Patent - Business Method Patents - Part I

In this first of a series of articles we're going to discuss a specific type of patent called a business method patent.

If a company develops a new method for conducting an e-commerce business they may be able to prevent other companies from using this method for almost twenty years.

The truth is, since 1998 an increasing number of software and Internet companies have been issued patents for designing new ways of doing business. Examples would be new online ordering processes or a unique Internet advertising method. These kind of patents which are usually the combination of software and business methods are called business method patents or Internet patents.

The reason these patents are important is because a company that develops such a patent can keep other companies from using these business methods for 17 years. And if the owner wants, he can make additional money from the patent by licensing out to other companies. If there is a large enough market, the company may make more money from the licenses than from the patent itself.

A very good example of a business method patent is Amazon.com's 1-click payment method. This system allows a customer to bypass the traditional address and credit card forms as long as the customer has an account with Amazon. After clicking on the payment button the order automatically goes through. This patent was granted to Amazon.com in September 1999. The patent number is U.S. Pat No. 5,960,411.

Business method patents are actually a part of a larger family of patents called utility patents. These protect inventions, chemical formulas, processes and other discoveries. A business method is technically classified as a process. The reason is because it is not a physical object like a machine or some form of chemical compound.

During most of the last century the patent office issued very few business method patents. The reason for this is that they claimed that a process could not be patented if it was an abstract idea. The same thing was also said about software because software was said to be unpredictable algorithms.

That all changed in 1998. In July of that year a federal court upheld a patent for a method of calculating the net asset value of mutual funds. The court ruled that patent laws were intended to protect any method regardless of what it was, even an idea. As long as it produced a useful, concrete and tangible result. With this ruling the court made idea and software patents a reality again. After this ruling, business method patents increased by 40%. Also, that year, the U.S. Patent and Trademark Office created a new classification for business method patents. The classification is stated as "Data processing: financial, business practice, management or cost/price determination."

Many patents since this time have been issued for online shopping programs, Amazon's 1-click being the best example. However, because of the gray area of these patents, not having a physical product, an additional layer of review was added to the patent determination process. Technology specialists have been hired specifically to review these type of patent applications.

In the next article in this series we're going to discuss how to go about applying for a business method patent.

Michael Russell
Your Independent guide to Patents

Patent Call for a New Digital Rights Management System

Intellectual Property Rights is a key consideration in today's standardisation world and naturally the field of audio and video coding / decoding, such as MP3 and MPEG is no exception. Digital rights management is an additional key element in todays digital world.

The Digital Media Project (DMP) is a non-profit organization devoted to developing worldwide standards for music, video and other creative works that are digitally recorded and transmitted. Such standards allow the rights of creators to be compensated for their works, allow the public to fully enjoy the benefits of digital recordings, and allow other businesses to provide products and services consistent with these principles and the Digital Media Manifesto.

DMP was founded by Mr. Leonardo Chiariglione, who developed worldwide standards for digital audio and video coding, such as MP3 and MPEG, while chairing the working group of the International Standards Organization ISO/IEC. In April 2005, DMP produced a technical Specification for a Platform for Interoperable Digital Rights Management, for which it would be beneficial to establish a patent pool in order to have clear and acceptable licensing terms for the underlying patents. The standardization approved in 20045 refers in particular to portable audio and video devices (PAV)

One of the members of the Digital Media Project is helping set up the patent pool: Sisvel, S.p.A., a company with an international network specialized in licensing, with offices in Europe and subsidiaries in America and Asia, will arrange for a team of independent patent experts to evaluate patents that may be essential in this field.

Any company having related patents and wishing to participate in the patent pool is requested to submit patents to Sisvel for evaluation. The objective is to create a one-stop-shop licensing mechanism for intellectual property rights (IPR) that will help to standardize the digital media project, providing a clear view of the exposure to royalties relating to the standard.

SISVEL is a company active in the field of exploiting industrial and intellectual property rights. For instance Sisvel has the right to grant licenses for the use of several patent families concerning the MPEG Audio standard comprising the Mp3 standard. Contact: segretaria@sisvel.com for information.

Trademark: Do I Need One for My Business Name and Logo?

Wondering if a trademark is important to you as a business owner? Let's start with the basics. A trademark is a word, phrase, symbol, or logo that distinguishes and identifies the source of goods of one company or person from another. For example, the name Kraft is trademarked, as is Nike's "swoosh" logo.

The list of what constitutes a trademark is long. A trademark can also be granted to unique packaging such as the shape of Coca-cola's bottle, building designs, color, sound, and even fragrance. Service marks receive the same legal protection, but are used to distinguish services instead of products.

Your business can acquire trade or service marks through the consistent use of a mark. The symbols TM and SM demonstrate the owner treats the mark as a trademark or service mark. There is no requirement to federally register at the trademark office. You are still protected under intellectual property laws. However, if another party uses your mark it can be more difficult to prove your ownership.

To register online with the United States Patent and Trademark Office (USPTO), go to www.uspto.gov. There is a registration fee for each name, logo, and slogan. Federal registration ensures another party is not already using your mark. A registered trademark gives you exclusive rights to use a mark with your particular goods or services. The USPTO can only register trademarks for marks that are used across state lines. A website customers can access in other areas can satisfy this requirement. Otherwise, you will only be able to apply for a state trademark.

Only a mark registered and approved by the USPTO can use the ? symbol. Since the application process can take many months to complete, use the TM or SM symbol in the meantime to establish your intention to use the mark as a trademark. Make sure you keep records as to when your mark was first used in commerce and regulate the use of your mark in the marketplace.

Wendy Maynard, your friendly marketing maven, is the owner of Kinesis. Kinesis specializes in marketing, graphic and website design, and business writing. Visit http://www.kinesisinc.com/resources/articles.html for more articles and free marketing wisdom.

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