If you are one of the recipients of the 1,330 business method patents issued in the U.S. last year, or the thousands more that have been issued rampantly and indiscriminately over the past decade, you are probably out of luck. The U.S. Court of Appeals in Washington, D.C. ruled today that business methods are not patentable unless they meet fairly narrow rules. What this means for Internet companies and patent trolls alike is that many of their existing patents may be invalid—at least until the case is heard by the Supreme Court, assuming it is appealed.
Mike Masnick at TechDirt has a good overview of the issues in the case and the stricter rules to be applied to these sorts of patents. He writes:
The summary is that the court has said that there’s a two-pronged test to determine whether a software of business method process patent is valid: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing. In other words, pure software or business method patents that are neither tied to a specific machine nor change something into a different state are not patentable.
The most famous business method patent is Amazon’s One-Click patent, but that is not what the case was about. (It deals with a proposed patent for a method to manage the risks associated with energy cost fluctuations that was rejected). But even the validity of Amazon’s One-Click patent could be questioned if it does not meet the new test. And that would depend on what you consider to be the definition of a “machine.” Is the Amazon store the machine in question (in which case that particular patent doesn’t have any particular value beyond Amazon’s own operations), or is it any online store (in which case, it might be too far reaching)?
This ruling raises a ton of questions like that across literally thousands of patents. And it is a good thing too because business-method patents tend to be overly broad and abused.
Good
Yeah, but I give it a good month before the big boys pay up and have this repealed and everything returns to its extortionate self.
I dont always neccessarily think its “good” mark. Most startups file patents to get the attention of funders. If all this collapses, much harder to get a look in and the process for funding becomes much “later stage” – which implies less risk for investors, but less returns.
PSS – If you want a fantastic overview – review here
http://www.pate...-re-bilski.html
so what, there isn’t anything innovative anyways. business methods..
If you’re filing patents JUST to get the attention of VCs or angels then you’ve done nothing that’s deserving of a patent.
VCs want patents because they want to get protected against patent trolls.
If there are no patent trolls, most people will just spend their time building their products than wasting money on applying for business patents.
Does this mean the pending “1-click layoff” business process is bunk?
Companies and Patents {seesmic_video:{”url_thumbnail”:{”value”:”http://t.seesmic.com/thumbnail/BPTM76FwIT_th1.jpg”}”title”:{”value”:”Companies and Patents ”}”videoUri”:{”value”:”http://www.seesmic.com/video/43yVChYWKB”}}}
Patent trolls like Thomas Edison, Nicola Tesla, and two-time physics Nobel prize winner John Bardeen are a shameful episode in our national history, perhaps second only to slavery. These filthy monopolists among them stifled innovation in nearly 2200 industries! No wonder we lag behind open source nations like Haiti and Sierra Leone.
good move by the courts too many bs patents created just to limit innovation , halt competition etc…
you mean to halt the stealing of of someone else’s good idea by people who cant come up with any at all?
I love techcrunch, but the amount of data they put on the “preview” of a feed is too much, hogs my Safari RSS reader for several seconds loading all that text and images, can you preview less info please?
Get a new browser and quit whining.
Or use Google Reader
Didn’t know any 8 years old went to this site.
@Raul- “8 years old”? It is your writing that seems to have been crafted by someone in grade school.
I prefer full text RSS.
I am sure top men are on this as we type.
Top men.
What about the business patent for priceline’s name your price?
Seems someone in USA finally made a good cup-o-coffee to wake these politicians up.
Does this mean that Glam won’t “take off” anymore?
Wow. A verdict based on common sense. Could change be afoot?
Thank you TechCrunch for covering a nice, wide swath of the entire industry and what is important to help our businesses grow.
-Randall
Awesome.
A patent attorney told me I could spend tens of thousands getting a patent done, but if a major deep-pockets competitor wanted to, they could set aside $5M to take me to court and drive me into the ground, regardless of my patent. Seemed uber-stupid and very unfair.
Isn’t the competitive advantage more in the size of your company (revenue or profit or users or _____)?
Jason Alba
CEO – JibberJobber.com
You’ve got one expensive attorney
I wonder if all the start-ups who actually filed this can get a refund from their lawyers?
A mafioso could make you an offer you couldn’t refuse. If you go outside, a mugger could rob you. If you stay at home, it might burn down.
HORRAY!
I’ve always thought patents, unless you actually create something unique, are a joke and often wonder how so many get accepted.
Off on a tangent: I’ve also wondered how they got patents on the human gnome etc. through. Yes the process for identifying it (what they invented), but no to the actual ’source content’ something that is in essence in the public domain. Its like saying because you have developed a way to mine gold, you have rights over all gold.
can we throw Y and G’s adsense patent 360 into the mix. i think amazon is an online store first and foremost. is adsense is an online add store?
interesting stuff.
CreatorLocator.com
What? You’re incoherent most times. I think you might actually have something important to say this time but please edit your comments before posting.
He just posts to spam his links…
A comment that finally fits the content of the story with out pitching strictly pitching your site!!!!!!!!!!!!!!!!!!!!
I commend you for changing!
I disagree with the ruling. Imagine a scientist who invests a formula that cures cancer or a inventor who invents a business process like http://www….to share pages with colleagues: yes this would make trillions to more established corporations, but nothing from the originator. Of course with everything there is abuse, and elimination of trolls must be taken care of. Thoughts should have the same protection as copyright, and no one should be able to profit from another persons thoughts.
This will be appealed and it will be a bad dream. We need to fix the issue and protect these inventors rights.
Interestingly – all this means is that patent drafters have to tie any plausible invention to “(1) a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing”
Evidently, anything which is structured to run through a database which operates through the hardware of a ‘particular’ computer system would most likely satisfy this test. The “transformation” of a particular article would be the next step. If the database transfer the article into a “different state” on a “particular machine” then you could argue, with reasonable clause, that you have satisfied this test.
Sure this is going to make some things harder – but its just going to mean that patents are “worded” differently. It’s not going to adversely affect “new” patent draftings – but indeed will effect many existing ones.
If you believe you do have a novel idea, just ensure that the patent drafter is aware (and they will be) and ask them specifically how they are going to get around this.
seems a lot of the folks in favor of the ruling are not familiar with patents or the benefits of public notice … the ruling simply means you need to tie to a machine (bizarre) & transform data … Okay – the folks who get burned most actually are the folks who supported the Patent Reform Act[s] … Banks & computer companies … Coalition for Patent Fairness members should have very interesting comments … btw, every patent that is able to receive money *is* a business method …
i think this is like the Process patent vs the product patent, that is plaguing the Pharma industry. many indian and chinese companies copied the molecules as US Pharmas had process patents. they changed teh process and still produced the same compound, thus escaping patent lawwuits …..
sort of unfair
searching technology is patented by google!!
http://12tb.com
Most patents are ridiculous. Most of the time they just describe unoriginal ideas. Common sense and obvious ideas should not be patentable. One-click buying. Meh. There are too many stupid patents out there clogging the system as it is. Not to mention all the ones that are similar but just worded differently enough for a different person to slide in to put more money in government hands.
Patents definitely benefit the companies with deep pockets. Lawyers are just too expensive for the little guy to defend himself against the corporate giants. So even if they did patent an original idea, they would quickly be litigated out of protection.
I work for a company that has a patent(s) (from before I started) that other companies (being vogue on purpose just in case) are now realizing could be a benefit to their properties and are basically violating patent law as it currently exists (already stated my idea about patents above). The company I work for doesn’t have their deep pockets and so will probably not be able to defend it and lose their competitive advantage.
nice and good posts ever i read you may like more news at http://skilltech.blogspot.com
I have never patented a business method. So I don’t give a crap.
BTW, I’m so much happier just being a regular programmer again than running a company. You people who put yourselves in the line of fire are real suckers.
I make more now just hacking code.
THANKS CALIFORNIA.
I finally have time to finish my long awaited NON-business method patent applications and prototypes now. And the cash too!
If it weren’t for those people putting themselves in the line of fire, your dumb ass wouldn’t have the opportunity to just “hack code”.
Go back to your script kiddie nonsense and leave the commentary to the adults.
hmmm… Will the government now reimburse the costs of everyone who was charged by the government to obtain one of these patents? How about the cost of having built your business around a patent the government told you would protect you, and now that government takes away that protection? Lost years of your life, lost money, lost career opportunities, and lost time with your kids, because the government told you that your idea was protected and you went forward with building a business and bootstrapping that business based on the government’s word that they would stand behind you & protect it. And now they back out on you. Wow — at first glance, that seems to really stink.
Dejavu.
Techcrunch’s reporting implies that all business process patents are now likely to be invalid which is clearly not the case. If your read the article, it states that protecting broad concepts is not likely to be patentable. Yet specific processses that are innovative, buildable and provable technically will still be upheld. Be a little bit more careful with your reporting.
Ever notice all the losers bitching about patents, as a rule, are the ones who have never invented anything in their entire lives.
Instead, they are trustfund Stanford pukes, or MIT breast haters, who couldn’t tell you an original idea if a gun was pointed at their head.
That’s why they hate patents. Someone else created it first. But because these Sequoia and Ycombinator abortions want to be playas, they instead decide to trample on someone else’s IP.
I bet a dollar not one of the posters above is a patent holder. Not one.
Know why?
Because not one of them had the foresight to create and protect their invention. Most likely, none of these strokes ever came up with an original idea in their lives.
That doesn’t stop Sean and the other Ycombinator douchebags from bitching about the law.
Go EAST young men. Go East of Oakland. You live in a very large country. A country with hundreds of millions of people, the vast majory, smarter and better prepared than you.
I don’t wanna go East. I like it here with the Stanford pukes and I can’t stand the MIT breast haters.
I filed for 3 non-provisional business method patents 3 years ago. They are fairly similar and we have received an office action on one of them already (FAST!). It was minor, a couple of claims had to be adjusted, but generally the patent will be left intact. I’m excited about being an inventor soon.
HOWEVER, BM patents are ridiculus and this ruling is great. Let someone else come into my space and I will crush them with better ops and better customer service. Patent protection is supposed to motivate people to spend a lot of time/money putting something together that they wouldn’t otherwise have done if they weren’t going to get protection – like a drug that costs $1B to bring to market. They make it economically feasible to create your product. BM patents do not meet this criteria and should be eliminated.
Now we might all have to work for our money. How unfair is that.
So how does this ruling impact the various prepaid cellular companies that were drummed out of business due to a patent on the business model?
http://www.cbsn...D8A747JG0.shtml
masnick often writes like a microsoft shill.
the press is jumping the gun on this. the impact will be far less than advertised. most “business method” patents recite an apparatus or system so this will have no affect. thoughtful claims drafting will avoid these issues.
Call it what you will…patent hoarder, patent troll, non-practicing entity, etc. It all means one thing: we’re using your invention and we’re not going to pay
BUSINESS METHOD PATENTS ARE STILL GOOD IF IT MEETS THE MACHINE OR TRANSFORMATION TEST. Techcrunch is WAY OFF. I usually don’t care to correct headlines, but your readers are assuming this is supported by solid analysis and reading. I would suggest that Techcrunch should either read the 130+ page opinion or visit some of the noted patent blogs. BUSINESS METHOD PATENTS ARE NOT INVALID DUE TO THIS CASE.
Here is a link to get you started: http://www.pate...-re-bilski.html
Thanks Random Patent Attorney. The like you provided gives some solid examples – my interpretation > patents with abstract definitions will not stand > those that define specific input and output for a designated purpose should be fine.
This example was the best part of the post and the golden nugget I was looking for:
the court distinguished between two of Abele’s claims – finding only one patentable. The unpatentable claim recited “a process of graphically displaying variances of data from average values” without specifying “any particular type or nature of data … or from where the data was obtained or what the data represented.” The patentable dependent claim identified the “data [as] X-ray attenuation data produced in a two dimensional field by a computed tomography scanner.” In retrospect, the Federal Circuit sees the difference between these two claims to be that of transformation. The second claim included sufficiently specific transformation because it changed “raw data into a particular visual depiction of a physical object on a display.” Notably, the transformation did not require any underlying physical object.
Finally. It’s about time that someone realized the absurdity of these patents…
Yeah, about that story. You see that techdirt retracted it today with an apology.
Apparently, the writer got it wrong. He misinterpreted the decision.
Looks like Hendrickson is still fucked after all.
Hendrickson: The Arch Duke Ferdinand of Patent Law Reporting
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thanks….
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