April 6, 2001

New laws now in place for business method patents

By Dan Cleveland

Lathrop & Gage

www.lathropgage.com

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While method patents have long been available to protect inventors of useful, novel methods of accomplishing particular tasks, such as surgical procedures, business method patents — on a particular method of doing business — are new to the scene.

Once issued, a business method patent provides a federally protected monopoly on making, using and selling the invention for up to 20 years, a monopoly that can then be protected through an array of legal remedies.

Controversy has long surrounded the development of business method patents because they appear to give protections to old ideas that are simply being used through new technology. In 1998, however, the Federal Circuit Court of Appeals made it clear that business methods are an appropriate subject of patent protection. That decision generated a storm of activity, as companies began aggressively filing for patents on their business methods and litigating against alleged infringers.

Widespread concern regarding this movement has spurred Congress and the Patent and Trademark Office (PTO) to overhaul the business method patent process.

Recent changes include the American Inventors Protection Act of 1999, through which companies can obtain information about pending patent applications 18 months after they are filed. Other legislation has been proposed but not yet passed, such as the Business Method Patent Improvement Act, which would provide increased scrutiny of, and added procedural hurdles for, business method patents.

The PTO also announced last March that it would institute an "Action Plan," incorporating enhanced communication with industry groups regarding business method patent concerns and has implemented certain safeguards to help ensure better scrutiny of business patent applications.

So how does the business method patent affect you? It˜s a proactive measure, in that protecting your business methods with a patent can help ensure that competitors do not patent ideas your company uses.

There are several steps to take when considering a business method patent. Train your management and staff regarding intellectual property issues. Identify and meticulously document innovations that may be patentable and evaluate whether such innovations warrant seeking patent protection. Finally, verify that existing patents do not cover new products and methods your company is considering before substantial time or money is invested.

Because of the competitive benefits patent rights convey, aggressive pursuit of such rights will continue and likely increase, as will associated litigation. Defeat in such litigation can cost a company the ability to make, use and sell its key products and methods of doing business.

By actively identifying, documenting and patenting proprietary innovations, however, companies can position themselves to win or avoid litigation, and be victors, not victims, in the new economy. Dan Cleveland is an attorney at Lathrop & Gage L.C. and a member of the firm˜s Intellectual Property practice group. Additional information for this article was supplied by Dave Clark and David Barnard.

By Dan Cleveland

Lathrop & Gage

www.lathropgage.com

While method patents have long been available to protect inventors of useful, novel methods of accomplishing particular tasks, such as surgical procedures, business method patents — on a particular method of doing business — are new to the scene.

Once issued, a business method patent provides a federally protected monopoly on making, using and selling the invention for up to 20 years, a monopoly that can then be protected through an array of legal remedies.

Controversy has long surrounded the development of business method patents because they appear to give protections to old ideas that are…

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