Academic journal article Rutgers Computer & Technology Law Journal

The Proliferation of Electronic Commerce Patents: Don't Blame the PTO

Academic journal article Rutgers Computer & Technology Law Journal

The Proliferation of Electronic Commerce Patents: Don't Blame the PTO

Article excerpt


In the Dot Com world of today, many players are spending large sums on the acquisition of electronic commerce patents. Most of these E-commerce patents are a little bit software patent, a little bit business method patent, and likely invalid. There is indeed growing concern among commentators that the United States Patent Office (1) is issuing an ever-increasing number of invalid patents. Of course, this statement is legally incorrect because a patent once issued is presumed to be valid, (2) but the reality is that many patents that are not objectively valid are indeed emerging from prosecution and are enjoying the presumption of validity. In fact, there are many examples of business method and software patents that have been issued that likely are not valid, or that have been demonstrated to be invalid. (3)

For example, has received a United States patent on pricing, selling, and exercising options to purchase airline tickets. (4) This patent, however, apparently gives the exclusive right to what is known as a Dutch auction, (5) something that is hardly new or nonobvious. In fact, the patent acknowledges the use of options in other markets, before explaining in its specification that:

   Until now, however, there has been no acceptable way to minimize the risk
   of fluctuations in airline ticket prices. In particular, as far as we are
   aware, options to purchase airline tickets have never been sold. Moreover,
   no systems have been developed for determining prices for options on
   airline tickets, and keeping track of the sale and exercise of those
   options. (6)

Apparently the fact that this type of system had never been implemented makes this business method patentable in the minds of and its attorneys. (7) Patentability, however, is not so easy a question. The fact that it has not been implemented is perhaps entirely due to the fact that there existed no means for reaching individuals in real time to engage in such a Dutch auction with respect to purchasing airline tickets. The invention that allows the business method to work is the Internet, not any technological advancement by the inventors of the method for which the patent was issued. Therefore, it would seem that the advent of the Internet has enabled to obtain the exclusive right to a business method that has been within contemplation for quite some time.

In all fairness to the United States Patent Office, it is certainly not to blame for the explosion of E-commerce patents, and it is also not to blame for the number of invalid software and business method patents that are being issued. The Patent Office is attempting to engage in more rigorous examination of such patents, but these laudable improvements are falling short of the mark. One reason for this is that the patent examiners are simply too overworked and do not have the proper resources to examine patent applications in a manner likely to result in the weeding out of patents that ought not see the light of day.

The real problem can be summarized by a 1999 survey conducted by Greg Aharonian, which revealed that fifty percent of all patent applications cited no prior art at all. (8) Mr. Aharonian similarly estimates that somewhere between fifty percent and seventy percent of software patents would likely not issue if the examiners were to conduct prior art searches of both Patent Office archives and databases that are readily available but not accessible within the confines of the Patent Office. (9)

A change is necessary to ensure that USPTO issues only software and business method patents that justifiably deserve to enjoy the presumption of validity. The primary pieces of prior art considered in the examination process are previously granted United States patents. Unfortunately, however, the patenting of both software and business methods is a relatively new phenomena, which means that relatively few United States patents have been issued in this area. …

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