page looks at e-business patents, the newest and for some
people most contentious area of intellectual property.
It covers -
methods - can (and should) we
have e-business patents?
- industry, consumer, academic and government debate
- pointers to major sites
supplements discussion in the Intellectual Property Guide
elsewhere on this site regarding
patents and designs.
Patent protection for 'inventions' dates from at least
the English Statute of Monopolies of 1624, which provided
a 14 year statutory protection for new devices and methods
of manufacture. (The 14 years reflected contemporary apprenticeship
arrangements: the inventor/manufacturer training successive
apprentices, each indentured for a seven year terms).
Until the closing years of last century protection was
given to original inventions and manufacturing processes.
Given a traditional emphasis on originality, technical
progress, practicality of identification and enforcement
of rights, and a wariness among courts and patent offices
(the government agencies that issue patents and maintain
registration databases, highlighted below)
about the "general inconvenience" of overly
broad patents there was a strong reluctance to provide
protection for methods of doing business, eg the idea
of the reverse auction.
The term 'business method' - embracing activities such
as buying/selling items, marketing techniques, financial
schemes and gaming strategies - was a shorthand for all
non-technical and thus unpatentable inventions.
That changed with the 1998 State Street and Priceline
patents in the US, with US courts deciding that internet-related
methods such as the online reverse auction and one-click
shopping cart should be protected.
Abraham Lincoln, initially better known as a very successful
corporate lawyer than a politician, praised the US patent
system as "adding the fuel of interest to the fire of
genius." In recent years it seems to have been adding
petrol to the fiery debate about the basis and extent
of intellectual property.
The US courts did not define 'business method' and, say
some observers, the US Patent & Trademarks Office
(USPTO) has accordingly been trying to fill a conceptual
void with a body of comments, hints and guidelines.
Reception ouside the US has been mixed. The European Patent
Convention - the collective of EU patent offices - has
to recognise business method patents but, so far, has
disdained to closely identify what they comprise and rejected
the Priceline reverse auction and Amazon 'one-click' applications.
A perspective is provided by Hartmut Pich's 2003 paper
Why Amazon One Click Shopping is patentable under
the proposed EU Directive.
A 2000 study by Oxford University and Olswang (PDF)
found that although only 28% of all EPO applications were
filed by US businesses, 52% of business method applications
came from the US. Risto Saevas' masters thesis (PDF)
considers software patent decisions by the EPO.
Australia the landmark ruling was that in the 2001 Welcome
Real-Time v Catuity case, with the Federal Court finding
that a method of using information technology within a
business system could comprise patentable subject matter
under the Patents Act 1990. The implications of that decision
are being digested by legal theorists, courts and the
Australian Industrial Property Office (AIPO),
the counterpart of the USPTO and EPO. The Advisory Council
on Intellectual Property (ACIP) formed a working group
on business method patents in 2002.
In Grant v Commissioner of Patents  FCA
1100 the Federal Court held that Grant's 'pure' business
method (the structure of a financial transaction in an
attempt to protect an individual's assets in bankruptcy)
was not patentable subject matter.That decision was upheld
on appeal, albeit on different grounds ( FCAFC 120.
The Full Court of the Federal Court ruled that Grant's
invention was a "mere scheme", "mere working
directions" and "mere intellectual information".
As such the invention was not patentable subject matter.
The court noted that that principles to determine
patentable subject matter should be applied flexibly -
patentability must accommodate inventions not yet envisaged - and
acknowledged that development is unpredictable.
Examples of concerns about business method patents
- and patenting in general - are
American Bar Association's March 2001 review article
in the MIT Technology Review and James Gleick's
2000 Patently Absurd article
Owning The Future: Inside the Battle To Control the
New Assets That Make Up the Lifeblood of the New Economy
(Boston: Houghton Mifflin 1999)
Lea's 2000 paper
The Revolution That Never Was: A Cynic's Eye View
of the Software, Business and E-Commerce Method Patenting
Controversy in the Wake of State Street
Merges 1999 As Many as Six Impossible Patents Before
Breakfast: Property Rights for Business Concepts &
Patent System Reform (PDF)
papers by Mark Lemley are particularly insightful. We
recommend his 2001 Rational Ignorance at the Patent
2001 Patent Scope
& Innovation in the Software Industry (PDF)
with Julie Cohen and 2001 The Growing Complexity of
the United States Patent System (PDF)
with John Allison. Greg Aharonian published two characteristically
provocative critiques on his BustPatents site in October
2001. They are his Business Methods paper
and a Software Copyright Deconstruction paper.
For an empirical study questioning the value of patents
per se see Sequential Innovation, Patents &
by James Bessen & Eric Maskin of MIT and The Patent
Paradox Revisited, a 1999 paper
by Bronwyn Hall & Rose Ham. There is a defence in Thomas
Mandeville's Understanding Novelty: Information, Technological
Change, And The Patent System (Norwood: Ablex 1996)
and Stephen Ladas' Patents, Trademarks & Related
Rights: National & International Protection (Cambridge:
Harvard Uni Press 1975). An overview is provided in the
US National Academies study
Patents in the Knowledge-Based Economy.
On 9 March 2000 Jeff Bezos, founder of Amazon.com (widely
criticized for abusing the patent system and sponsor of
a site that awarded US$10K prizes to those who demolish
high-tech patents) argued that software and business method
patents such as the Amazon one-click cart are "fundamentally
different" and should be recognized as such.
He proposed that business patents should be recognized
as so fundamentally different that they might only apply
for 3 to 5 years, as opposed to the usual 15 to 20. That
proposal came under fire from those insisting that all
patents must be treated the same: special treatment for
certain categories of patent is inappropriate.
The Maastricht University Portal on Information Economy
& Intellectual Property (here)
points to some EU studies. There's more detail at Bernard
Lang's Software Patentability Debate site.
Can an algorithm be patented? In Australia a claim to
a mathematical algorithm as such is not patentable, on
the basis that an algorithm per se does not produce a
"commercially useful effect". That effect can
only arise when the algorithm is implemented in a way
that produces a result, eg when it is used in a computer
to produce a commercially useful effect. Relevant case
law includes IBM v Commissioner of Patents (1992)
22 IPR 417 and CCOM Pty Ltd and anor v Jiejing Pty
Ltd and ors (1994) 28 IPR 481. Protection for algorithms
is discussed in a lucid 1998 Sydney Law Review
by Andrew Christie).
page (biotech patents)