Historical Basis Historically, a method or process of doing business was Because it had long been believed that business methods were not patentable, most companies had not bothered to invest the necessary time and money to apply for business-method patents. The 1998 court decision opened a floodgate of patent applications for business methods, many of which involved computer technologies and methodologies, in many cases for conducting business on the Internet. There quickly developed a widespread concern on the part of companies that they might infringe a business-method patent simply by continuing to conduct their business using well-established methods for which someone all of a sudden held patents. In response, Congress passed the First Inventor Defense Act, which adds to the federal patent statute a defense to patent infringement based on the prior commercial use of a business method. Under the prior-use defense, a person or company that is sued for the infringement
considered unpatentable, even if that process was otherwise useful, new and
non-obvious.
However, over
the
latter part of the 20th century, there was a slow realization that the basis
for rejecting business method patent applications was because the process or
method was not novel or was obvious, not because the invention was related to
a process or method. In fact, with the widespread use of computers and the development
of business methods involving computers, courts were forced to reexamine the
question of whether a business method could be patented or, as they had been
historically treated by the USPTO, were inherently unpatentable. In 1998, the
federal court in the United States which hears all appeals of patent decisions
ruled once and for all that business methods could be patented if they produce
a “useful, tangible, and concrete result.” In the reaching that decision, the
Court concluded that a system that used a computer to calculate a mutual fund
share price from a complex set of parameters was not an abstract idea but rather
was within the statutory subject matter which qualifies for patent protection,
namely a machine–embodied by the computer–that produced a useful result–the
share price.
Ruling lead to a “Patent Rush”
Prior-Use Defense
of a business method may escape liability for infringement by showing that
it had used the patented method commercially for at least one year before the
patent holder had applied for the business-method patent. Commercial use does
not necessarily mean public use; use in an internal manufacturing or distribution
procedure that contributes to the effectiveness of a business operation qualifies
as commercial use for the purposes of the prior-use defense, as would a method
that produced a product for final sale to another party. A party asserting
the prior-use defense has a burden of proving the circumstances that constitute
a successful defense by clear and convincing evidence. If a party asserts a
prior-use defense without a reasonable basis to do so, the party may be required
to pay the patent holder’s attorney’s fees.
Delay to File, Still a Barrier
If you believe you have invented a new, non-obvious method or process which qualifies for patent protection, schedule a meeting with one of our patent attorneys before your time runs out. Remember, even if you have an inventive process or method, you must file for protection quickly or risk losing your patent rights forever.