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Here are some salient points in the issue of business method patents that should interest a potential applicant or a keen observer.

  1. 1. A trade secret does offer competitive edge to a company, but when someone stumbles on the trade secret, the exclusivity is lost forever. Only a patent can ensure exclusivity and more importantly, legal protection in case of infringement, and will come handy when someone independently or otherwise ‘reinvents the wheel'.
  2. 2. The novelty of a business method needs to be demonstrated in one or more aspects when compared to prior art, which consists of known technology or extant expertise available in the public domain including relevant published writing, earlier filed patent applications, and even public use of the method more than a year before filing of application. Also, all such prior art need not be related to the Internet.
  3. The criterion of non-obviousness is quite subjective, and this is where the services of specially trained patent examiners become necessary. In the light of prior art, when seen by persons of ordinary skill, are results from the new method obvious consequences or effects? If they are not, then the method passes the test of non-obviousness. For example, US Patent No 5,206,803 was granted to an economist for a novel and subtle way to avoid taxes by use of credit cards to borrow money from a 401(k) fund.
  4. The pendency period can be as long as three years from date of filing of patent application to actual issue of patent number. During this period, it is not possible to prevent a competitor from developing and using the method.
  5. For business method patents in particular which are software and Internet related, the efficacy of a single country's grant of patent is not seen as an effective or complete protection. For example, it is possible to launch a site on the World Wide Web from a place outside the US , and therein employ a US-patented method and still escape liability of infringement. In other words, how can one country impose its patent laws on another, unless this is done through a mutually acceptable patent cooperation solution?
  6. A few critics argue that a 17- or 20- year period of patent validity, if at all, is irrelevant. Here are the bases for this view. [Under WTO's (World Trade Organization) TRIPs (Trade-Related Aspects of Industrial Property Rights) agreement, though, all utility patents enjoy a 20-year exclusivity. In that case, creation of a new type (other than utility, design and plant types) with shorter patent period is one possible way out.]
    • The Internet technology is so vibrant that it sees innovations and newer paradigms, in much shorter time than other technology whose evolution and incubation is nowhere near this pace.
    • Hardware and software become dated much more quickly.
    • With continuous or periodic revision of source codes, newer software versions or complete makeovers enter the market even as earlier versions continue to serve the purpose.
    • In the US , business methods are all implemented by software, and so the controversies cropping up in the wider and more encompassing software patent discussion are equally applicable.

References Law at Harvard.