[Congressional Record Volume 146, Number 121 (Tuesday, October 3, 2000)]
[Extensions of Remarks]
[Pages E1651-E1652]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   INTRODUCTION OF THE BUSINESS METHOD PATENT IMPROVEMENT ACT OF 2000

                                 ______
                                 

                           HON. RICK BOUCHER

                              of virginia

                    in the house of representatives

                        Tuesday, October 3, 2000

  Mr. BOUCHER. Mr. Speaker, I am pleased to join my colleague from 
California, Mr. Berman, in introducing the Business Method Patent 
Improvement Act of 2000. As we look forward to shaping intellectual 
property law for the 21th 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.
  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 Amazon.com 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. The root of 
the problem is that the PTO does not have adequate information--what is 
called ``prior art''--upon which to determine whether a business method 
is truly non-obvious and therefore entitled to patent protection. We're 
introducing this legislation in an effort to repair the system before 
the PTO awards more monopoly power to people doing the patently 
obvious.
  Not surprisingly, there has been a great deal of concern in the high-
tech community that the continued award of business method patents 
could lead to a significant amount of wasteful litigation, could stifle 
the development of new technology, and could retard the development of 
the Internet. Consider for a moment a few of the more extreme cases now 
in the courts:
  Amazon.com has sued Barnesandnoble. com, alleging that it infringed 
its ``one click'' shopping method, forcing its principal rival and 
other website merchants either to pay Amazon.com royalties for the use 
of any one click method or 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.
  It should be said that in these instances, the patent covers the 
basic concept of the business method, such as the one click to checkout 
or using computers to solicit donations or accomplish 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.
  I am hard-pressed to understand how the award of these kinds of 
patents will advance the greater public good. Under the Constitution, 
Congress has the power to grant inventors exclusive rights to their 
discoveries ``[t]o promote the Progress of Science and useful Arts. . . 
.'' Rewarding someone for ``inventing'' a method of doing something 
obvious on its face hardly seems to meet standard. In fact, rather than 
encouraging innovation, which is the purpose of the patent laws, it has 
the opposite effect by foreclosing entire markets to competition.
  Our purpose in introducing this bill today is threefold. First, given 
the importance of the subject and the critical need to support the 
development of new technology and the growth of the Internet, we 
believe it is important to begin a public debate now about how Congress 
should respond to the State Street Bank decision. Second, we want to 
develop through legislation an appropriate framework for the PTO to 
assess the claims asserted by would-be business method inventors and to 
give the public a meaningful opportunity to participate before--not 
just after--a patent is awarded. And finally, we hope to force business 
method patent applicants to disclose all the relevant prior art to the 
PTO, rather than hiding the ball as some do now.
  I want to stress that our bill does not outlaw or prohibit the award 
of business method patents. Rather, it is designed 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.
  Our bill makes one important substantive change to the law and 
addresses two fundamental procedural defects in the current system. And 
in doing so, it will help create an urgently needed database of prior 
art so that patent examiners will have a better basis for evaluating 
claims made by applicants in the future.
  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. In these

[[Page E1652]]

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 thus has no opportunity to bring prior art and other 
information to the attention of a patent examiner or to argue that the 
statutory criteria for the award of a patent is for other reasons not 
met before it is too late to do any good. We, therefore, would require 
the PTO to give the public at large an opportunity early in the patent 
review process to submit prior art information and evidence that the 
claimed invention is already in public use or is obvious. In addition, 
if asked, the PTO would be required to conduct a proceeding comparable 
to the discretionary public use proceeding already on the books.
  At the end 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. Decisions in these proceedings would be made by an 
administrative opposition judge chosen from a panel of examiners with 
special expertise in evaluating business method patents.
  The bill makes two other important procedural changes. In cases 
involving business method patents, the burden of proof on the party 
seeking to show invalidity would be lowered from the current ``clear 
and convincing evidence standard'' to the ``preponderance of the 
evidence'' standard. And because we share the concern the PTO has about 
the lack of prior art being accessible to examiners, our bill would 
require an applicant for a business method patent to disclose the 
extent to which the applicant has searched for prior art.
  Taken together, these changes will enable the PTO to do a better job 
when examining business method patent applications, and they will 
ensure that the American public has an opportunity to participate more 
fully in the process, which should reduce the risk of the PTO awarding 
any more patents on the patently obvious.

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