In the old days business innovations would mostly be something tangible such as a devices, chips, appliances, tools, or packaging. In order to protect your innovation patents could be used as long as the innovation was novel, inventive, useful, and not been subject to prior use (Business Queensland, 2022). Momentarily, more and more innovations are business models including platforms and information strategies. Companies such as Airbnb, Facebook, and Amazon do not have a tangible good to file a patent for. What can companies like this do to protect their business model?
The first method is filing a patent on the technical invention required for the business model (Nowotarski, 2019). In this way the intangible business model is protected by the tangible technical invention. Many businesses are however concerned competitors will get easily around the technical patent. Although this concern is valid, this can be addressed by making the patent generic enough without sacrificing its technical nature to get meaningful patent protection (Nowotarski, 2019).
The second method, which can be used in addition to the first, is to file a patent on the business method. The business method is a specific way of doing business (Ovans, 2000). When the way of doing business is new, useful, and not obvious the business method can be patented. For example, software that governs a business method can be patented if it produces some tangible results (Ovans, 2000). Amazon did this by patenting its one-click shopping process.
The question remains if these methods are enough or necessary to protect a business model. It could be that competitors work around the method and technical patent and can still copy the business model more or less. It could also be that patenting is not necessary, maybe the economies of scale or network effects are large enough to keep competitors away. Ultimately, the business model is a general vision or strategy (Ovans, 2000). Is a business model something businesses should be able to patent? Or is it too vague and will it dampen innovation too much? Should we take action to protect business models or leave it be?
References
Business Queensland (2022) What are the 5 requirements for obtaining a patent? Available at: https://www.business.qld.gov.au/running-business/protecting-business/ip/ip-kit/browse-ip-topics/new-products,-processes-and-inventions-patents/five-requirements.
Nowotarski, M. (2019) If You Want to Protect Your Business Method, Reframe It as a Technical Invention. Available at: https://www.ipwatchdog.com/2019/09/03/want-protect-business-method-reframe-technical-invention/id=112875/#:~:text=The most effective way to,a business method by itself.
Ovans, A. (2000) Can You Patent Your Business Model?, Harvard Business Review. Available at: https://hbr.org/2000/07/can-you-patent-your-business-model.
A really interesting topic that I have not thought about before. How do companies use technical invention to patent an innovative business model? How does that look like in practice? And what if the innovative business model is not based on technical invention? These are some questions that could be looked into to understand the first method that you mention in your blog. Another question is how can a company determine if a patent is necessary in the first place or if economies of scale is going to push competitors away anyways? All in all, I liked your blog 🙂