March 30, 2000
Federal Agency Rethinks Internet Patents
Government Changing Its Evaluations of Business-Method Filings
By SABRA CHARTRAND
ASHINGTON, March 29 -- Facing charges that it has been too
ready to issue patents for Internet
business methods, the Patent and
Trademark Office said today that it
was changing its evaluation procedures to ensure that such patents
cover true innovations.
The patent office's director, Q.
Todd Dickinson, said his agency will
be "fine-tuning our examinations in
a lot of areas" regarding the handling of business-method patents.
"These changes have been in the
works for a while."
The actions announced today are
the first substantial move to address
a growing debate over whether ownership of business methods can be
awarded to someone exclusively because they are applied online. The
debate centers on this question: Do
recent patents for practices like single-click purchases or name-your-price sales, to name just two, protect legitimate innovations? Or do
they stifle electronic commerce and
competition when issued to inventors
exploiting a patent system designed
in a non-digital age?
It is not the first time the agency
has made changes after being criticized for lagging behind technology;
a similar controversy arose several
years ago over its processing of software-related inventions. Both then
and now, critics said the agency
lacked the trained staff and resource
materials to make informed judgments -- in the present case, to know
enough about software, the Internet
and electronic commerce to understand what business methods are
widely used or already in the public
domain.
The agency said today that it
would tackle those challenges by increasing review of its examiners'
work, and by inviting representatives of the software industry to help
educate the agency's staff. The plans
were first reported today in The Wall
Street Journal.
Mr. Dickinson said the examiners
who analyze and approve patents
will be required to search databases
to look for "prior art," or existing
evidence of a business method. Each
patent application will now undergo
an initial examination and two reviews, instead of one review. The
agency also will double the number
of business-method patents it
chooses at random each year to scrutinize for a fourth time.
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The move follows
debate over just what
can be protected. | |
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Mr. Dickinson said he also hoped
"to get more examiners into the
field," where they could visit laboratories and offices, in the software
and computer industry, for example.
He said he would like industry
representatives to offer their expertise to the agency, and planned to
invite them to a round-table discussion this summer, to share information, and to bolster the agency's research resources and the expertise
of its examiners, managers and policy makers.
Software makers and others would
find themselves dealing with Group
705, a department created in 1997 to
process patents for business-method
software.
At that time, it employed
12 examiners; now it has 40.
The department was set up not
long after a furor arose over software-related inventions. For years
software was covered by copyright
law, and was believed, like mathematical algorithms, to be ineligible
for patents. But that changed as the
software industry grew, and as ownership of lines of code became increasingly valuable.
The dispute culminated with a patent awarded in 1993 to Compton's
New Media for a search-and-retrieval method. Critics immediately
pointed out that the technology was
already in the public domain. The
Patent and Trademark Office was
forced to reveal that it had few software engineers on its staff to evaluate such applications, and an inadequate supply of software manuals in
its research library. The agency
made a rare re-evaluation of an issued patent, and an even rarer rescinding of that patent.
In 1994, the agency issued new
guidelines, hired software engineers
to train as patent examiners, opened
a new computer database of existing
software technologies, and set out to
collect reference material for its
software library. But the lesson was
not easily transferred to the explosive growth in electronic commerce
and the sudden glut of Internet-related business-method patents.
In recent months, the agency has
found itself criticized for issuing patents for what appear to be common
ways of conducting electronic business, like the 1-Click purchasing patented by Amazon.com or the name-your-price method patented by Priceline.com.
The chief executive of Amazon,
Jeffrey Bezos, proposed this month
that the controversy might be resolved by publishing applications
while they are pending, and by shortening the lifespan of business-method patents.
But Mr. Dickinson rejected the
idea that the 210-year-old patent system was not well suited for a rapidly
evolving computer-based economy.
"We've adapted to every technology that has come along," Mr. Dickinson said. "People made the same
argument when the telephone came
along. They said the same thing with
Henry Ford and the motorcar. The
automobile industry was the main
part of the economy in the first half
of the century. This will sort itself out
in the same way."