A business method patent is a type of utility patent that protects a process rather than a physical object. It has proved especially useful to online companies that use software for their business. Protection through a business method patent, also known as an Internet patent, allows the owner to control rights to that business method during the life of the patent. This means that they can prevent other companies from using the process, or they can license the process to other companies for a fee.
Most people or entities that attempt to register a business method patent retain an attorney to assist them. When the attorney fees are taken into account, getting a business method patent may cost several thousand dollars or more. (If you get a patent without an attorney, the costs will be much lower.) In addition, the owner of the patent will need to pay maintenance fees to the U.S. Patent and Trademark Office after three and a half years, seven and a half years, and 11½ years. The pendency period, which is the period between filing the application and getting the patent, usually lasts two or three years. You cannot stop someone else from using the process during the pendency period. Patent rights expire 20 years after the date of filing.
Requirements for Business Method Patents
There are four main requirements for patenting a business method. First, the business method must be patentable subject matter rather than an abstract idea. It also must meet the usefulness requirement, but this is a low threshold to meet. The method only must produce a concrete result. The two remaining requirements are more complicated. These involve showing that the method is novel and that it is not obvious.
A novel business method must be different from any previous method or invention, and it must not have been exposed to the public. A method is exposed to the public if it was used publicly or described in a publication before the application was filed. (An exception applies if the applicant described the method in a publication no more than one year before the filing date.)
A business method that is non-obvious must produce a result that is new or unexpected to someone in the relevant field. This is often determined by assessing whether someone in the field would have seen the new method as a natural evolution of previous methods.
The America Invents Act
The Patent Reform Act of 2011, also known as the America Invents Act, imposed some restrictions on business method patents. It excluded future patents for tax strategies, and it provided an eight-year period in which anyone can ask the USPTO to review the validity of any existing business method patent that does not cover a technological invention.
Meanwhile, the America Invents Act created a nine-month period in which anyone can challenge the validity of a business method patent on any basis within nine months of the patent application being granted. To trigger this review, the challenger must prove that it is likely that at least one claim of the patent does not qualify for protection or that the patent implicates a novel legal question. However, the challenger cannot use the basis for the review again later in an infringement case or a declaratory judgment action.
Competing Use of Business Methods
Sometimes another business in the applicant’s industry will assert that it was using the business method already. This will be a basis for denying protection or invalidating a patent if the other business can prove that it had used the method publicly more than a year before the applicant filed the application. Confidential use does not provide a basis to challenge the application or patent. The other business will be able to continue using the method without infringing on the patent, though, if it used the method confidentially before the patent owner filed the application.