Patents and Online Trading

In an article entitled "Challenges of Online Trading" appearing in Business day on Thursday 2 March 2000, page 25, the validity of the new breed of patents for business methods and computer software related was questioned.

The article referred to a lawsuit between Amazon and Barnes and Noble relating to the infringement of Amazon’s US patent for its "one-click online ordering system", and also refers to a patent which has apparently recently been awarded to Amazon for "an affiliate programme". The article quotes Tim Burners-Lee, the inventor of the Worldwide Web, as saying that online business method patents "... combine well-known techniques in apparently arbitrary always - like patenting going shopping in a yellow car on a Thursday".

The article also suggests that the enforcement of such intellectual property rights threatens to disrupt the operation of many online retailers, unless courts act to invalidate "this new type of patent".

The writer strongly disagrees with the abovementioned comments. A patent awarded for computer software or a business method not only needs to meet the specific requirements set by patent legislation and the courts relating to such subject matter, but also has to meet the requirements for any other invention, namely that the invention defined by the patent must be both "new" and "inventive". These words have very specific meanings in the context of patent law. In order to be "new", an invention must not already be available to the public in any way. So, if competitors were already using a particular method or system at the time the patent application in question was filed, the patent would be invalid and unenforceable. Similarly, if the invention in question was not "inventive" but was just an obvious application of existing technology, it would be unpatentable.

Obviously, "... going shopping in a yellow car on a Thursday..." is certainly not new or inventive, and would therefore not be patentable. With respect, Mr Burners-Lee’s comments therefore appear to stem from a lack of knowledge of the patent system.

Because the patenting of computer software and business methods is relatively new, it is true that patent offices are struggling to search prior art in this field effectively, as they do not have a large body of patents for previous similar inventions to refer to, and other "prior art" or evidence of earlier use of a particular invention may be hard to track down. It is therefore possible for a patent office to issue a patent for an invention in this field which is either not new or not inventive. However, it must be stressed that the patentee who tries to enforce such a patent is vulnerable to attack when before a court with the authority to overturn the patent office’s decision and declare the patent invalid. Thus, if Amazon’s patent was really invalid, Barnes & Noble would most likely be able to prove this easily, and would be able to put the litigation to rest.

It should also be pointed out that patents, particularly in the USA, normally take at least two to three years from the date of filing of the patent application until they are granted. However, the novelty and inventiveness of the invention is decided with regard to the state of the art at the date of filing of the patent application. The patents that are being granted today were filed several years ago, and although the inventions in question may not be new today, they will have been new when the applications were filed for the patents to be valid. In the context of the article in question, the test is thus not whether numerous online companies are presently using the invention, but rather whether those companies were using the invention two or three years ago.

The Internet and the systems and software it has spawned has proven to be one of the fastest growing fields of technology we know today, and certainly appears to be the wave of the future. The principles of patent law are no less applicable to this field than to any other. The inability of any patent system to protect inventions in this field would lead to a serious hampering of technical growth and development. It would be unfortunate if such a scenario were to come about only due to an inability to appreciate the less tangible, but no less real nature of such inventions.

Lance Abramson

Spoor & Fisher

Date published: 2000/03/01
Author: Lance Abramson

Tags: patents online trading business methods computer software