Patent Benefits

Patents are not just for large companies. Patents are not only for high technology. Some of the most successful E-Commerce companies have used patents for business methods and “low-tech”inventions.

Patents can help your E-Commerce business in a number of ways.

There are probably more benefits to patents, but this list is a start. These benefits are not only for E-Commerce companies, but are especially important in E-Commerce. This is because E-Commerce is closely linked to subjects that have recently, in countries where patent protection is available for these fields of technology, been the subject of vigorous patent activity: telecommunications, semiconductors, business methods and software.

Patents in E-Commerce are important because of the amount of licensing, contracting out, outsourcing, and strategic relationships involved in E-Commerce.

You will want to consider whether to implement an Employee Invention Incentive Program in your company. Such programs are common, in particular in countries that do not provide for legislation on remuneration for employee inventions, in larger companies and usually involve a bonus in stock and/or cash given to an employee or team of employees who produce inventions.

The awards are usually given in stages, with a small award given at the time an invention disclosure is filed by the employee with the person in the company who is responsible for this task, another given at the time the patent application is filed, and another one given when the patent issues, with the largest incentive given last. Public announcements and award ceremonies are good ways to boost morale and encourage creativity.

Patents are usually first filed in your own country’s patent office, but also in most other countries, anyone can file a patent in the respective national patent office or use, where the conditions therefore are fulfilled, the International Bureau of WIPO for patents filed under the Patent Cooperation Treaty (the “PCT”). Using the PCT gives you options to file patent applications in a number of countries. There are also regional patent offices, for example, the European Patent Office (EPO), the Patent Office of the Gulf Cooperation Council (GCC), the African Regional Industrial Property Organization (ARIPO) and the Organisation Africaine de la Propriété Intellectuelle (OAPI). See: “Protecting Your Intellectual Property Abroad”.

If you are engaging in E-Commerce as your primary business, or as an important part of your business, you will need to decide whether patent protection for your employees’ inventions is a useful tool for your company, and if so, where you should file the application.

For More Information:

On business method patents, see:

• US Patent and Trademark Office (USPTO)

• NOLO

• Consumer Project on Technology

On regional and international patent filings, see:

• Patent Cooperation Treaty (PCT)

• European Patent Office (EPO)

• Japanese Patent Office (JPO)

• African Regional Industrial Property Organization (ARIPO)

On patent licensing and other types of licensing, see:

• Society of Licensing Socieities (LES)

Ways in Which Patents can Help Your E-Commerce Business

• They motivate employees who enjoy challenges and who may benefit from remuneration or other benefits from the company.

• They help record and develop new ideas.

• They can increase the valuation of your company in the context of investment, financing, merger and acquisition transactions.

• They can support an increase in the price of your products by giving your company products exclusive features unavailable to competitors.

• They can increase sales of your products by giving your company products exclusive features unavailable to competitors.

• They can be a source of royalties in licensing transactions, thus adding revenues to your company bottom line. Such royalties can be in a lump sum, in installments, based on units of product sold, or based on a percentage of revenues from sales of product.

• They can permit your company, if it grants licenses to the patent, to expand its markets and/or create a platform, whereby licensees develop and differentiate products based on the patent.

• They can be used in connection with participation in standards bodies or consortia, where different companies join forces to create interoperability or promote a technology.

• They can be used defensively in case your company is accused of violating the patent of another company; you can protect your company from litigation and/or trade your patent against the accusing company’s asserted patent.

• They can help your company develop strategic alliances with other companies who wish to take a license to your company patents and thereby increase their own patent portfolios.

Business Method and Computer Software Patents

Today, there are an increasing number of software and business methods which are protected by patents in the United States. In Japan, computer programs and business methods are patentable provided that they are considered to be technical instead of merely abstract ideas (see web site of the Japanese Patent Office. Under the European Patent Convention and the patent laws of a number of countries members of the European Patent Organisation, computer programs and business methods as such are still expressly excluded from patent protection. In practice, however, the approach has changed in recent years as the result of long-lasting intensive and controversial discussions and many decisions. The vast majority of applications are today considered not to claim abstract programs or business methods but to describe technical means like, for example, computer networks, for carrying out these programs or methods. In order to be inventive, the programs or methods have to overcome a technical problem in a non-obvious way; in other words, it is not the commercial ingenuity which makes them patentable (see EPO web site and the report of the 80th EPO Administrative Council, 2000. In a number of other countries, computer programs and business methods are not yet patentable.

Some examples of business methods are: patents on using a single click to order goods in an on-line transaction, on an on-line system of accounting, and on-line rewards incentive system. Much has been written about business methods patents. In most countries, patents are available for a wide range of inventions. In E-Commerce business, it is prudent to get legal advice about whether any new business methods developed by your company may be patentable.