Business method patents - defining your viewpoints and your rights.

• Author: Kain, Robert C.

Business method patents are a class of patents which permit the owner to exclude others from making, using, selling, or offering to sell (1) the services or functions set forth in the patent rights-defining claimed method, the data exchanged with the claimed method, or a computer program which embodies functional steps of the claimed method. Although computer program financial patents have been the subject of patent protection for many decades, (2) most people believe business method patents cover unique or unusual business practices regardless of whether the methods are embodied in a computer program or are a series of novel and nonobvious steps employed to produce a product or deliver a service. (3) Business method patents often encompass Internet or e-commerce systems.

Patent attorneys employ business method patents to protect current commercial processes because many of these processes involve computers. However, there is a growing body of noncomputer-related business method patents. A computer search through abstracts of issued U.S. patents with the term "business method" revealed 32 patents, a majority of which are computer-related program patents (4) and a distinct minority of which are associated with noncomputer-related patents. (5) The distinction is significant because a method of doing business embodied as a computer program necessarily uses some computing data communication system (sometimes the Internet), (6) whereas a true or pure business method patent is simply a series of steps. One example is a method for producing revenue from a gypsum-based refuse site. This patent includes "providing at least one facility suitable for containment of non-gypsum waste materials, ... a container ... being formed substantially from said gypsum refuse ... and renting, leasing or otherwise driving revenue from said at least one facility suitable for the containment of said non-gypsum waste materials." (7)

A spotlight was cast on business method patents during the dot-com boom in 1999 when Amazon.com, Inc., sued Barnes & Noble.com, Inc., for infringement of Amazon's "one-click" patent in Amazon.com, Inc., v. Barnes and Noble.com, Inc., 239 F.3d 1243. (8) Amazon's broadest patent claim establishes Amazon's exclusive patent rights as:

a method for ordering an item using a system, the method comprising: displaying information identifying the item and displaying an indication of a single action that is to be performed to order the identified item; and in response to only the indicated single action being performed, sending to a server system a request to order the identified item whereby the item is ordered independently of a shopping cart model and the order is fulfilled to complete a purchase of the item.

Although the trial court in the Amazon case initially issued a preliminary injunction prohibiting Barnes & Nobles' use of the one-click process, the Court of Appeals for the Federal Circuit (9) reversed and held that Barnes & Noble had raised a substantial question of patent invalidity regarding the asserted patent. (10) After this preliminary adverse ruling by the Federal Circuit, patent owner Amazon settled with Barnes & Noble early in 2002.

Several organizations, including the Electronic Frontier Foundation (EFF), strenuously objected to the scope of Amazon's one-click patent arguing that it prohibited a substantial portion of on-line shopping activities. This argument was then expanded to computer-related business patents in general and the EFF publicly announced that many of these patents, issued by the U.S. Patent and Trademark Office (PTO), were invalid and should be struck down by the court system or recalled (reexamined) by the PTO. In April 2004, the EFF launched its "Patent Busting Project" stating that many business-related patents had a chilling effect on public and consumer interests. The EFF also indicated its intent to file multiple reexamination requests with the PTO to invalidate these patents. (11)

Numerous computer-based or computer-related method of doing business patents continue to effect the electronic commerce (e-commerce) businesses. For example, Double-Click has a banner ad patent, U.S. Patent No. 5,948,061, for "A Method of Delivery, Targeting, and Measuring Advertising Over Networks" which was cited in a class action suit for data misuse, but the patent claims were never litigated. (12) An open market electronic shopping cart patent, U.S. Patent No. 5,715,314, for a "Network Sales System," is subject to ongoing litigation in Texas also involving Amazon.com, Inc. (13) Patents have also been issued for an online shopping reward or "click reward program," U.S. Patent No. 5,774,870; a system that provides a financial incentive to view Internet political messages, U.S. Patent No. 5,855,008; an online auction system sometimes known as a "name your price" or a "reverse auction" patent, U.S. Patent No. 5,794,207; and a process that reacts to such auctions, U.S. Patent No. 5,845,265. (14)

A review of Federal Circuit case law relating to "business method patents" shows that the appellate court is relatively active in expanding the use of business method patents under current U.S. patent law. (15) In 2005, a district court refused to issue a permanent injunction after a jury verdict of infringement stating its "growing concern over the issuance of business method patents, which forced the PTO to implement a second-level review policy and caused legislation to be introduced in Congress to eliminate the presumption of validity for such patents." On appeal, the Federal Circuit reversed the trial court's denial of injunctive relief stating that such reasons were not grounds to deny the permanent injunction. (16)

In August 2005, the Federal Circuit issued another ruling in NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282 (Fed. Cir. 2005), involving the popular Blackberry[TM] email communicators that effectively established that, with respect to method patent claims, all the rights-defining claimed steps must be executed or practiced (found) in the U.S. NTP made a distinction...