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What is a Business Method Patent?

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  • Written By: Mary McMahon
  • Edited By: Kristen Osborne
  • Last Modified Date: 19 November 2016
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    Conjecture Corporation
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A business method patent is a legal protection for a particular method of doing business, granting the patent holder sole rights to use and license that technique for use by others for a set period of time. Such patents have a long history, with various patent offices recording examples as far back as the 18th century. They are also a topic of dispute and discussion, as some critics feel they are too vague to be meaningful.

To file for a business method patent, a company must be able to meet a number of criteria. The first is novelty. Someone cannot patent something already in wide use and acceptance, like accepting credit cards as a form of payment. The patent must also be for something materially useful; abstract, unclear, and frivolous “inventions” are not subject to patent. Furthermore, a business method patent must be non-obvious in nature. This can be a difficult test to meet, as it must be novel, implying it does not already exist, and at the same time cannot be something people would logically develop on their own.

Internet commerce furnishes a number of examples of situations where companies use a business method patent filing to protect certain business processes. These can include new ways of handling e-commerce, as well as tactics for interacting with customers. People can challenge patents if they feel they are too vague, don't meet the standards, or infringe on existing patents, and some legal challenges of business method patents are successful in court.

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One problem with this type of patent is the fact that many business methods are transparent in nature. As companies adopt new business methods, other companies can follow suit before they have time to file a patent. The method will no longer be novel, and the business cannot receive protections as it may have trouble proving who invented it and when. In the case of proprietary business methods that occur behind the scenes, it may be easier to provide supporting evidence for a business method patent on the grounds that the procedure is critical to the operations of a business and allows the business to perform a service in a new or unique way.

Proponents believe that, just like other inventions, new business methods should receive patent protection. This compensates people for their investments into developing new business methods and creates an incentive for innovation, with the patent acting as a reward for developing new concepts. With a business method patent, a business can choose to keep a method to itself, or license it to other companies for a fee with the goal of recouping some of the cost of development.

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