Intellectual Property: A Guide for Engineers
5 Intellectual Property and the Internet
As discussed earlier, the Federal Circuit, in State Street Bank, clarified that patent protection was available for software and business methods. Prior to that decision, various prior computer and business methods were held to be ineligible for patent protection based on the U.S. patent law (i.e., the inventions were “non-statutory”). 1 However, the dividing line between those inventions that are the proper subject matter of patents and those that are not was left unanswered by State Street Bank.
Less than a year later, the decision of the Federal Circuit in AT&T Corp v. Excel Communications2 was perceived by many to signal that the courts were liberalizing their interpretations of the types of inventions that are statutory, i.e., that can be protected under the patent statutes. In that case, the Federal Circuit held that, unlike in previous decisions, a physical transformation of a signal from one form to another is not required. With the transformation requirement removed, the PTO has seen a substantial increase in the number of patent applications. In fact, the Commissioner of Patents and Trademarks stated that since the State Street Bank decision, e-commerce related patent filings have increased 700%.
That increase also is consistent with the realization by Internet companies that being “first-to-market” is no longer a guarantee of success. Internet retailers, such asAmazon.com and PriceLine.com, have begun to obtain patents in an attempt to protect market share against their rivals. On December 1, 1999, Amazon.com obtained a preliminary injunction3 against BarnesandNoble.com for Amazon's one-click ordering technology. That injunction required that BarnesandNoble.com stop using the Express Lane feature on the BarnesandNoble.com website.