

Ask YC: Should a business method patent stop my startup? - ericb

It made me sick to read a "business method" patent spelling out a service I am considering developing. I know similar services exist, although not in the exact formulation as the patent and what I might create.  Are these patents meaningful?
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muerdeme
Business methods were held as unpatentable subject matter until a Supreme
Court ruling in 1998 ("State Street Bank"). Almost overnight, a flood of
business method patent applications hit the PTO, but the examiners had no
prior art to cite against the applications.

As a result, many absurdly broad business method patents were issued between
1998 and 2001, when the PTO started to tighten up on the issuances for
business methods. For example, see U.S. Patent No. 5,715,314 ("Network sales
system"), which probably covers every online shopping cart you've ever used...

I find it interesting that the timing of the decision coincided perfectly with
beginning of the internet tech boom, so the overwhelming majority of business
method patents are related to internet businesses, for better or worse.

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ericb
I can think of other services that violate this patent and still exist. On the
other hand, I can't really do too much if I get sued... The current patent
system is such an anti-competitive blight. Ugh.

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Shooter
I was in a similar situation to you a little over a year ago, although from
the sound of it our situation was a bit more dire:

I learned that there were a number of patents (12+) that covered nearly every
variation of our business method EXACTLY, and all were held by just two large
companies. They were also the only two companies I could find that were using
these business methods, and I couldn't find any pre-existing art. I was ready
to slit my wrists. [One of the two companies has an IP division that will
license the patents for royalties, but the other company wouldn't even talk to
us except to threaten us.]

I spent a few weeks reading the competitive patents, and then found a
'loophole' than not only enabled us to compete with them, but that allowed us
to generate several new revenue streams and to strengthen the strategic
position of another one of our portfolio companies. The companies with the
competitive patents had also been successful enough (Billion$) that they
essentially proved our business model, so signing up partners is becoming
easier for us. The fact that our competitors had great patents actually ended
up helping us in the end.

In our case, the initial breakthrough for finding the 'loophole' was realizing
that by focusing on an alternate "concrete and tangible result" to the
competitive patents, we gained an entirely new perspective. Say, for example,
that the competitive patent's "tangible result" was financial savings for
retail investors. Our "tangible result" might then become generating new
business for a brokerage firm, not saving money for the retail investors. That
little change in perspective might suggest a different business method,
perhaps even one that is better. I'd give our specific example, which would be
much more clear...but that would be giving away the store a bit. We're still
in the process of patenting OUR new business methods, so that we can cause
some other startup intense psychological pain ;-)

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phony_identity
No, don't sweat it. You can't do a web application of any kind without
violating any number of patents.

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