processes.

Before You Patent Your Business Method

  • Have an attorney evaluate the potential patentability of a business process by reviewing what is currently patented and what subjects are patentable.
  • Decide if the business process would afford a substantial competitive advantage and determine whether the business method will generate sufficient revenue to justify the expense of the patent process.


 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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