When companies first learned about Amazon.com's patent, many began rushing to see if their business processes could also be patented-and they did so in droves. In fact, e-commerce- and software-related business-method patent applications doubled from 1998 to 1999, according to the U.S. Patent and Trademark Office (PTO), the federal agency that administers patent laws, examines patent applications and determines who will get patents.
For dotcoms, there are numerous competitive advantages to owning patents, ranging from royalties to good public relations. "Having a patent helps the patent owner maintain an edge over competitors because it can prevent those competitors from using its technology to their benefit," says Joshua Bressler, an attorney with law firm Schulte Roth & Zabel LLP in New York City who specializes in intellectual property, e-commerce and technology law. "In addition, a patent can provide substantial revenues generated from the licensing of rights under it."
Bressler says start-up companies in particular can benefit greatly from patents. "If you're a start-up looking for early-round financing, or if you're planning to go public," he says, "investors like to see aggressive protection of proprietary business methods and other intellectual property, particularly because they've gotten so much press lately."
One start-up that understands the benefits of patents is TradeAccess Inc., a Cambridge, Massachusetts, company that sells B2B e-commerce software that automates the process of negotiated buying and selling. It received a Notice of Allowance from the PTO for a soon-to-be-issued technology and business method patent for its B2B e-commerce negotiation process. The company's founder believes so strongly in patents that he applied some of his last remaining capital to the patent process.
"Given the invention revolution that's going on now around the Internet, I felt having strong intellectual property would really help the company distinguish itself and protect the investments that everyone's made here, vis-à-vis the competition," says Jeffrey M. Conklin, 45, founder and CEO of TradeAccess. "I felt it could be money very well spent and it would provide returns."
Conklin says the patent has already played a major role in attracting premier partners and customers. For example, it's helped the company form a global strategic alliance with Andersen Consulting, a leading global management and technology consulting firm. Says Conklin, "A big piece of why they wanted to do business with us was because of the patent allowance on our system."
Now TradeAccess is looking forward to licensing its application to e-market-makers and corporations, and to licensing its technology to technology vendors.