Kevin Kilgour, a partner with Hesketh Henry in Auckland, sets out the recent trends and business implications of patenting e-commerce related systems.
Organisations moving into e-commerce and e-commerce companies developing new products or applications, need to be aware of the issues surrounding business method patenting. Many businesses are becoming aware that it is vital to capture the value of their intellectual property. An important indicator of this is the considerable growth offshore, in patenting companies' business methods and e-commerce related systems.
Businesses patenting e-commerce related systems have generated significant controversy. Opponents of such patenting complain that most business methods do not meet one of the main threshold criteria for patenting - that of inventiveness or of not being obvious to an expert in the field.
THE WORLD TREND
A recent high profile e-commerce patent fight has emerged in the United States between Amazon.com and Barnes & Noble. Amazon.com patented a "one click" method of purchasing on-line. Late last year it obtained an interim injunction preventing Barnes & Noble infringing the Amazon.com patent until the Court has properly tested the patent. In the meantime, customers of Barnes & Noble can no longer purchase books with one click of their mouse, although they can still use "two or more clicks".
A broad range of e-commerce patents is currently registered, particularly in the UK and USA. For example, Priceline.com's auction method patent protects a method of using the Internet to let buyers name the price they would be willing to pay for a particular product, and allowing the seller to decide whether or not to meet that price. Although there is nothing original about this as a general concept, it is the subject of an Internet based business method patent, effectively preventing the competitors using the same method.
Other granted patents confer even wider monopolies, such as the method of making secure credit card payments over the Internet. The extensive use of electronic shopping carts in e-commerce sites raises the question of how many sites currently using this technology are validly licensed to do so.
New Zealand and Australia tends to follow the United States lead in patenting issues, and while New Zealand, and we believe Australia, has yet to see a dramatic increase in e-commerce and business patents, the number of applications particularly in the UK and USA are already on the rise.
IMPLICATIONS FOR BUSINESSES
When considering developing a particular e-commerce product, e-commerce companies must enquire whether that product, or a related business method, are already the subject of an application or issued patent. The borderless nature of much e-commerce means it will often be necessary to conduct searches in significant overseas markets as well as Australia and New Zealand. Failure to do so may result in a great waste of time and money developing an e-commerce product or business which has already been the subject of someone else's patent.
E-commerce in business method patents can secure monopoly rights over important business methods. It can also add significant value through sustainable competitive advantage.
The important issue for businesses is to maintain an awareness of the value and danger of e-commerce in business method patents. It illustrates the need to take expert legal advice before launching into any e-commerce project or development.
Copyright The Lawlink Group Ltd 2001
Every effort has been made to ensure that this information is accurate. However, it is general introductory information only. It does not constitute legal advice and should not be relied on as such. Specialist legal advice should be sought in particular matters.
Kevin Kilgour is a partner in the Lawlink firm of Hesketh Henry. Kevin's principal areas of practice are in commercial and corporate law and intellectual property.
Web site: Hesketh Henry
Email: kevin.kilgour@heskethhenry.co.nz
February 2001
Organisations moving into e-commerce and e-commerce companies developing new products or applications, need to be aware of the issues surrounding business method patenting. Many businesses are becoming aware that it is vital to capture the value of their intellectual property. An important indicator of this is the considerable growth offshore, in patenting companies' business methods and e-commerce related systems.
Businesses patenting e-commerce related systems have generated significant controversy. Opponents of such patenting complain that most business methods do not meet one of the main threshold criteria for patenting - that of inventiveness or of not being obvious to an expert in the field.
THE WORLD TREND
A recent high profile e-commerce patent fight has emerged in the United States between Amazon.com and Barnes & Noble. Amazon.com patented a "one click" method of purchasing on-line. Late last year it obtained an interim injunction preventing Barnes & Noble infringing the Amazon.com patent until the Court has properly tested the patent. In the meantime, customers of Barnes & Noble can no longer purchase books with one click of their mouse, although they can still use "two or more clicks".
A broad range of e-commerce patents is currently registered, particularly in the UK and USA. For example, Priceline.com's auction method patent protects a method of using the Internet to let buyers name the price they would be willing to pay for a particular product, and allowing the seller to decide whether or not to meet that price. Although there is nothing original about this as a general concept, it is the subject of an Internet based business method patent, effectively preventing the competitors using the same method.
Other granted patents confer even wider monopolies, such as the method of making secure credit card payments over the Internet. The extensive use of electronic shopping carts in e-commerce sites raises the question of how many sites currently using this technology are validly licensed to do so.
New Zealand and Australia tends to follow the United States lead in patenting issues, and while New Zealand, and we believe Australia, has yet to see a dramatic increase in e-commerce and business patents, the number of applications particularly in the UK and USA are already on the rise.
IMPLICATIONS FOR BUSINESSES
When considering developing a particular e-commerce product, e-commerce companies must enquire whether that product, or a related business method, are already the subject of an application or issued patent. The borderless nature of much e-commerce means it will often be necessary to conduct searches in significant overseas markets as well as Australia and New Zealand. Failure to do so may result in a great waste of time and money developing an e-commerce product or business which has already been the subject of someone else's patent.
E-commerce in business method patents can secure monopoly rights over important business methods. It can also add significant value through sustainable competitive advantage.
The important issue for businesses is to maintain an awareness of the value and danger of e-commerce in business method patents. It illustrates the need to take expert legal advice before launching into any e-commerce project or development.
Copyright The Lawlink Group Ltd 2001
Every effort has been made to ensure that this information is accurate. However, it is general introductory information only. It does not constitute legal advice and should not be relied on as such. Specialist legal advice should be sought in particular matters.
Kevin Kilgour is a partner in the Lawlink firm of Hesketh Henry. Kevin's principal areas of practice are in commercial and corporate law and intellectual property.
Web site: Hesketh Henry
Email: kevin.kilgour@heskethhenry.co.nz
February 2001
July, 2001
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