THE EFFECTS OF INTERNET BUSINESS MODEL PATENTS IN ELECTRONIC COMMERCE

Abstract

This paper addresses the issue of understanding the effects of business method patents on electronic commerce. This subject is currently an important discussion topic among companies with an electronic commerce presence who are racing to win patents on existing business methods using new technology. These patents established a new precedent -- that never before had patents for business methods, such as the management of a stock portfolio over the Internet, been awarded. This paper investigates the conflict that arises as a result of these business method patents. The two competing concerns involve rewarding innovation and inhibiting standardization and competition. This paper will investigate these two competing concerns and argue that achieving a middle ground is the only way to foster competition and technological creativity in this increasingly information-driven society. This paper will further investigate how balancing these two concerns is an essential function of patent law. This paper begins by defining a business model, it then examines the current legal framework for electronic commerce, reviewing recent business method patent cases and existing and new patent legislation, analyzing the economic impact these technological patents will have on the electronic commerce community and presenting recommendations for future research.