Can someone be held liable for infringing on a patented business model if they aren't in business?

January 22, 2004 8:47 PM

Can someone be held liable for infringing upon a patented business model if they aren't in business?

A number of business model patents have been handed out in recent years by the USPTO, hindering competition and market performance, with companies suing others to protect their supposed intellectual property. What happens to that model when money-making is removed from the equation?

Say a fictitious online retailer named, oh, "Yamazon" received a patent for an "innovative" method by which their customers may buy root vegetables online. If an individual or organization were to implement a similar feature via an online service through which they stand to make no money whatsoever, could Yamazon successfully sue them for patent infringement? If no financial harm to Yamazon could be demonstrated, would they maintain the legal right to pursue an injunction and/or damages against the non-profit?

Put another way, if I'm an Open Source Software developer and I include a feature that a Commercial Software Company had previously patented, am I opening myself to legal proceedings, even if I have made no profit at all?

Scouring the USPTO FAQs and Googling haven't led me to a concrete answer. Hopefully, there are others wiser in the ways of lawyering than I. [Less Outside]

posted by Danelope to law & government (10 comments total)

I'm not a lawyer, consult a lawyer, do not construe this as legal advice, stop doing that or your face will stay like that forever, etc etc.

I don't know about business models when you're not a business (though you turn into a business pretty soon when you start doing business-like stuff), but I'd say implementing a feature in your software isn't a business model.

Patented algorithms and techniques cannot be used without a license, even if you're not making any money off it. See the whole GIF/LZW debacle, or any of the myriad of patented cryptographic protocols and algorithms that nobody else can use for the next few years. (I'm especially bitter about chaum's untracable electronic cash because I came up with the protocol too, only to find out later that it was patented.)
posted by fvw at 9:02 PM on January 22, 2004

On reread: I might not have been entirely clear in the second paragraph; What I meant is, not everything you patent is a business model. You can patent business models, engine designs, algorithms^*, etc. It doesn't sound like what you're describing is a business model. If it is patented as a business model, you might be in luck because if the patent describes it only as a business model what you're doing won't be what the patent describes and you won't have a problem.

How about telling us what you want to do btw?

*Note algorithms are not [yet] patentable in Europe, luckily.
posted by fvw at 9:20 PM on January 22, 2004

Thanks for the thoughts, fvw. In retrospect, I shouldn't have included the paragraph about software, as software features aren't really relevant to my question or goals. The focus is truly whether an idea/concept/method of making money is applicable when it's no longer about making money.

I suppose the more important question is about the specificity of a patented business model. If the patent explicitly says "whereby a user can buy $x" or "an online retail application wherein $y", does an infringement against that patent have to be retail-driven in order for liability to stick? Or are patentable concepts subject to a more liberal interpretation?
posted by Danelope at 9:29 PM on January 22, 2004

I think if it really says buy in the actual description, and not just in an example, you're fine. But I'm not anywhere near up to speed on patent law, especially american patent law. If you have any legal assistance insurance or whatever it's called, call them up, you can usually get 30 mins advice free, even if you're not suing or getting sued. (At which point they will tell you this falls outside of the insurance, but at least you'll be snubbed by someone potentially knowledgeable.)

On the bright side, unless you're a very serious threat to a company and are making money in some other way, chances are even if they notice you're using their patented method, you'll just get a nastygram telling you to stop, and even if they go to court immediately the judge probably won't do more than make you stop doing it.
posted by fvw at 9:41 PM on January 22, 2004

if no one is buying anything and the patent has to do specifically (not incidentally) with buying, then you are AOK.

the bigger issue anyway is that if you're of absolutely no threat to a company that has the patent even if you aren't 'selling' something. Are you giving away something that someone normally pays for? Or are you just using the same technique to do something that no one pays for, or that least that no one who uses their application pays for? If it's the former, then don't even worry about scrutinizing the patent, because their lawyers will know it better than you ever will.

In short, if no one is buying the thing you're giving out (service, product, process, whatever) then you're fine. If not, you should rethink your plan.
posted by chaz at 10:41 PM on January 22, 2004

IANAL, but I do work with patent attorenys fairly regularly, and like to think I know more about patent law than the average MeFite.

In your example, Yamazon could definitely sue for an injunction to make your organization stop doing what they've claimed in their patent, and would very likely win.

Even if your organization stands to make no money at all, if it is using the business method in a way that directly or indirectly leads to a loss of income for Yamazon, then Yamazon could likely win damages as well.

Also, just because the organization is a non-profit does not automatically mean you are not making money (in the sense I'm using it here). "Making money which all goes back in to the organization" and "making money which is given to various other charities" are both still making money.

If your organization is really not making money, and your use of the business method does not harm Yamazon, then I don't think they'd be able to get damages, but they could still get the injunction to make your organization stop.

I repeat: I am not a lawyer, this is not legal advice, yada yada yada.
posted by DevilsAdvocate at 7:02 AM on January 23, 2004

Chaz is correct. The real metric of your potential liabilty is not only how much you profit from the infringement, but also the impact on the patent holder's livelihood.
posted by Fupped Duck at 7:05 AM on January 23, 2004

Oh, one more thing (although you may already be aware of this). If you really want to know what a patent covers, ignore the nice little abstract which appears at the front of the patent. The part that explicitly and legally specifies what is covered by the patent are the claims. Since this is the most important part of the patent, the claims are naturally placed at the end of the document. Patents usually have multiple numbered claims, and it's useful to think of each claim as sort of a mini-patent by itself. If you're doing what it says in claim 12, you're infringing on the patent, regardless of what claims 1-11 and 13-34 say.
posted by DevilsAdvocate at 7:10 AM on January 23, 2004

And then there's the "doctrine of equivalents." This concept can be explained in detail by a Patent Attorney, along with many other considerations not mentioned in the above comments. If you are truly concerned about this I highly recommened talking to a Patent Attorney. A "regular" lawyer will not do, this is a highly specialized field. In fact it's the only area of law which requires its own specific exam.
posted by anathema at 9:26 AM on January 23, 2004

i'd be concerned that if they get an injunction (which, in your example, is highly likely) then that would benefit them if they wanted to sue you for damages...you don't need to be a company to get sued, you only need to be doing a specific activity that is harmful.

but if they get that injunction, that tends to weigh-in pretty heavily when they go to sue you. and then you're PERSONALLY liable.
posted by taumeson at 10:21 AM on January 23, 2004