1. What is a Patent?
Patents grant monopoly rights for a limited period for novel, useful, inventive and innovative products and processes. A patent is a legal monopoly granted by the Commissioner of Patents or by staff of IP Australia acting under delegated authority from the Commissioner (1) to the patent owner to prevent others from using, selling, or otherwise exploiting the patented invention or innovation without the permission of the patent owner.
Not all inventions are patentable. Unlike copyright protection, which is automatic, patent protection exists only after an application for patent protection is made and granted. The application process determines whether or not the invention or innovation meets the legal requirements of a patent.
See Patents Fact Sheet in relation to obtaining a patent and the term of protection.
Patent protection is important to the Internet in two areas:
(a) protection of computer-related technology; and
(b) protection of business methods.
2. Patents and Computer Programs
A computer program may be patentable if it produces a commercially useful effect. The Australian Patent Office accepts that "any innovative idea which provides a practical solution to a technological problem" may be the subject of a patent.(2)
3. Patents and Business Methods
Business method innovation intertwined with technological innovation (eg Internet commerce systems) is patentable in certain circumstances. The Federal Court of Australia has recently decided that a patent covering a device or invention AND a business method was patentable (3). This has implications for ways of doing business over the internet in that developers of new business methods should consider seeking patents for their methods or if an existing patent for the business method is found, seeking a licence from the patent holder to use that patent.
Examples of business methods patents granted in the USA include patents for:
* various electronic payment systems and methods;(4)
* advertising and marketing on the Internet;(5)
* auctions on the Internet;(6) and
* accounting and management systems.(7)
4. Legal issues in Patenting Internet Technology
Patent protection is territorial. A patent registered in Australia protects the owner from infringement or breach only in Australia. If an innovation protected in Australia is infringed outside Australia where there is no patent protection, there is little the owner can do.
The validity of patents granted for Internet technology will stand until a successful revocation proceeding is brought against them. Such actions are unlikely given the associated uncertainty, risk and costs of these proceedings.
5. Innovations Patent
From 24 May 2001, the innovation patents system has been in place. The regime establishes a patent system with a lower threshold of difficulty to meet patent requirements. Innovators are encouraged to patent innovations using a cheaper, simpler and easier alternative to standard "inventive" patents.
The requirements for innovation patents are the same as for standard patents, only substitute "inventive step" with "innovative step".(8) Therefore, the threshold for obtaining an innovative patent is lower than that for standard patents, increasing the likelihood of the patent being granted.
Given the lower threshold and easier and simpler method of obtaining patents, it is likely that business methods, tools and methodologies and computer- and internet-related innovations will increasingly become the subject matter of innovations patents.
Other relevant Articles on this site:
Other relevant Fact Sheets:
Jurisdiction
Patents
End Notes
1. Patents Act 1990 (Cth), sections 61, 62 and 209.
2. See IP Australia Patent Office information sheet "Patents for Computer Related Inventions" available at http://www.ipaustralia.gov.au
3. See Welcome Real-Time SA v Catuity Inc [2001] FCA 445 (17 May 2001) and Welcome Real-Time SA v Catuity Inc (No 2)[2001] FCA 785 (24 July 2001).
4. For example, Mastercard International holds a patent (no. 5,699,528) for the system and method for the bill delivery and payment over a communications network; V-One Corp holds a patent for electronic payment system and method (no. 5,590,197); and a patent (no. 5,727,163) for a secure method for communicating credit card data when placing an order on a non-secure network held by Amazon.com, Inc.
5. Open Market holds a patent (no. 5,724,424) for digital active advertising.
6. The reverse auction patent (no. 5,794,201) held by Priceline.com, Inc.
7. Patent (no. 5,706,442) on system for online financial services using distributed objects held by Block Financial Corp.
8. Compare Patents Act 1990 (Cth) s 18(1) with s 18(1A).