Analysis: High-tech patent reform pending

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By Aaron Pressman

(IDG) -- It was a symbol of the excesses of the Internet age: The U.S. Patent and Trademark office's propensity to hand out patents for such ideas as pop-up advertising and one-click shopping systems.

The Patent and Trademark office's willingness to grant patent protection for what many considered to be pedestrian schemes provoked hostility from lawmakers and industry critics who charged that the United States government was endorsing dubious business practices. It got so bad that that patent officials pledged in March 2000 to subject so-called Internet business-method patent applications to more stringent review. A year later, the agency is issuing fewer patents. But that hasn't satisfied detractors in industry and Congress, who will hold hearings on patent reform this month.

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Since last year, the patent office has slowed down the examination process by adding a second level of review of business-method patent applications. The change seems to have had an effect: The percentage of business-related patents approved this year fell to 47 percent from 57 percent a year ago, already well below the agency's 67 percent overall approval rate.

Nevertheless, patent examiners are rejecting only about one in 20 applications after the second review. Those patents can be resubmitted if the applicants sufficiently narrow their claims.

"What we're seeing initially is a reduction in the number of cases allowed," says John Love, director of the Patent Office's Technology Center. "Many of these will eventually get a patent, though."

So Internet-related business method patents are hardly dead. Just last week the patent office granted its stamp of approval to such loosely defined business methods as collecting data from users of interactive television services and creating semi-anonymous online chat forums. Even a process that creates a customized Web page based on a user's query passed muster.

"The PTO is not designed to catch all bad patents -- it just doesn't have the time or the resources to do so," warns University of California at Berkeley law professor Mark Lemley. He predicts that the tech industry increasingly will turn to the courts to rule whether obvious ideas deserve patent protection. Already a federal appeals court has narrowed Amazon's one-click shopping-system patent. Reviews are pending on other controversial awards, such as NetZero's patent for pop-up ads.

There's also momentum in Congress to reform patent law. Democrats are planning to introduce legislation in the House of Representatives to create higher hurdles for business-method patents. The law would bar patents for known processes whose only novelty is that they are being conducted on the Internet for the first time. A House Judiciary subcommittee has scheduled hearings on patent reform for April 4. In the Senate, Judiciary Committee Chairman Orrin Hatch (R-Utah) will examine the issue at a hearing in May.

Patent Office officials won't take a stand on any proposed legislation. But they do defend their handling of Internet-related business-method patents and efforts to beef up the review process. "We're going in the right direction," Love maintains.

A change in the law may not entirely succeed in eliminating the problem, however. Clever patent attorneys will still look for loopholes. In Europe, for instance, applicants get around a ban on business-method patents by passing off new processes as novel technology, according to Brad Lytle, a patent attorney in Virginia.

So a patent crackdown in the United States may leave companies fuming -- or racing to the patent office with new, improved ideas.

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Injunction overturned in Amazon one-click case
February 15, 2001
New Web technology: Patently unfair?
July 5, 2000
Net-patent boom forces Patent Office to seek help
September 20, 1999
E-businesses vie for technology ownership
March 10, 2000

Court buys AOL claim to 'Buddy List'
(IDG.net)
Patent slows multilingual domain name plan
(Network World Fusion)
BountyQuest announces results of 1-Click patent search
(IDG.net)
How business-method patents could threaten your e-company
(CIO)
Threaten a patent, win valuable prizes!
(The Industry Standard)
Want coffee with that sandwich?
(Network World Fusion)

U.S. Patent and Trademark Office

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