Yes, businesses for years have always been free to patent their models and methods. Companies have, for example, patented the way they sell airline tickets and the way they manage money – market accounts. But in an information economy, in which entire business models can be embedded in digital code, attempts to use patents as competitive weapons have intensified.
The USPTO differentiates between a business model and a business method. That is, there is a legal line between your strategy or vision and your actual means of doing business. To be patentable, just like any invention, the art, method, or process must be useful, novel, and non – obvious. Disclosure has to be complete to the point that anyone with general knowledge of the industry can comprehend how it works.
Nonetheless, not every business method, model or process is patentable. In fact, there are strict limitations and classes of business methods that can be patented under the USPTO. Of these, the most common is financial data processing (class 705).
This class covers computer processes that involve business practices, finance, price determination, or management. Other classifications of eligible business model processes include gaming, education, and agriculture (classes 273, 434 and 47, respectively).
These qualifications are outlined in Section 101 of the U.S. Patent Act. They carry three exceptions. One cannot patent laws of nature, abstract ideas or physical phenomena. In the same vein, printed matter cannot be patented; it is instead protected by copyright laws. In addition, the Supreme Court has generally taken the stance that patent law interpretations will be based on common and ordinary language usage.
Even though a business method is granted a patent, the protection is valid for 20 years. This is the same period of time as a utility patent. The protection restricts others from using the methods covered in the patent without receiving permission from the owner.
In 2007, the USPTO published Interim Guidelines for Examination of Patent Applications for Patent Subject Matter Eligibility. These guidelines were written in response to a skyrocketing number of business method patent applications during the prior decade. Through this publication, the USPTO set the criteria for a process to be patentable. Specifically, it must either be tied to a specific machine or work to transform physical matter in some way.
How to Protect Your Business Plan and Business Model from Being Copied
Protecting business ideas is very necessary for entrepreneurs and small businesses. It is crucial to start guarding these business ideas during the start-up phase. Note that the primary methods available to small businesses to protect their business ideas are non – disclosure agreements, trademarks, common sense procedures around trade secrets, employment agreements and, increasingly, patents.
1. Non – Disclosure or confidentiality agreements
Non – disclosure agreements or confidentiality agreements are always used with potential business partners or people funding your business. Note that when you start discussing your business plan with others, for whatever reason, it is imperative to have people sign a non – disclosure agreement prior to the discussion. You should expect a lot of resistance to this. You should also include confidentiality language and non – disclosure language in your business plan.
For decades, trademarks have been used to protect trade names and business names. A trademark is a word, phrase, symbol or design, or a combination of words, phrases, symbols or designs, that identifies and distinguishes the source of the goods of one party from those of others. A service mark is the same as a trademark, except that it identifies and distinguishes the source of a service rather than a product.
3. Common sense protection of trade secrets
These procedures are also necessary to protect business ideas and trade secrets. Strive to keep as many people as possible from knowing your trade secrets. For example, to protect a recipe, don’t let people know what’s in it — or combine some ingredients so people don’t know everything they are using. With a business process, don’t let people know how you do it — or all of it.
4. Employee agreements
It’s advisable you ensure that all employees sign agreements requiring them to keep business information confidential and to not use such information in the future. Additionally, non – competition agreements may be useful.
5. Patents to protect business methods
Just like it was expressed above, patents are becoming increasingly available to protect small business methods. A patent is defined as the granting property right to the inventor, issued by the United States Patent and Trademark Office (USPTO).
The term of a new patent is 20 years from the date on which the application for the patent was filed in the United States or, in special cases, from the date an earlier related application was filed. U.S. patent grants are effective only within the United States, U.S. territories, and U.S. possessions. Under certain circumstances, patent term extensions or adjustments may be available.
In order to qualify for patent protection, a business method must meet the USPTO’s rigid classifications. However, for a long time, patents for business methods or business ideas were extremely rare. Increasingly, the USPTO is granting patents for business methods, particularly around the internet or other high – tech applications. For example, the following patents have been granted:
- Open Market’s patents for electronic trading (USP 5,724,424; USP5.715.314; and USP 5,708,780)
- Netcentive’s bonus gifts marketing (USP 5,774,870)
- Cyber Gold’s Attention Brokerage patent (USP 5,794,210)
- Price Line’s patent (USP 5,794,207)
- Double Click’s web advertising method patent (USP 5,948,061)
- Com’s one click patent (USP 5,960,411)
- WWW scheduling control patent (USP 5,960,406)