Method patent goldrush spreads

In the past year, the patenting of business methods has featured prominently in the US headlines. For example,'s US patent infringement action...

In the past year, the patenting of business methods has featured prominently in the US headlines. For example,'s US patent infringement action against has become a high-profile case, in which Amazon has alleged infringement of its "One-Click" patent.

Priceline's action against Microsoft's Expedia site, based on the former's reverse auction patent for hotel price-matching, has also evoked interest.

These actions follow on from the 1998 US State Street Bank case, which specifically held that business methods could be patented provided that they were novel, non-obvious and produced a "concrete and tangible result".

It is expected that more than 1,000 business method patents will be filed in the US in the year 2000.

But what about the UK and Europe? Under the UK Patents Act 1977 and equivalent European legislation, business methods as such are excluded from patent law. Despite this legal hurdle, it is often possible to obtain business method patent protection by claiming the method together with some form of apparatus, which produces a technical effect or makes a technical advance over the prior art.

This is getting quite close to software patents and indeed the European Patent Office has already accepted some patents, such as EP 0 749 081 which covers a computer-based information distribution system for delivering information and advertising to subscribers during their computers' inactive periods.


However, business methods by their very nature tend to be more "idea-based" or conceptual than software. There may, for instance, be a number of technical ways to implement a patented business method and full protection might be difficult to obtain.

Careful claims drafting is required to ensure that all the inventive technical aspects of implementing the business method are identified and then claimed in the patent application.

Be alert to

  • Always consider whether a business method which you have devised is suitable to patent, preferably in all relevant jurisdictions, but at least in the US for Internet-related business methods. Remember, the Internet is global. Keep the other guy off your patch.

  • The business method must be novel and inventive and produce a real tangible result. It must not have been disclosed to any third-parties before the patent application is filed, save under the protection of a confidentiality agreement, otherwise novelty value can be lost.

  • Bear in mind that obtaining a patent requires disclosure of the business method to the public and some inventions are better kept confidential and protected as a trade secret. However, many business methods will become public knowledge in any event as and when you implement them.

  • It is becoming increasingly important to search for adverse patents when implementing new business methods in order to avoid your new business method infringing on other people's intellectual property. Remember that your Internet site may be held to be sufficiently interactive to enable a US court to claim jurisdiction over you, even if you and your server are in the UK. If so, you could be sued for infringement of your competitor's US business method patent in a US court - a very expensive experience both in terms of damages and legal costs.

  • Remember software patents too.

For further information please contact George Godar, DLA partner and national head of intellectual property, on 020-7796 6269

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