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Statement by Rep. Rick Boucher (D-VA).
Re: introduction of HR 5364, the Business Method Patent Improvement Act of 2000.
Date: October 3, 2000.

Editor's Notes:
  Rep. Boucher read this statement almost verbatim at a press conference on October 3, 2000. However, he also added ad lib comments about other bills he has worked on with Rep. Berman; he also stated that he is not wedded to the language of this draft.
  Tech Law Journal scanned a paper copy and converted into HTML.
  Copyright Tech Law Journal. All rights reserved.
  See also, story by Tech Law Journal, statement by Rep. Berman, and bill summary by Reps. Berman and Boucher.

Introduction of Business Method Patent Improvement Act of 2000
Tuesday, October 6, 2000

As we shape intellectual property law for the 21st Century, few issues in the 107th Congress will be more important than deciding whether, and under what conditions, the government should be issuing "business method" patents. And so today, I am pleased to join with my friend Howard Berman, with whom I have served on the Judiciary Committee for the past 18 years, in introducing the Business Patent Method Improvement Act of 2000.

We are putting this measure forward today to frame the discussion on the reforms that are needed with the goal of enacting the reforms next year.

Two years ago, the U.S. Court of Appeals for the Federal Circuit ruled in the State Street Bank decision that a patent could be issued on a method of doing business. Since then, the Patent and Trademark Office has been deluged with applications for business method patents. Unfortunately, the PTO has granted some highly questionable ones. Last year, it awarded a patent to for its "one-click" method of shopping at a web site. The press recently reported that the PTO is now on the verge of awarding a patent covering any computer-to-computer international commercial transaction.

Something is fundamentally wrong with a system that allows individuals to get patents for doing the seemingly obvious. And it has led to a lot of unnecessary litigation. Let me give you some examples of a few of the more extreme cases now in the courts:

  • has sued, alleging that it infringed its "one click" shopping method, forcing its principal rival and other web site merchants to use a "two click" means of selling books and records;

  • Priceline has sued Microsoft for offering a "name your price" service on its Expedia travel site, even though the market economy of the Western world and the theory of microeconomics is predicated on individuals setting a price at which they are willing to purchase something; and

  • The Red Cross has been sued for using computers to solicit contributions and donations from the public at large, even though philanthropy in this country has always depended on organizations making requests for contributions, whether by phone, in person, or through other means.

Our bill wasn't written to decide these cases or to prohibit the award of business method patents. Rather, our goal in drafting it has been to ensure that these kinds of patents will only be issued when they truly represent something new and innovative -- in other words, something that deserves protection.

I am hard pressed to understand how the continued award of these kinds of patents advances the greater public good. The purpose of the patent laws is to encourage innovation, but these patents tend to have the opposite effect by foreclosing entire markets to competition.

It should be said that in these instances, the patent covers the basic concept of the business method, such as using one click to checkout or using computers to solicit donations or to conclude commercial transactions across international borders. The creator of the intellectual property can always obtain a copyright on the software that implements a particular method of doing these things, and no one would complain. What is new and disturbing is obtaining ownership of the entire concept of performing seemingly obvious acts whatever individual method of implementation is used,, foreclosing the opportunity for competitors to develop new and different means of entering the business.

Let me briefly describe the major elements of our bill, which makes one important substantive change to the law and addresses two fundamental procedural defects in the current system.

On substance, our bill would create the presumption that the computer-assisted implementation of an analog-world business method is obvious and thus is not patentable. Accordingly, using the Internet to do such ordinary things as solicit money, take orders for products, provide information or advice, advertise products or conclude commercial transactions would be presumed to be obvious. In these cases, the burden would be on the applicant to rebut the presumption of obviousness.

On procedure, we would add new protections at the beginning and at the end of the current process. Unfortunately, the public rarely knows when the PTO is evaluating a proposed business method patent application, and, therefore, has no opportunity to bring prior art and other information to the attention of a patent examiner before it is too late to do any good. The bill, therefore, requires the PTO to give the public at large an opportunity to submit prior art information and evidence that the claimed invention is already in public use or is obvious or for other reason fails to meet the statutory criteria for the award of a patent.

At the conclusion of the process, we would establish an opposition procedure so that the public at large would have one additional opportunity to challenge the award of a business method patent short of having to file a lawsuit.

And when a challenge to a patent award is made, we propose that the standard of proof for the challenge be the preponderance of the evidence rather than the clear and convincing evidence standard that must be met by challenging parties today.

Taken together, we think these changes will restore confidence in the system and will ensure that the PTO won't award any more monopoly power to people doing the patently obvious.


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