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Patently obvious

The Internet has fueled an unhealthy demand for dubious patents covering common business practices.

October 30, 2006

IN 1999, AMAZON.COM won a controversial patent for a seemingly obvious feature of online stores: Letting shoppers buy an item by pointing their mouse and clicking on it. Now the retailer is getting a taste of its own medicine from IBM, calling into question why the federal government needs to protect methods of doing business in the first place.

IBM filed a pair of lawsuits last week accusing Amazon of violating five of Big Blue's patents related to e-commerce. Although IBM contends that the patents are grounded in important technological advancements, the list involves such mundane activities as "ordering items using an electronic catalog" and "presenting advertising in an interactive service."

Both appear to fall under the much-maligned category of "business method" patents, or federally protected ways to perform such fundamental commercial activities as marketing, billing and monitoring inventory.

The requirements for obtaining patents have evolved since 1790, when the first Congress created the federal patent system, but a key principle has remained consistent: They are to be awarded for the implementation of ideas, not the ideas themselves. Other important requirements added along the way include that the invention be novel and useful, and not obvious.

Business methods were not considered patentable for many years because they were too much like ideas. In the late 1990s, however, a federal appeals court ruled that methods could be protected if they met the same criteria as other inventions. These rulings, combined with the emergence of the World Wide Web and the business world's increasing reliance on computers, fueled an exponential increase in the number of patents sought for high-tech ways to conduct business.

To its credit, the U.S. Patent and Trademark Office has been slow to recognize business methods. Of the more than 42,000 such patents sought between 2000 and 2005, only 3,600 have been approved. Nevertheless, some of the office's grants have blurred the distinction between novel commercial methods and abstract business models. Applicants exacerbate the problem by claiming the broadest possible coverage -- applying the patent to the idea instead of their way of implementing it. And the short history of the Internet as an electronic shopping mall has made it harder for patent examiners to gauge how new and non-obvious the proposed methods are.

So should business methods be totally ineligible for patenting? That may be a step too far. At minimum, though, method patents should only be granted if they're tied to real technical innovation.

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