Can You Patent a Process: Everything You Need to Know
A process patent is a form of utility patent that covers methods of changing the functionality or characteristics of a material during a particular use.12 min read
2. Which Business Methods Can Be Patented?
3. E-Commerce, Business Methods, and Patents
4. Patenting a Process
5. Early Guidelines for Patentability
6. Bilski v. Kappos
7. Can Any Business Method Qualify for a Patent?
8. Lingering Problems
9. Issues of Disclosure
10. Complications to Process a Patent for Computer Programs
11. Patents vs. Trade Secrets
12. Patenting Medical Procedures
13. Mental Processes
14. Transformation or Machine Test
15. The Prior Use Defense
Updated June 24, 2020:
Can you patent a process? A process patent is a form of utility patent that covers methods of changing the functionality or characteristics of a material during a particular use.
Processes are patentable under the U.S. Patent Act if they meet certain criteria. A process patent is a form of utility patent that covers methods of changing the functionality or characteristics of a material during a particular use. The patent-holder is granted exclusive protections and rights to that process for 20 years.
When one patents a business method or, in some cases, a computer program, this is a form of patenting a process. It's now possible to patent subscription-based services, targeted advertising networks, online auction sites, portal sites, email systems, and even discussion forums.
As our society has evolved, intellectual property (IP) issues have evolved along with it. What constitutes IP these days is so much more than the newest machine or physical invention. Today we have genetically modified seeds, new strands of DNA, computer software, chemical formulae, and more. As these issues become more complex, patent law has to evolve to address new concerns. For example, one can now patent business models and software through the U.S. Patent and Trademark Office (USPTO).
Since being made available, software patents have experienced widespread popularity. In 1997, there were only 1,000 software patents filed. In 2007, that number skyrocketed to 11,000.
The Basics of Patents
At its most basic, the U.S. Patent Act says that you can be granted a patent if you create or discover one of the following:
- A process
- A machine
- A composition of matter
- A manufacturing technique
- A useful and new improvement on any of the above
The patent gives you exclusive protections and rights to your invention for 20 years.
Which Business Methods Can Be Patented?
Not every business method or process is patentable. In fact, there are strict limitations and classes of business methods that can be patented under the USPTO. Of these, the most common is financial data processing (class 705). This class covers computer processes that involve business practices, finance, price determination, or management. Other classifications of eligible business model processes include gaming, education, and agriculture (classes 273, 434 and 47, respectively).
Generally speaking, the USPTO differentiates between a business model and a business method. That is, there is a legal line between your strategy or vision and your actual means of doing business. To be patentable, just like any invention, the art, method, or process must be useful, novel, and non-obvious. Disclosure has to be complete to the point that anyone with general knowledge of the industry can comprehend how it works.
These qualifications are outlined in Section 101 of the U.S. Patent Act. They carry three exceptions. One cannot patent laws of nature, abstract ideas or physical phenomena. Likewise, printed matter cannot be patented; it is instead protected by copyright laws. In addition, the Supreme Court has generally taken the stance that patent law interpretations will be based on common and ordinary language usage.
E-Commerce, Business Methods, and Patents
As e-commerce has become more prevalent, it has brought new practices, business models, processes, methods, and terminology. With these shifts in business models across all industries, the idea of patenting a business method started to rise. Some of the first software and internet-based companies in Japan started patenting business models. By the late 1990s, the idea had gained prominence in the United States. A federal court ruling gave the responsibility of issuing patents for certain technologies to the USPTO. Examples of these automated technologies include those that generate revenue or process data, including processes, business models, methods, and software.
This ruling impacted e-commerce businesses that provided a variety of services and products. Examples include:
- Portal sites
- Subscription-based access
- Virtual malls
- Online auctions
- Targeted advertising networks
Patenting a Process
Many businesses believe that the methods used to perform certain tasks are considered to be their intellectual property. As such, these methods should be protected under the laws that govern patent protection. Some of the patent applications that went through the USPTO in the late 1990s and early 2000s and were successful included:
- Amazon's One-Click ordering system
- A monitoring and access control system for sharing online data
- Electronic mail systems for ads displayed to remote users
- A client-server solution that delivered information online
- A monitoring and access control system for network servers
When a business method is granted a patent, the protection is valid for 17 years. This is the same period of time as a utility patent. The protection restricts others from using the methods covered in the patent without receiving permission from the owner.
One example of the importance of being able to patent a business method is Netflix, an online-based provider of subscription services. The company's computer-implemented system for renting TV shows and movies to customers was awarded a business process patent in 2003. Blockbuster, a competitor to Netflix at the time, started a similar service. Netflix took legal action against Blockbuster based on the infringement of this patent. The case was settled later.
Early Guidelines for Patentability
The first case that clearly established that software governing business processes could be patented was 1997's State Street Bank v. Signature Financial. Since that time, there have been high-profile cases involving such notable companies as Amazon and Priceline. Since patents grant sole rights to innovations for a period of 20 years from the date of filing, businesses look to patent just about anything they can.
In 2007, the USPTO published Interim Guidelines for Examination of Patent Applications for Patent Subject Matter Eligibility. These guidelines were written in response to a skyrocketing number of business method patent applications during the prior decade. Through this publication, the USPTO set the criteria for a process to be patentable. Specifically, it must either be tied to a specific machine or work to transform physical matter in some way. Examples include a method to vulcanize rubber or smelt ore.
In 2008, the U.S. Court of Appeals for the Federal Circuit ruled that this test formed the sole benchmark for determining patentability of a process or business method. This decision regarded Bernard Bilski's patent application for his risk management strategy against energy market price changes.
Bilski v. Kappos
Bilski applied for a patent requesting protection for an invention he claimed as his own. This invention would explain how sellers and buyers of commodities in the market of energy could reduce the risk of increased prices. His application was rejected by the patent examiner. That rejection was upheld by the Board of Patent Appeals.
This 2008 ruling created a great deal of tension in the software industry. Suddenly, many of the patents issued up to that point could now be deemed ineligible, even those that were accomplished by a computer. Then came the 2010 Supreme Court ruling on Bilski v. Kappos (originally Bilski v. Doll), which overturned the prior decision, holding that the Bilski test was one useful metric for determining whether something could be patented — but not the only one.
Bilski had filed to challenge the refusal of his patent application. He sought to patent both the idea of hedging risk and the method by which it could apply to energy markets. However, since abstract ideas can't be patentable, the courts ruled that his concept wasn't eligible. The Federal Circuit Court of Appeals maintained that the process is only patentable if it transforms a specific article into a different thing or state, or it is linked to a specific apparatus or machine.
The case later went to the Supreme Court, where the rejection was upheld. However, the grounds for rejection were very different from those provided by the Federal Circuit Court of Appeals. Under the Patent Act, section 101, whoever is the inventor or discoverer of a useful and new manufacture, process, composition of matter, or machine is eligible to receive a patent.
The precedent set by the Supreme Court outlined three exceptions to section 101 of the Patent Act:
- Physical phenomena
- Laws of nature
- Abstract ideas
The courts felt they needed to set a high bar in such situations to avoid giving people monopolies over things that could damage innovation and competition. They also felt, however, that there wasn't an ordinary and common use interpretation of the wording of patent law that would exclude methods.
In the end, though Bilski wasn't able to patent his idea, his case did ensure that other metrics can now be used when determining whether a process is eligible to be patented. His idea was an invention claiming to be a process.
Under patent laws, a process is defined as a method or art. Under the court's ruling, an observation was made that unless specifically defined, words in patent law must be interpreted with their common, contemporary, and ordinary meaning. The result was a conclusion that adopting a transformation or machine test as the only way to determine what makes a process violates the principle of interpretation.
Can Any Business Method Qualify for a Patent?
In order to qualify for patent protection, a business method must meet the USPTO's rigid classifications. When classifying a business method, most applicants will use class 705 (financial data processing). Eligible computer-based processes must involve price determination, management, finance, or business practices under this class. Other classifications for business models or methods include:
- Agriculture (47)
- Gaming (273)
- Education (434)
Other than a process requiring a useful, concrete, and tangible result to be eligible for a patent, no further guidance was offered. The courts have yet to develop new criteria to determine what processes can be patented. A few recent cases, including Prometheus v. Mayo and Research Corp v. Microsoft, have given some insight into the court's stance moving forward, but there has yet to be a final word.
Problems have arisen specifically in the terms "useful" and "result" from the decision delivered all the way back in the State Street case. Since utility is already included in patent law, does "useful" refer to something different, or is it just reaffirming the existing language? Likewise, does the requirement for a result then make the process itself meaningless in the face of what it accomplishes? If nothing else, these questions make it difficult to have a consistent benchmark.
Another issue with software patents is that unlike other fields, there aren't comprehensive sources of prior art for comparison. For example, Medline allows efficient searching of medical technology, and Chem Abstracts allows a search of chemistry innovations. Since every patent requires disclosing prior art, a one-stop database to search software methods would make it far easier to pursue patents.
Issues of Disclosure
One problem inherent to the patent system is that full disclosure of the invention has to be included in the application, which is then published. The reason for this is that when patents run out, they become, in a sense, public property. Then anyone is allowed to access, use, and improve upon the innovation.
This means, of course, that the disclosure has to be complete and clear. Anyone with a general knowledge of the subject matter should be able to reproduce the work. It's also where the "concrete and tangible" aspect of the State Street benchmark comes into play. This aspect is more important than the "useful" and "result" phrasing.
As the courts have clarified, a software process that simply transfers a well-known business practice to the internet or computers is not patentable. Software patents have to be rooted in computer technology and must overcome an issue that is both relevant and likewise rooted in the computer world. In order to establish this, full and clear disclosure at the technological level is essential from the first application you file.
Complications to Process a Patent for Computer Programs
Computer programs are tricky. The program itself can be copyrighted, while the techniques that it embodies can be patented by establishing that the method is intrinsically linked to the computer technology. In order to firmly establish that your business method is linked to computer technology and implementation, you must establish a number of things in your application:
- Clearly identify the real-world value of the process. Generally explain how it works and what it accomplishes. This can be done using flowcharts and covered from several viewpoints.
- Clearly identify the computer's role in accomplishing the process and how it functions to implement the process. This aspect should be as technical as possible. Include minimum and recommended configurations.
- Provide an overview of the method's implementation in terms of system usage. Describe the relationship between the computer and the controller. Explain how all elements work together to facilitate the process.
- Provide a description of the best means to carry out the innovation by disclosing how the software functions. Flowcharts are highly recommended in this regard.
- If needed, disclose some of the code used. This is especially helpful when seeking a provisional application. However, you don't need to disclose the exact code if the function is clear from specifications and a skilled programmer could easily reproduce said functions.
Patents vs. Trade Secrets
Due to the sheer number of people seeking patent protection over their business practices, obtaining such a patent can be difficult. The USPTO and the courts are very strict with these sorts of patents out of a fear of overstepping their bounds. They also want to avoid damaging the spirit of innovation that patents are designed to protect.
Because of this, many companies choose to use trade secrets to protect their processes. Trade secrets allow you to protect your business practice by holding those who acquire your secrets liable for damages. However, you must demonstrate that they may have gained those secrets illicitly or improperly, whether through illegal means or via a breach of duty. Reverse engineering is not improper under the law.
Of course, the secret needs to qualify as a valid trade secret under the following criteria:
- It has not been known to any outside businesses.
- Its existence is known only to limited employees.
- You have taken strong efforts to protect the secret and the steps you took to develop it.
The problem with trade secrets is that once it has been revealed, it is no longer a secret. You can recover damages when a trade secret is violated, but you won't be able to use that form of protection anymore.
Patenting Medical Procedures
Medical procedures can also be patented. There's an urban myth that the Heimlich maneuver (also called the upper abdominal thrust) is patented. While this is not true, Heimlich did patent a number of devices, including tracheal tubing and a respiratory exerciser. In addition, there are over 100 patents for medical processes issued every month. In 2007, for example, a veterinarian successfully sued someone for infringing their patented cat declawing process.
The one catch is that federal law prohibits suing a doctor for infringing on medical process patents, such as when a surgeon needs to use one in the operating room. However, you can still patent a process if it's related to medical procedures.
Many cases have been focused on whether mental processes are statutory subject matter. While it may seem like mental processes are included under Section 101, it's actually not that simple. For instance, the Supreme Court case Cochrane v. Deener ruled that only actions that transform the subject are processes. However, this leaves the question of whether this definition excludes other types of processes that don't involve a physical transformation.
In AT&T v. Excel Communications, it was decided that other processes could be included. The Court decided that physical transformation wasn't a firm requirement. It was only an example of how someone could apply an algorithm to a useful application. The Supreme Court's use of "e.g." in an earlier decision was meant to indicate physical transformation as an example, not a requirement.
The best way to view mental processes is in terms of judgment. If a process requires mental steps that include making a subjective judgment by whoever is performing the process, then it is not eligible for a patent. The reason for this is that it doesn't fulfill the disclosure requirement in Section 112. Patents must include full instructions on how to perform a process. Since you can't teach a judgment call, any process that includes such a step cannot be patented.
Transformation or Machine Test
Between 1997 and 2007, the number of issued patents for business methods rose from 1,000 to 11,000. Internet and software companies started to look for ways to patent their own methods. With the massive rise in the number of applications received, the USPTO issued the Interim Guidelines for Examination of Patent Applications for Patent Subject Matter Eligibility.
These guidelines outlined the requirements for submitting a patent application for a business method. Specifications included the requirement to be either linked to a specific piece of equipment or machine, or the ability to transform physical matter, like vulcanizing rubber or smelting ores. Unless an idea met one of these two requirements, the USPTO would deem it an abstract idea. Many wondered if the guidelines would become the demise of the patentability of business methods and even software.
In the case involving Bilski, the Federal Circuit of the U.S. Court of Appeals ruled that the sole test for determining whether a business process or method is patentable was the machine-or-transformation test. In order to be eligible for a patent, the method must be linked to a particular machine or transform an article into a different thing or state.
The Prior Use Defense
Thanks to the America Invents Act of 2011, broader protections are available to those accused of infringing a patent, based on prior use of patented or protected inventions. However, to use this defense, the company must prove that it had been using the invention continuously for at least since a full year before the patent was filed. It can be hard to produce documentation to this effect. This defense can't be extended to customers, acquirers, or vendors.
If the defendant can't prove prior use, the plaintiff can get damages and attorney's fees. In addition, such a defense can only be used if the patent was issued after September 15, 2011.
If you need help with patenting a process, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.