Firms consider putting a patent on the way they do things at the office
By Richard Lee, Staff Writer, Stamford Advocate, February 13, 2003
Industries have always looked to patents to protect their inventions and products, but how can they protect something nontangible, such as software applications developed in-house?
When the U.S. Supreme Court upheld a federal appeals court decision five years ago that Signature Financial could patent software that was part of its business method, it prompted companies to examine software and ideas they originated.
Many decided to prevent competitors from incorporating those ideas into their businesses.
That opened the floodgates, said Mark Nowotarski, president of Markets, Patents & Alliances LLC, a Stamford firm that helps clients commercialize their innovations by preparing and prosecuting patent applications, conducting market research and forming commercial alliances.
"The areas they tend to patent are usually in fields where they take what had been done manually and automate it with a computer.", Nowotarski said.
A classic example, said Nowotarski, was Norwalk-based Priceline.com.
They took a reverse auction and automated it with the Internet and took a patent on it. They developed a program to do this special thing, he said.
Nowotarski, a former associate director of research and development for Praxair and the inventor or co-inventor on 17 U.S. patents, has focused his business on financial services companies and contract manufacturers specializing in business methods.
He and Tom Bakos, a consulting insurance actuary in Ridgway, Colo., have partnered in a new service to the insurance industry on the patent process. Nowotarski said he struck upon the idea after talking with an insurance executive at a Connecticut Venture Group meeting.
"He's an expert in insurance, and I'm an expert on patents. We're ready to launch now. We'll be the first offering training of this type.", said Nowotarski, who has received an inquiry from a major Boston-based insurance company.
Bakos said he has noticed an increase in patents sought by Insurance companies in the past three years to protect their intellectual properties.
A total of 175 business method patents have been issued to insurance companies, but there are 206 patents pending on business methods, based upon applications in the past three years, Bakos said.
Insurance companies often copied their competitors' ideas before the federal court decision, he said. "That situation seems to be changing. We're offering seminars and training sessions to insurance company management. They need to be aware about patents. It never occurred to them that they couldn't copy a product. "
Nowotarski has represented Daedalus Software Inc., in Cambridge, Mass., in its effort to acquire a patent for a software tool designed for medical researchers and surgeons to track information on donors and recipients of organ transplants.
The patent is pending on the software, which underwent its second improvement last year.
"We have to be prepared to defend it. Software products are very difficult to protect because it's easy to twist one of the functionalities.", said Azita Sharif chief executive officer of Daedalus, who worked for Nowotarski at Praxair in New York City in the early 1990s.
Nowotarski also is helping Dr. Beth Noveck, chief executive officer and co-founder of Bodies Electric, and developer of UnChat, to patent a software business method invention to enhance structured online group discussions for up to 30 people.
"We've sought patent protection for our invention to safeguard our intellectual property and enhance our opportunity for investment.", Noveck said. "We really wanted someone who specialized in the language of the patent office and filing applications."
"Having a patent, however, does not guarantee that a company will not face a threat of litigation for a business method.", said David E. Martin, chief executive of M-Cam Inc., an Arlington, Va. based risk management firm specializing in patents.
"That is especially true when it comes to Internet sales.", he said. "A11 online merchant would have to be aware of about 11,000 patents.", he added.
"The Patent Office has been so swamped by this category of patent application that it does not have the time to determine if they are truly unique.", he said, leading to complaints of patent infringement.
Among other notable patent rights claimants, SBC Communications, owner of SNET, has sent dozens of U.S. businesses letters claiming that it holds patents issued in the late 1990s that cover a common Web page construction in which navigation elements such as bars, tabs and buttons don't change among the various pages of a larger site.
SBC's letter invites Web site owners believed to be in violation of its patents to pay up to $5 million in royalties. Those who don't run the risk of litigation.
Just determining whether there is merit to SBC's claims is weighing on Marilynne Eichinger, founder and president of MuseumTour.com, a seller of educational toys that also raises money for nearly two dozen museums and not-for-profit organizations. Eichinger is trying to locate other companies also contacted by SBC with the hope that they can band together to do their homework.
"Everyone is trying to capitalize on absolutely every single detail of the Web.", Eichinger said. "If this keeps up, it will cause everything to come crashing down.”
SBC knows a thing or two about overly broad patent claims.
The company spent big bucks to defend its subsidiary, Prodigy, an Internet service provider, against a claim lodged by British Telecom. ET claimed that its patents covered hyperlinks, the clickable elements of a Web site that steer users from one place to another on the internet. A federal judge threw out the case last year .
(The Los Angeles Times and the Chicago Tribune contributed to this story .)
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