Sunday, November 2, 2008

Business Method Patents?

Does your business plan rely on a business method patent? In simple layman's terms, a business method patent is one for a process of doing business as opposed to the more standard mechanical process. A prime example us Priceline's patent for an online reverse auction of services. See article. In case you have not heard, the Court of Appeals for the Federal Circuit just cast a shadow over all business method patents. See In re Bilski. Opinions range on the effect of Bilski from a minor opinion which places some needed limits on business method patents to a definitive invalidation of all business method patents. Blog post on legal debate. From the prospect of the entrepreneur, it almost doesn't matter which group of patent lawyers is correct in interpreting Bilski. It will be fought out in the court for years to come and anyone's guess what existing business method patents shall be invalidated or if the USPTO will issue any new BMPs. Investors shy away from uncertainty. Lack of capital kills early stage ventures.

The gravest business planning mistake I made in life was founding a company whose success hinged heavily on a business method patent application. The patent process itself sucks resources and attention from the business venture. I am not advocating wholesale abandonment of filing for business method patents. The point is that the thrust of the business plan has to be your competitive advantage in the market place, not a magic bullet from the USPTO. In my opinion, the patent process is a crap shoot. Be prepared to succeed in the marketplace or don't enter the field of battle.

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