Posted on Apr 30, 2015

In today’s complex world, every business owner should have a basic understanding of patents. Without this knowledge, you can’t protect your company’s inventions or defend yourself against lawsuits from other firms.

Supreme Court Defines a Patentable Process

In a computerized era, you may wonder: Can a business method (not tied to a machine or apparatus) be patented? The Supreme Court answered that question in a significant case.

In the case, the inventor came up with a method of hedging risk in the commodities trading field. Specifically, the invention explained how commodities buyers and sellers in the energy market could protect, or hedge, against the risk of price changes.

The Supreme Court ruled the inventor’s “application is not a patentable process.” (Bilski v. Kappos, No. 08-964, 6/28/10)

The court held that a claimed process is patent eligible if:

  •  It is tied to a particular machine or apparatus, or;
  • It transforms a particular article into a different state or thing.

In its decision, the Court noted the difficulty of answering questions like this in the Information Age. In an earlier time, patents were rarely granted for inventions that did not satisfy the machine-or-transformation test. This test would create uncertainty about the patentability of software, advanced diagnostic medicine techniques, and inventions based on linear programming, data compression, and the manipulation of digital signals.

This Age puts the possibility of innovation in the hands of more people and raises new difficulties for the patent law,” the court stated. With ever more people trying to innovate and thus seeking patent protections for their inventions, the patent law faces a great challenge in striking the balance between protecting inventors and not granting monopolies over procedures that others would discover by independent, creative application of general principles.”

The court added: “Nothing in this opinion should be read to take a position on where that balance ought to be struck.”

U.S. patents date back to the Constitution, where it says Congress can secure “for limited times to … inventors the exclusive right to their discoveries.” In other words, patents provide the owner with the right to exclude others from making, using, selling, offering for sale, or importing the invention for 20 years. Patents are granted by the U.S. Patent and Trademark Office.

Exclusive rights begin once a patent is granted and they expire 20 years after the application is filed. Most patents are owned by companies, inventors and universities. If your company is granted a patent, it is only good in the United States. Americans can apply for patents individually from foreign countries, but it is usually a complex process.

Applying for a patent involves more than just filling out a simple form. The application form is a legal document, which must be accompanied by the description and drawings of the invention.

A Provisional Application

It can be expensive, but there might be a cheaper alternative for your company. Since 1995, the Patent & Trademark Office has offered inventors the option of filing a “provisional application” for a patent.

With this lower-cost option, there are fewer requirements but you must provide a detailed written description of the invention, its intended use and, if appropriate, an informal drawing.

This allows you to claim “patent pending” status for one year. If you don’t follow up with a regular patent application, the provisional status will expire after that. You can still file for a patent on the same invention, but you won’t be able to benefit from an earlier effective filing date. (However, these applications can’t be filed for ornamental designs.)

What Can Be Patented?

The list includes machines, manufactured products, chemicals, computers, and applied technology. You can’t patent scientific principles and naturally occurring materials. Under U.S. law, there are three different patent types:

  1. A utility patent on the functional or structural aspects of an apparatus, composition of matter, method or process. (See right-hand box for a Supreme Court case defining a process.”)
  2. A design patent on the ornamental design of useful objects.
  3.  A plant patent on a new variety of living plant.

Contrary to popular belief, patents don’t protect ideas. Rather, they protect the structures andmethods that apply technological concepts. In return for receiving the right to exclude others, the inventor must relinquish the secrecy of the invention and fully disclose to the public the best mode of making and using the invention. For more information in your situation, consult with an intellectual property attorney.