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Say the Girl Scouts allow hungry customers at a bake sale to name their own price for pies and cakes. Are they infringing on Priceline.com’s business method patent that protects its “reverse auction,” where buyers set their own price before purchasing goods online? That’s a fictional example of a real issue confronting inventors and patent lawyers. What is the proper scope of patents that allow companies to protect their methods of doing business? It’s an issue that Margo A. Bagley, an assistant professor of law at Emory University, Georgia, will be exploring this year. She’s one of three law faculty members from around the country selected to write a paper on the issue and present it at George Washington University in October. Bagley will get a $5,000 grant from Oracle Corp. and Los Angeles-based intellectual property law firm Lyon & Lyon for her research. The validity of business method patents was established last year, in State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149F.3d 1368 (1999). But the scope of those patents remains to be decided, and Bagley says patents that are too broad may chill, rather than promote, innovation. Bagley says there are three basic requirements for patentability. An idea must be new, it can’t be an obvious extension of something already in existence and it must be useful. Her research will focus on the obviousness issue. In the arena of Internet-related business methods patents, she says patent examiners and judges have tended to look only at whether patent applications are an obvious extension of other Internet-related patents. That view may be too narrow, she says. “With business method patents, you’re dealing with ways of conducting business, not necessarily limited to a computer.” She gives the example of Amazon.com’s patent of its “one-click” method of ordering that allows consumers to buy a book with one click of a mouse button. With that patent, Amazon enjoined the online version of Barnes & Noble from also using a one-click ordering method. But as Bagley points out, a repeat guest who’s well-known at a luxury hotel need only walk into the gift shop and give his or her name to purchase an item. There’s no need to fumble for cash or credit cards, or to give a room number or address for delivery. Bagley’s point is that there’s a non-Internet version of one-click. That means, arguably, that one-click isn’t new. So if a patent examiner had thought more broadly about business methods, one-click might have been deemed an obvious — and therefore not patentable — extension of an existing business method. Barnes and Noble, she says, got around the restriction by setting up a system where customers must click twice to make a purchase. Bagley says she’s not an opponent of all business method patents. On one hand, Bagley says, patents can promote innovation — if a double click can be considered innovation. On the other hand, those that are too broad and obvious, she says, can pose a threat to a growing industry with many small players who can’t afford to litigate a bad patent.

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