Common Approaches to Patenting New E-Commerce Business Models (a Case Study)

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The development of electronic commerce utilizing numerous publicly available databases has greatly expanded the number of products and services that can be accessed effectively via the Internet. These products and services range from simple objects that are easily described by several main features (i.e., books, airplane tickets, cars, etc.) to more complicated, less standardized products (i.e., real estate, medical, legal, and financial services). The tremendous growth of ecommerce has made it important to reconsider how best to protect emerging technologies and new methods of doing business. Organizations concerned with e-commerce typically use computer software to facilitate their on-line commercial transactions and often employ new methods of doing business to provide their services. Accordingly, the protection of business methods and computer software is of increasing significance to the e-commerce industry (Shu-Tai & Van Barr, 2000). A patent grants a property right to an inventor for 20 years, prohibiting others from using the invention in the U.S (McGeever, 2000). As companies venture into the un-chartered territory of e-commerce, many of them seek to patent their work (Alexander, 2000). Similar processes are taking place in Europe (Lang, 2000).

US patent law declares that the question is not whether there is a mathematical algorithm involved or whether the claimed subject matter does "business", but rather whether the algorithm-containing invention as a whole produces a useful, concrete and tangible result, which means that specific, practical applications of algorithms are patentable (Durant & Chuang, 2000). Examples of such e-commerce patents are well known to all interested in the field (Alexander, 2000):

AMAZON.COM's patented one-click system enables repeat online customers to place orders without re-entering credit-card or address information. Part of the patent covers the way Amazon stores billing and shipping data. In 2000, Amazon obtained a preliminary court injunction against that prevents the Amazon competitor from using the one-click system.

PRICELINE.COM patented a method by which a customer could propose a price for a product or service, and the order would be filled if a seller was willing to accept that price. sued Microsoft Corp. and its Expedia Inc. travel service for allegedly violating Priceline's method of letting consumers propose their own prices for flights and hotel rooms. Simultaneously, Priceline. com used its patented business model as an aggressive marketing tool, trying to attract as many potential new customers as it became possible. Thus, one another and very important function of the patent as an informing and marketing tool have been introduced.

Open Market Inc. (Duvall, 1998) has received three patents from the U.S. Patent and Trademark Office covering fundamental technologies for doing business over the Internet:

* Digital Payments (Patent No. 5,724,424). Covers secure, real-time payment using credit and debit cards over the Internet. Open Market claims it is one of the earliest and broadest Internet payment patents granted, with a filing date of Dec. 16, 1993.

* Internet Server Access Control and Monitoring Systems (Patent No. 5,708,780). Covers the ability to analyze how users browse through content on a Web site. Session identifiers allow businesses to market more effectively to buyers based on their viewing patterns.

* Network Sales System (Patent No. 5,715,314). Covers the use of electronic shopping carts, which merchants provide to their customers as a way to accumulate items before purchasing.

Searchable database of patents on the Internet (and in particular, one created by United States Patent and Trademark Office -- shows that some established in E-commerce area companies are still having (December 2004) very small number of patents as assignees--22 for Yahoo, 14 for Priceline. …