Q. So we all know about patenting physical inventions, but recently “business process patents” have become very important… and this has become a key issue for many startups.
A. Right. For many years, the USPTO actually took the position that a method of doing business could not be patented. But starting with the technology revolution of the 80s and 90s, new technology and new business methods essentially became intertwined, and that led to the USPTO reversing its position and starting to grant business process patents. But there is an awful lot of controversy around them.
Q. How about an example?
A. A famous one was the “one click” patent that Amazon got… I think a lot of folks, today, think the idea that they own a patent on the concept of entering an order with a single click (based off previously accumulated information) seems, well, strange. When Barnes and Noble also advertised one click check outs, Amazon sued and the case eventually settled, but B&N stuck in an extra click. And in fact, Apple actually licensed the tech from Amazon so they could do one click check outs.
Q. So I guess a lot of folks now think that’s a pretty obvious idea, and it obviously affects an awful lot of ecommerce companies.
A. Exactly. At least that one is pretty straightforward and clear. The real problem, and one the courts are trying to deal with now, is that a lot of these are also pretty vague… a system for settling insurance claims, for example, or offsetting debt claims.
In principle, “abstract” concepts cannot be patented, and now a lot of litigation focuses on whether patents that have been granted actually violate this rule.
Q. And I guess the big problem for a lot of startups is that they may unknowingly violate someone’s patent…
A. Right, and there are companies that buy up these vague patents, then run around and sue everyone who might even remotely be in violation. So called “patent trolls”.
The smaller companies can either agree to pay for something they probably shouldn’t have to, or try to litigate — something they really can’t afford. Kinda ugly, and one does hope the courts start to narrow the scope of the business process patents.