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[FYI] Patent Reform Pending


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April 2, 2001  

Patent Reform Pending  

The U.S. Patent Office has cracked down on Internet business-method 
patents. But critics aren't satisfied.  

By Aaron Pressman  

WASHINGTON  It was a symbol of the excesses of the Internet age: The 
U.S. Patent and Trademark office's propensity to hand out patents for 
such ideas as pop-up advertising and one-click shopping systems.  

The Patent and Trademark office's willingness to grant patent 
protection for what many considered to be pedestrian schemes provoked 
hostility from lawmakers and industry critics who charged that the 
United States government was endorsing dubious business practices. It 
got so bad that that patent officials pledged in March 2000 to 
subject so-called Internet business-method patent applications to 
more stringent review. A year later, the agency is issuing fewer 
patents. But that hasn't satisfied detractors in industry and 
Congress, who will hold hearings on patent reform this month.  

Since last year, the patent office has slowed down the examination 
process by adding a second level of review of business-method patent 
applications. The change seems to have had an effect: The percentage 
of business-related patents approved this year fell to 47 percent 
from 57 percent a year ago, already well below the agency's 67 
percent overall approval rate.  

Nevertheless, patent examiners are rejecting only about one in 20 
applications after the second review. Those patents can be 
resubmitted if the applicants sufficiently narrow their claims.  

"What we're seeing initially is a reduction in the number of cases 
allowed," says John Love, director of the Patent Office's Technology 
Center. "Many of these will eventually get a patent, though."  

So Internet-related business method patents are hardly dead. Just 
last week the patent office granted its stamp of approval to such 
loosely defined business methods as collecting data from users of 
interactive television services and creating semi-anonymous online 
chat forums. Even a process that creates a customized Web page based 
on a user's query passed muster.  

"The PTO is not designed to catch all bad patents  it just doesn't 
have the time or the resources to do so," warns University of 
California at Berkeley law professor Mark Lemley. He predicts that 
the tech industry increasingly will turn to the courts to rule 
whether obvious ideas deserve patent protection. Already a federal 
appeals court has narrowed Amazon's one-click shopping-system patent. 
Reviews are pending on other controversial awards, such as NetZero 
(NZRO) 's patent for pop-up ads.  

There's also momentum in Congress to reform patent law. Democrats are 
planning to introduce legislation in the House of Representatives to 
create higher hurdles for business-method patents. The law would bar 
patents for known processes whose only novelty is that they are being 
conducted on the Internet for the first time. A House Judiciary 
subcommittee has scheduled hearings on patent reform for April 4. In 
the Senate, Judiciary Committee Chairman Orrin Hatch (R-Utah) will 
examine the issue at a hearing in May.  

Patent Office officials won't take a stand on any proposed 
legislation. But they do defend their handling of Internet-related 
business-method patents and efforts to beef up the review process. 
"We're going in the right direction," Love maintains.  

A change in the law may not entirely succeed in eliminating the 
problem, however. Clever patent attorneys will still look for 
loopholes. In Europe, for instance, applicants get around a ban on 
business-method patents by passing off new processes as novel 
technology, according to Brad Lytle, a patent attorney in Virginia.  

So a patent crackdown in the United States may leave companies fuming 
 or racing to the patent office with new, improved ideas.  

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