While the first covered shopping mall was opened in Minnesota in 1956, it wasn't long before practically every region in the United States had something similar. But what if that first entrepreneur had obtained a patent for his or her invention, characterizing it as a "method for operating retail stores"? Sound impossible? Back in the '50s, it might have been, for such so-called "business methods" were presumed to be unpatentable, along with such things as natural phenomena, abstract mathematical algorithms, mental steps, and items found in nature.

However, with the advent of computers and the information age, that presumption gradually weakened, and was put to rest in 1998 by the Court of Appeals for the Federal Circuit (the "Federal Circuit") with the case of State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368, and still further, in 1999, with the case of AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352. Now that the status of business method patents is no longer clouded, companies should take advantage of a potential strategic and financial boon by obtaining patent protection for all the unique aspects of their businesses.

State Street Bank and AT&T Corp.

In State Street Bank, the patent at issue involved a computer-implemented "hub-and-spoke" arrangement for administering mutual funds. In a patent infringement suit, the federal district court held the patent invalid as being an unpatentable business method. The Federal Circuit reversed, noting that while it was sometimes thought that business methods were not patentable (because of old case law, dicta, and the fact that certain business-related patents had been struck down as not being new), there was no per se restriction against patenting business methods under current U.S. law. The spirit of this holding was reaffirmed in AT&T Corp., driving the point home that business methods are and have been patentable subject matter, and opening a floodgate of new patent applications at the Patent Office.

What Is a "Business Method?"

In a broad sense, a "business method" is just that: a process or series of steps for conducting, organizing, or managing a business or related activity. For example, a method for selling ice cream (a business) might include the steps of: (i) transporting ice cream through residential neighborhoods in a refrigerated vehicle; (ii) broadcasting music over a loudspeaker to announce the vehicle's presence; and (iii) selling ice cream to those who come out to meet the vehicle. Other business methods might involve sales procedures, customer service, product quality assurance, data management, employee training, and billing systems.

These days, the vast majority of patent-eligible business methods, like the one in State Street Bank, involve computers and/or the Internet. This is because most Internet- and computer-related business methods are new, while most other business methods, like selling ice cream out of a refrigerated truck, are old and well known. However, there is no requirement that a business method invention involve computers, software, or the Internet to be patentable, as long as it is new, useful, and non-obvious.

Why Patent a Business Method?

All patents allow the patent owner to prevent others from practicing (making, using, selling) the claimed invention for twenty years from the filing date of the patent application. Offensively, if the invention relates to the core of your company's business plan, e.g., to a key product or the way in which business is carried out, a patent can protect or increase your company's market share (imagine if someone had obtained a patent for drive-thru banking or fast food in the 1970s!), or give you an advantage over your competitors (e.g., in a recent case, Amazon.com was able to temporarily prevent Barnesandnoble.com from using 1-click ordering on the Internet, as discussed further below).

Defensively, a patent can reduce the chances of your competitors obtaining patents that might be used against you, although there is a limited defense to infringement available for companies that were the first to invent, but not patent, a business method. More importantly, however, even if a business method invention is only peripherally related to your business, or if you are not interested in gaining market exclusivity, a patent can be an excellent source of income from licensing. This is especially true considering that the real value of a patented invention may not be known for several years.

Identifying Business Method Inventions

Given the potential benefits of securing patent protection for qualifying business methods, it is incumbent on companies to identify potentially patentable inventions. Here are some suggestions for doing so:

• Take a close look at everything your company does related to conducting business, both internally and externally: products, services, internal organization and operations, information flow and management, etc.
  
  
• Don't assume something is unpatentable - even conceptually simple inventions may meet the requirements for patentability.
  
  
• Draw on your (and others') common sense and business experience - frequently, you will have an idea if what your company is doing has been around for a long time, or if it might be something new.
  
  
• Do some research - review industry literature (business texts, technical journals, etc.), check online to see if other companies are already doing something similar, and take a look at what others have patented. Good sources for the latter include: the national system of Patent and Trademark Depository Libraries (at the Hartford Public Library, the Physical Sciences Library at U.Mass. Amherst, and the Boston Public Library); the U.S. Patent Office's web site at www.uspto.gov/patft/index.html; and the European Patent Office's patent search web page at ep.espacenet.com.
  
  
• Finally, consult your patent lawyer. He or she can act as an effective "sounding board," and may even have some idea right off the bat if an idea looks promising. Additionally, further, more extensive patentability searches can be performed to further determine whether or not it is worth it to file a patent application.

Recent Developments

While the Federal Circuit held that business methods constituted patentable inventions in State Street Bank and AT&T Corp., it wasn't clear how patent applications and resulting patents for business methods would continue to fare in the Patent Office and federal courts, and whether the State Street decision would elicit a response from Congress. Now that several years have passed, despite this uncertainty, business method patents remain viable and potentially valuable business assets, meriting continued consideration by the business community.

Presently, it appears that Congress is not poised to enact any legislation curtailing business method patents. This is because the federal courts and the Patent Office have sought to ensure that only truly innovative business methods receive patent protection. More specifically, the Patent Office is working to particularly thoroughly examine all business method patent applications. The resulting patents will be more likely to withstand challenge in court, and, therefore, will be of more value to patent owners.

Additionally, in Amazon.com Inc. v. Barnesandnoble.com Inc., No. 00-1109 (Fed. Cir. 2001), the Federal Circuit found that Amazon.com's patent for its "one-click" ordering system might be invalid because others had developed similar systems in the past, e.g., a single operation system for obtaining stock information by computer. While this decision went against the patent owner, it shows the federal courts' continued willingness to uphold business method patents provided they meet the general requirements for patentability (e.g., novelty, usefulness, non-obviousness).

Conclusion

Even before the Federal Circuit's decisions in State Street Bank and AT&T Corp., shrewd companies realized the potential for business method patents. Since this acumen has largely been affirmed, it is incumbent upon companies to at least assess the strategic and other benefits of identifying and patenting their unique methods of doing business. As the marketplace becomes ever more crowded, doing so may provide unique competitive advantages and additional sources of income, further insuring a company's success and longevity.

PROPER TRADEMARK USAGE
© 2001 Cari A. Mazza

In order to protect a registered trademark, one needs to employ a proper statutory notice with it to tell the world that the mark has been federally registered. To do this, it is suggested that the mark be referred to in the following manner:

FOOT TOWN® shoe stores

The mark (here, "FOOT TOWN") should always appear in capital letters, bold letters, or fanciful print. The generic description of the goods to the right of the trademark (here, "shoe stores") can be located below it and should appear in less conspicuous type (either upper or lower case). Any general description can be used, but it is best to keep the description generic such as the suggestion given above.

The above-listed trademark form is a proper trademark usage and should appear the first time the trademark is used in each piece of literature (e.g., signage or advertising). For any subsequent appearance of the mark in that piece, the mark can be used by itself with the "®" symbol. No listing of the goods is necessary.

Use of the "®" symbol is proper for federally registered marks only (for information on federally registering a trademark, consult a trademark lawyer). Unregistered trademarks, or state registered marks, can employ a "™" notice after the mark, which provides notice that the particular words/symbols are considered to be a valuable trademark.

For more information, contact the trademark lawyers at Holland & Bonzagni.

WHEN IS AN INVENTION PATENTABLE?

Obtaining patent protection can greatly enhance the potential value of an invention. However, before going to the trouble of filing a patent application, how do you know if an invention is patentable in the first place? Under United States patent law, there are many requirements for patentability, including, fundamentally, that the invention must be something new. Here, we will briefly address these requirements, along with some final advice for weeding out unpatentable inventions before committing to preparing and filing a patent application.

Overview

To be patentable, an invention must meet many requirements. The foremost of these is that the invention must be something new, i.e., it must be "novel." If the invention is not new, or only differs in obvious ways from what has been done before, it cannot be patented. In addition, there are other miscellaneous requirements (e.g., the invention must be useful), as well as certain deadlines for filing patent applications, as set by law.

Threshold Requirements

At the outset, before even considering whether an invention is actually new or not, there are several miscellaneous or threshold requirements that must be met for an invention to be patentable. These include: (i) originality; (ii) enablement; (iii) statutory subject matter; and (iv) utility.

The first of these, "originality," simply means that the invention must have originated with the person claiming to be the inventor, or, in the case of multiple co-inventors, that each person contributed something of significance to the invention. Put another way, patent law prevents someone from successfully patenting another's invention.

The second requirement, "enablement," means that the inventor has to be able to tell someone how to actually make and use the invention. It is not enough to merely have a good idea without any idea about how to implement it. For example, a machine that teleports objects from one location to another is a great idea, but unless the inventor has figured out how to make such a device work, it is not patentable.

Thirdly, for an invention to qualify for patent protection, it must have "utility," i.e., it must be useful. Since most inventions are inherently useful, or can be characterized as being useful for one purpose or another, this requirement is generally met, and rarely comes up in practice. An example of a non-useful invention would be a new chemical compound whose purpose, if any, has not yet been determined.

Finally, some inventions fall into categories that the federal courts have decided should not be patented, i.e., they are not "statutory subject matter." These categories include abstract mathematical algorithms, laws of nature, and naturally-occurring plants and minerals. However, patent protection can be obtained for just about everything else.

Statutory Bars

Other hurdles that must be crossed before addressing the issue of whether or not the invention is new are the so-called "statutory bars." These are provisions under United States patent law that impose certain time limits for filing patent applications. If these time limits are not met, the invention may be unpatentable.

To elaborate, in most foreign countries, a patent application must be filed before selling or publicly disclosing an invention. This "absolute novelty" requirement encourages early filing and prevents inventors from extending the period of potential and actual patent protection. However, under U.S. patent law (specifically, 35 U.S.C. § 102(b)), inventors are given a grace period of one year from first selling or publicly disclosing or using an invention before a patent application has to be filed. If the one-year period is exceeded, the invention cannot be validly patented. Accordingly, it is of vital importance to keep track of how and when an invention is being used or sold, and to file a patent application before any statutory deadlines.

It should be noted that "public" use basically includes any commercialization of the invention, whether done in public or private. Thus, using an invention in private to, e.g., make an item that is then sold, constitutes a public use, thereby starting the one-year "clock."

While the United States has a one-year grace period, most other countries, as mentioned above, do not. Accordingly, it is a good idea to at least consider filing a patent application before publicly disclosing or commercializing an invention. That way, the option to file patent applications in foreign countries is not unwittingly lost. Because of various treaties and other agreements, filing an application in the United States preserves the right to file corresponding foreign patent applications within a year of filing the U.S. application, even if the invention is disclosed or sold during that period, i.e., after filing in the U.S. but before filing in foreign countries.

There are other statutory bars under U.S. law, but these do not come up that often and will not be addressed here. However, a registered patent attorney should be consulted as soon as possible during the invention process, to make sure no such bars are applicable.

Novelty and Non-Obviousness

If there are not any problems with the threshold requirements or statutory bars, the final requirement for patentability is that the invention be something "new." To cross this hurdle, the invention must be both "novel" and "non-obvious," as the issue is characterized under U.S. law. Although novelty and obviousness are related, the former asks if the invention is different from what has been done before, while the latter looks at the character of the differences.

To elaborate, if an invention turns out to be exactly the same as a prior invention, as publicly known and/or shown in a patent or other document, it is not new, and cannot be patented. On the other hand, if there are differences between the invention and the most similar prior invention(s), those differences can be relied upon to obtain patent protection, provided the differences would not have been obvious to someone with "ordinary skill in the art," i.e., someone familiar with the particular technological field to which the invention relates. Thus, if the only difference between an invention and what has been done before is a change in size or scale, the addition of "bells and whistles," or replacing one component with another of similar function, the invention will probably not be patentable. For example, replacing the stock chromoly handlebar on a mountain bike with a carbon-composite handlebar would be an obvious, and hence unpatentable, modification.

Where Do I Go From Here?

To file a patent application, it is technically not necessary to first figure out if the underlying invention is patentable - instead, one can simply file the application at the Patent Office, whose job it is to make an independent determination of patentability. However, it makes a lot more sense to find out if a patent is likely before committing to the expense and effort of preparing and filing a patent application.

To do so, it is first recommended to look through some free, publicly-available sources of published and/or patented inventions, to get a preliminary idea of whether or not an invention is patentable. Such sources include technical journals and write-ups available at public libraries and on the Internet, and the national Patent and Trademark Depository Libraries ("PTDL"). Local PTDL's can be found at the Hartford Public Library in Northern Connecticut (CT), the Physical Sciences Library at UMass Amherst (convenient to Springfield, Longmeadow, and the rest of Western Massachusetts), and the Boston Public Library, also in Massachusetts (MA). Also, there are several free Internet-based patent databases, including the U.S. Patent Office's search website at www.uspto.gov/patft/index.html and the European Patent Office's search site at http://ep.espacenet.com.

For searching the online databases, it is typically best to first select several keywords that describe the invention. Then, take two or three of the keywords and plug them into the proper search format for the particular database. If this produces too many "hits" (results), the search can be narrowed by adding further keywords. Here's an example using the U.S. Patent Office's site:

• My invention is a device for roasting bell peppers, tomatoes, and chile peppers in a microwave oven. The keywords I select are "microwave," "pepper," "roast," and "brown" (as in "browning" something in the oven).

• I go to www.uspto.gov/patft/index.html and select the "Advanced Search" button, which leads to patft.uspto.gov/netahtml/search-adv.htm.

• In the "Query" box, I type "abst/(microwave and (brown or roast or pepper))", and then click on the "Search" button. This looks for any patents whose abstract section ("abst/") contains the words "microwave" and any of "brown," "roast," or "pepper" (the abstract section is a short description of the invention contained in a patent).

• This produces 55 hits (patents), which I can then look through to see if any are similar to my invention.

Further instructions for searching these electronic databases can be found on the particular websites.

After this, the next step is to consult with your registered patent attorney. If the results of the preliminary research appear unfavorable, they can verify that patent protection is precluded. If the results of the research appear favorable, they can help determine if the other requirements for patentability are met, e.g., the threshold requirements and statutory bars, and recommend the next steps for proceeding. These might include: (i) one or more formal, professionally-conducted patent searches, to get a more thorough, definite idea of patentability; (ii) preparing and filing foreign patent applications, such as a Patent Cooperation Treaty (PCT) application or a European patent application filed with the European Patent Office (EPO); and/or (iii) one or more U.S. provisional patent applications or regular patent applications (also called "nonprovisional patent applications"). Regarding the former, a provisional patent application has few formal requirements and costs less to prepare and file, but does not mature into a patent. Rather, it gives one year to see how an invention fares in the marketplace before having to file a regular patent application, which can eventually mature into a patent, but has more formal requirements and is more costly to prepare and file.

For more information about the patenting process, please contact the patent lawyers at Holland and Bonzagni.