SHOULD THE UK FOLLOW AMERICA AND GRANT PATENTS FOR BUSINESS METHODS?
Peter Freedman, October 2002
Protecting an idea for a new business is a lot harder than protecting
an idea for a new invention, since you can't obtain a patent on
a business idea. Or, at least, you haven't been able to in the
past. That has now changed - at least in certain respects - in
America and could soon change in the UK.
The United States Patent and Trademark Office has started issuing
patents for all kinds of things that would once have been felt
unpatentatable. These include software, genetic discoveries and
- since a landmark court case in 1998 - for business methods,
in particular Internet business methods. Thus, the USPTO has now
issued patents for such business methods as group buying, one-click
shopping, reverse auctions and matching professionals with those
wanting advice.
Business methods cannot currently be patented in the UK. The
UK Patent Office, however, is about to ask the UK business community
whether it wants Britain, and Europe as a whole, to follow the
American lead in this area.
"The argument", says Jeremy Philpott of the UK Patent
Office, "is about trying to second guess whether patents
for business methods will harm innovation or increase it."
The UK Patent Office will pass on its findings to the European
Commission, which is conducting its own, pan-European consultations
on the question (while also deliberating on whether to allow patents
on software).
At present, patents are territorial. Thus, a patent granted in
the US is only valid in the US. Since the Internet, however, is
an international platform, we have to take notice of US patents
covering Internet uses - given, say, that if a UK business runs
a website, and a product is purchased from it by someone in the
US, the UK business may unwittingly be infringing a US patent.
The European Commission realises, on the one hand, that international
discrepancies in patent legislation can cause act as a barrier
to trade, and, on the other, that granting business patents could
act as a barrier to competition.
Patents are designed to encourage innovation. By offering a monopoly
on a product for a limited product, a firm gets a reward for the
investment it has had to make in researching, developing and bringing
that product to market - and thus an incentive for investing in
further R&D.
Critics of the American move to grant patents for business methods,
however,
question how much R&D goes into thinking of a new way of trading.
Would a firm genuinely use a business method to protect its R&D
spend or just to stop competitors from trading? There is also
a concern that people may dress up old methods of doing business
as being new simply because they involve the Internet. For example,
a US patent issued on 13 June, 2000 (no. US6076070) is for undercutting
a competitor's price by offering a cheaper price on the Internet.
Thus, the age-old practice of undercutting a competitor has effectively
been patented, with potentially serious consequences for any company
wishing to undercut a competitor in the US.
The question is whether such patents would stand up in court.
Whereas the US seems willing to grant patents that stand a high
risk of being challenged in court - at a high potential cost to
all parties - the UK Patent Office seeks to grant patents that
have a high presumption of validity.
Another argument against Europe starting to grant patents for
business methods is that doing so gives an advantage to US corporations
that have already filed speculative applications in anticipation
of future changes to the European Patent Convention, thereby stealing
a march on European companies.
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