In 2004, Dell faced a patent infringement lawsuit for selling its computers online. A small business claimed Dell violated its business method patent for selling a product internationally using the internet.
How you do something – key processes and methods that give your business a competitive advantage – are valuable intellectual property. Some examples include manufacturing processes necessary to make a product, or that cuts its cost, or business methods that are unique ways of conducting business. Some of these methods can be patented, but most are managed as trade secrets.
The internet is a big reason for the growth in business and marketing methods patents. Many businesses, especially those operating predominantly in the online world, are often unaware of their intellectual property – especially if it’s a system of way of doing business.
A business method patent protects how a business function is performed. A large percentage of them are marketing activity related. Some of the best known examples include Amazon’s 1-click purchase, Yahoo’s delivery of ads based on keyword searching, and Priceline’s name your own price bidding method.
Business methods come in many formats. Following is a list of some of the most common types of methods:
- Brokerage (bring buyers and sellers together and ease transactions)
- Advertising ( provides content and services mixed with advertising messages)
- Infomediary (data about consumers/ producers and assisting buyers/sellers in a specific market)
- Merchant (selling goods and services based on list prices or through auction)
- Manufacturer (manufacturer sells directly to the customer)
- Affiliate (provides purchase opportunities wherever people are surfing)
- Community (based on user loyalty generating revenues)
- Subscription (periodic fee to subscribe to a service)
- Utility (“on-demand” model based on metering usage, or a “pay as you go” )
These business methods can be implemented in many ways. It can be combined in different methods as part of your company’s overall Internet business strategy. For example, if you’re a content driven businesses, you could blend advertising with a subscription model.
If you’re an internet based business, your methods are valuable intellectual property. The first thing to consider is protecting your IP rights. Some business methods can be patented, and most are trade secrets. In either case, you’ll want to make sure you keep all information about the business method confidential.