Challenging or Infringing Another's Business Method Patent

When another company holds a patent on technology you need to use, learn your options.

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Many think the U.S. Patent and Trademark Office (USPTO) has gone hogwild granting business method patents on obvious technologies and abstract ideas, unfairly preventing others from using them for the common good. If you find yourself in this boat, there are a few things you can do.

Challenging a Business Method Patent

There are two ways to challenge business method patents after they are granted. You can sue in federal court or institute a procedure in the USPTO known as a re-examination.

Filing a lawsuit in federal court can be expensive (often costing hundreds of thousand dollars and sometimes running into the millions), but some companies choose to fight it out in the hopes that they can invalidate the adversary's business method patent. The challenging party normally seeks to prove the patented process was not novel or was obvious, and therefore that the USPTO shouldn't have issued the patent. This is usually done by demonstrating that the patent examiner overlooked important prior art.

Initiating a re-examination procedure with the USPTO can also invalidate a patent. The USPTO will reconsider the patent in light of recently uncovered prior art. A re-examination is not as costly as litigation. But if re-examination fails and the patent survives, the patent will be "strengthened" to the extent that others will be less likely to challenge it and the patent owner will feel more confident enforcing it.

However, the result of many current USPTO and court challenges may be that at least some recent business method patents will be invalidated. One of the most vocal critics of business method patents, Gregory Aharonian of the Internet Patent News Service ( www.bustpatents.com), provides an archive of questionable business method and software patents.

When Is a Patent Infringed?

Determining whether someone has infringed a business method patent depends on a close examination of the patent "claims," a brief statement in the body of the patent application that defines the scope of the business method. You can read claims for any U.S. business method patent by visiting the USPTO website ( www.uspto.gov) and searching the patent database by name, subject matter, or other criteria.

Think of the claims as the boundaries of the patent owner's rights. Or put another way, if the elements or steps in your business method match all of the elements or steps elaborated in someone else's patent claims, then you have infringed their patent.

Even if the other owner's claims don't literally match your business method, a court may still find infringement if the methods are very similar. In doing this, courts will apply what's known as the "doctrine of equivalents." This means if the steps in the patent and the allegedly infringing method are sufficiently alike, a court will find that infringement has occurred. (To learn more about determining whether a patent has been infringed and the possible consequences of infringement, see Enforcing a Patent FAQ.)

Because your business method will not infringe someone else's patent unless each and every step (and limitation) of their claims is found in your method, it is often possible to write around or redesign a business method so that it does not create a violation. For example, in a lawsuit involving Amazon's 1-Click patent, the judge stated that Barnes and Noble could avoid infringement with "relative ease" by modifying its "Express Lane" feature. If true, this at least to some extent negates or narrows the power of the Amazon patent.

If you're concerned about whether a valuable business method you want to use infringes someone else's patent, it's wise to obtain the opinion of a patent attorney. The attorney may determine that your method does not infringe, or if it does, he or she can help you determine the modifications you'll need to make to avoid infringement.

Defending a Claim of Patent Infringement

If you are accused of violating another company's patent, your only real defense is to prove that the other company's patent is invalid. You do this by challenging the patent on the basis of lack of novelty or nonobviousness.

If the patent owner wins the lawsuit, the owner can obtain a court order against you preventing your infringing activity and can recover financial damages to compensate the company for lost revenue and, in some cases, triple damages and attorney fees.

For instance, if you know that your business method infringes an existing patent and you continue to use it, particularly after being warned by the patent owner, you may be found liable for willful infringement. If this occurs, you might be required to pay up to three times the actual damages. In other words, the court will determine the patent owner's lost profits and then multiply them by three. In addition, you may be responsible for paying the patent owner's attorney fees (as well as your own lawyer's charges).

If you are accused of violating another company's patent, you'll no doubt need the help of a patent attorney to defend yourself and prove that the other company's patent is invalid.

To Learn More

For the most concise and comprehensive explanations of intellectual property in one volume, get Patent, Copyright & Trademark: An Intellectual Property Desk Reference, by Richard Stim (Nolo).

Updated by: , J.D.

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