Patents also protect business plans

Say the word "patent," and most people think of the ownership protection the U.S. government grants inventors of unique widgets or gadgets.

By Lisa Carricaburu The Salt Lake Tribune

In today’s information-based economy, however, patents increasingly protect not just tangible objects, but ideas as well.

So-called "business-method" patents, granted to protect original ideas, can cover everything from medical procedures to hair-styling techniques.

Salt Lake City patent attorney Allen C. Turner and Johan Renes of Soest of the Netherlands, for example, have filed an application seeking a patent for a method of providing divorce insurance.

Their idea includes a process for arriving at a premium they would charge policyholders based on the spouses’ ages, income and other factors. People other than the married couple could buy a policy (parents of the betrothed, for example). Should a divorce occur, the insurance payout could be used to pay alimony, child support, or other divorce-related expenses.

Turner, who primarily does patent work in the biotechnology field, says he and Renes have not put their divorce insurance idea into practice, but they may if they get their patent.

Chances are good they will.

In 1998, a federal appellate court ruled valid a bank’s patent for a system it developed to enable mutual funds to pool their assets in an investment portfolio organized as a partnership, making them eligible for certain tax advantages.

The ruling validated business methods in general as patentable material, and business-method patents as a result are becoming commonplace, says Daniel McCarthy, also a Salt Lake City patent attorney.

The business-method patents process is still evolving, which is probably why some eyebrows raised last month when digital video disc rental company NetFlix announced it had received a broad patent for its method of renting DVDs .

NetFlix charges customers a monthly subscription fee to rent a specified number of DVDs they select on the company’s Web site. The company then mails the DVDs to customers, who may either keep them for the length of their subscriptions or send them back in exchange for other titles.

The awarding of the business-method patent could not have come at a more opportune time for NetFlix. Just days earlier, Wal-Mart announced plans to rent DVDs online using a similar model.

The fact that NetFlix now holds a patent may portend a legal challenge of the patent’s validity involving Wal-Mart or any other company that tries to compete.

McCarthy, for his part, views any controversy surrounding the patent as possibly a "flash in the pan."

If there are issues to be litigated, they will end up in court, and the outcome of any litigation will only contribute to the knowledge base that goes into determining what constitutes a valid business-method patent in the future.

[email protected]

http://www.sltrib.com/2003/Jul/07132003/business/74709.asp