PATENT APPLICATION REGARDING BUSINESS-RELATED INVENTION

March 26, 2002
HARAKENZO World Patent & Trademark Patent Law Firm
(Takaaki KOJIMA)

1. CS invention and BM invention
(1) CS invention
An invention relating to Computer Software (hereinafter referred to as CS invention) is an invention which requires software for carrying out the invention.
In contrast to other technical field, a major development of software technology is new ideas of suitable processing. Meanwhile, physical enforcement of the processing in a computer, i.e., a physical change of a computer memory for carrying out a program is merely an immediate result of the idea. Therefore, many of CS inventions are made up of ideas of abstract principles such as business methods.

(2) BM invention
A business-related invention (hereinafter referred to as BM inventionAand note that, BM invention is abbreviation for "Business Method Invention" or "Business Model Invention", which means "business-related" invention in Japan) is generally understood as a business idea realized on a computer by using IT (Information Technology).
In fact, business-related inventions (for example, a cash register or a cash dispenser) are nothing new and have been patented before. However, BM invention has become more controversial these days because of an increase of e-commerce and a wider use of computer for business processing.
In an actual patent examination, BM invention is treated as a direct extension of existing inventions relating to data processing systems made for specific purposes such as supervision, business or management. Namely, BM invention can be described as an invention relating to a data processing system made for a specific purpose in a business field, or the operation method thereof.

The existing inventions relating to data processing systems (for example, a ATM used as a teller of a bank) can be described as inventions relating to devices or systems which helps a part of the business. On the other hand, BM invention is an invention which makes it possible to carry out the whole part of the business; order, sales, payment, advertisement etc. by using IT, such as the data processing system for carrying out B to B or B to C in e-commerce. In other words, BM invention differs from the existing invention in the sense that it is a business method and a business system realized on computer.

Note that, in BM invention, not only IT is included as a mean for realizing a business idea. However, as matters now stands, most of BM invention not using IT is considered as "an arbitrary arrangement", and it is difficult to assume an invention not using IT but satisfying the definition of patent. Consequently, BM invention can be treated as CS invention.

Though BM invention is treated as CS invention as has been described, it is still possible to prevent competitor's entry into the whole business when the patent covers the right for carrying out the business method or all possible technical performances for realizing the business method. Therefore, in many cases, protecting the enforcement of business method means protecting the business method itself.

2. Those eligible for patent
(1) Japan
1) The definition of patent is "Highly advanced creation of technical ideas by which a law of nature is utilized". Accordingly, BM invention is possibly eligible for patent as CS invention "by utilizing hardware resources".
2) More specifically, BM invention can be defined as the following categories in claims. •device, system: hardware for realizing a business method •method: processing in hardware for realizing a business method •program or data (note; data will be protected as a program): program for realizing a business method in hardware •computer-readable storage medium having a program recorded thereon to install, execute or distribute the said
program: readable recording media having the program for realizing a business method in hardware •Note; a signal and a carrier wave are not included (included in U.S and Europe)
(2) U.S
Those that can bring "useful, concrete and tangible results" are eligible for patent even when it is a business method.
(3) Europe (EPO)
Those that can add a contribution of a technical character to the known art are eligible for patent even if it includes a non-technical part.
(4) International Patent Application (under PCT) Methods of business activities (business models) are excluded from the international search and the international preliminary examination, and therefore the results are not reported. This is not rejection according to the definition of unpatentable invention.
The applications of those are examined for its patentability in national phase of each country.

3. (Reference) Classification of BM invention
(1) Patent Classification
1) International Patent Classification (IPC)
there is no classification for business-related invention
G06F 17/60 (Digital computing or Data processing equipment or methods adapted for) administrative, commercial, managerial,
supervisory or forecasting purposes
2) FI (File Index) Classification (national classification subdivided from IPC)
G06F 17/60 100-250 a classification referring to JSIC (Japan Standard Industry Classification) on a business type basis (for example, business system for manufacturing, distribution, finance or insurance) for the business adopting calculation systems G06F 17/60 300-432

classification for a new style business, such as technology for e-commerce, technology for payment and settlement (e.g. order, production, sales, mediation and settlement)

3) F (File Forming) term (providing search by factors (e.g. the purpose or the arrangement) for each field)
5B049: calculator for specific purposes
5B055: banking and payroll accounting

4) broad facet classification (for cross section research for plural fields)
ZEC: e-commerce-related technology

including technology for carrying out e-commerce (the commerce using computer network, such as the Internet), technology for elements used for e-commerce and applied technology of e-commerce
ote; Facet classification symbol ZEC has been provided from April 2000, and FI Classification subdivided from G06F17/60 has been provided from July 2000.

(2) Technologies relating to business methods (by stages)
1) basic technology of computer, basic technology of communication
2) business system infrastructure technology (e.g. electric settlement or electric money) → It has been eligible for patent as a computer-related technology
3) business application system which applies the business system infrastructure technology to actual business� eligible for patent
4) those that have non-technical characteristics such as business methods and business ideas → not eligible for patent in Japan
(3) the method and the system of business
1) distribution market for the products and the services
2) financial services
3) the method for providing the advertisement or the contents
4) management technique or internal supervision for a company
(4) purpose of application
1) obtaining right of new business ideas
2) security for core system
(5)
1) common hardware (personal computer, PDA etc.) → the hardware has no particular characteristic
2) specific hardware (LCD, recording and reproducing machine for MD, photocopier etc.) → the hardware has particular characteristic
4. Trends of patent application regarding BM invention July 1998 State Street Bank judgment by Court of Appeals for the Federal Circuit of U.S ("Hub and Spoke" Patent (US Patent No. 5,193,056))

July 1998 Registration of the Establishment of "Auto Cafe" Patent (JP No. 2804933)(still in the duration)
♦BM invention application boom began (applications of non-technical business methods by misunderstandings, applications of current systems for security)
January 2000 Registration of the Establishment of "The method for giving gifts to wedding guests" Patent (JP No. 3023658)

April 2001 Revocation of "The method for giving gifts to wedding guests" Patent
♦BM invention application boom settled (clarification of examination standards, large number of applications ended up continued rejection, more caution taken for applications)
November 2001 Rejection for "Hub and Spoke" application (Tokuhyohei No.6-505581)

(Reference)
Hub and Spoke
This is a system which enables the supervisor to observe and record the flow of financial information and carries out the calculation required for maintaining the structure of a partner fund financial service.
The structure of a partner fund financial service makes it possible to economize the supervising cost by scale merit and provides tax advantage on the partnership by pooling money from a plurality of funds to a single portfolio (hub). This patent application has been rejected in Japan due to lack of inventive step.
The method for giving memorial gifts to wedding guests
This is a method for making the wedding guests to select one of various memorial gifts from a list and delivering the gift to them after the ceremony. Though this partly uses the "list of gifts" as its means, it generally made up of the performance of "person who gives the gifts" and the performance of "service provider". Therefore, it is considered as "an arbitrary arrangement" which does not utilize a law of nature.
Auto Cafe This is a cafe having a self-service system. The customers serve themselves coffee or salad etc. by using an automatic machine for providing tableware and automatic food and drink providing device. However, this may not satisfy the definition of invention since the invention is specified with operation by a person. Further, this may not satisfy "inventive step" in comparison with the conventional vending machine system.

5. Examination Standards
(1) BM invention is treated as a type of CS invention in patent examination, and is determined if it satisfies Description Requirements and Requirements for Patentability according to Examination Guidelines for Inventions in
Specific Fields: chapter 1 Computer Software-Related Invention. Note that, there are no particular examination standards for BM invention.
(2) The history of revision of Examination Standards
1) 1997 Announcement of definite guidelines for CS invention examinations

The definition of those eligible for CS invention was set as "computer-readable storage medium having a program recorded thereon to install, execute or distribute the said program (a recording medium having a program)"
As to the "recording medium having a program"
•it can be described as a product in claims.
•the rule for a general software-related invention is applied to determine whether or not the invention is statutory.
•the description for limiting the invention as "recording on a medium" in claims does not always satisfy the "Inventive Step"
2) 2000 Revision of the guidelines for CS invention examinations (December 28)

As the revision of the guidelines for CS invention examinations, the description for BM invention was clarified.
•a computer program not recorded on a medium is treated as a product
•a creation of a software including a combination of software and a specific hardware for realizing an idea is a statutory invention
•an invention which can easily be made by a person who has common knowledge both in the business field and computer technical field does not satisfy the "inventive step"

6. Determination in Examinations
(1) Major patent requirements
In patent examination, an application which does not satisfy all the requirements will be rejected. Namely, an application which satisfies all the requirements will be granted as a patent (Patent Law of Japan, sections 49, 50). The following are three major requirements.
•it shall be an invention defined in Patent Law of Japan, Section 2 (Patent Law of Japan, section 29 main paragraph
1)•the specification shall satisfy all the description requirements (Patent law of Japan, section 36)
•it shall involve "Novelty" and "Inventive Step" (Patent law of Japan, section 29)
(2) Statutory Invention
1) The claimed invention shall be "a creation of technical ideas utilizing a law of nature"
In BM invention, the "creation of technical idea" is not a business idea itself but when the idea is realized on a computer. Accordingly, an invention does not involve hardware cannot be patented.
2) Accordingly, in CS invention (including BM invention), "an information processed by software and realized by hardware" can satisfy the definition of "a creation of technical ideas utilizing a law of nature" (in the sense that the idea is realized by hardware which utilizes a law of nature)
3) In other words, if software is worked-out to be used with a common computer or an existing network system instead of creating new hardware to realize the idea, the worked-out software will be "a creation of technical ideas utilizing a law of nature" .
4) Meanwhile, when the realization of an idea is any of "economic laws", "arbitrary arrangements", "mathematical methods", "mental activity", "mere presentation of information", it will not be "a creation of technical ideas utilizing a law of nature".
5) These restrictions are also applied to BM invention adopting a computer. However, it should be noted that the BM invention adopting a computer is not always granted as patent according to the definition of "a creation of technical ideas utilizing a law of nature". For example, normally, "mail order by using direct mails" corresponds to the "arbitrary arrangement", and therefore is not considered a statutory invention. In this case, even when the direct mails are e-mails, it essentially corresponds to the "arbitrary arrangement".
6) Non-statutory inventions (those not eligible for patent)
•a business method itself
•a business method which utilizes a computer only as a tool
•an invention does not satisfy the definition of "an information processed by software which is realized by hardware"
(3) Description Requirements
1) The detailed description of the invention shall be stated in such a manner that a person who has ability to use ordinary technical means for research and development, and has ability to exercise ordinary creative activity in the field of CS invention can carry out the claimed invention on the basis of the description in the specification (other than claim(s)) and drawings taking into consideration the common general knowledge as of the filing.
2) In the case of BM invention, the detail of the arrangement of software and hardware shall be stated which is specific enough to create a data processing system can be used for a business field. A detailed-description stating only the business idea will not be enough to satisfy Description Requirement.
3) Non-statutory inventions (incomplete specifications)
•when there is no concrete explanation of the method for realizing the business idea on a computer
•when there is no description for defining the invention as an operating method of a computer (there is no concrete explanation whether it is performed by a computer or a person)
(4) "Novelty" and "Inventive Step"
1) Even when the invention satisfies the definition of "a creation of technical ideas utilizing a law of nature", it will not be granted as patent if it does not involve "Novelty" and "Inventive
Step".
2) The purpose of Patent Law is to encourage inventions by promoting their protection and utilization so as to contribute the development of industry.
In view of this purpose, inventions which were publicly known in Japan or elsewhere prior to the filing of the patent application cannot be granted as patent (Novelty). More specifically, inventions which were publicly known, inventions which were publicly worked, or inventions which were described in a distributed publication or made available to the public through electric telecommunication lines in Japan or elsewhere prior to the filing of the patent application cannot be granted as patent due to lack of "Novelty".
3) In the case where there are characteristics only in the contents of data, it does not satisfy the definition of "Novelty".
4) Further, even when the invention satisfies the definition of "Novelty", the invention must not easily be made by a non-professional person or by a person who has ordinary skill in the art ("Inventive Step").
A person skilled in the art of BM inventions is expected:
to have common general knowledge both of the applied field of the said software-related inventions and computer technology (e.g., systematization technology); to use ordinary technical means for research and
development; to exercise ordinary creative activity in changing
design; and to be able to comprehend all the state of the art in the field of technology to which the invention pertains (state of the art in the applied field of the said software and the computer technology) as of the filing.
In addition, a person skilled in the art is supposed to be able to comprehend as his/her own knowledge all technical matters in the field of technology relevant to a problem to be solved by an invention.
Namely, the person skilled in the art must be knowledgeable both in the business field and computer technical field.
Therefore, "Inventive Step" of BM invention is determined whether or not the invention could have easily been made by a person knowledgeable both in the business field and computer technical field. Note that, the difficulty of making a combination from existing business methods or that of application to other fields are examined in
terms of system design.
5) Examples of Exercising Ordinary Creative Activity expected of a Person having Ordinary Skill in the Art

(i) Application to other fields
There are a lot of cases in which procedure or means for realizing the function used in CS invention are often common in function or operation, regardless of the applied field to which the invention belongs. In such cases, it is within the ordinary creative activity expected of a person skilled in the art to apply such procedure or means of CS inventions used in certain applied fields to other fields to realize the same function or operation.
(ii) Addition of a commonly known means or replacement by equivalent
It is within the ordinary creative activity expected of a person skilled in the art to add a commonly known means for systematization as a constituent element thereof, or to replace part of constituent elements of the system with a well-known means equivalent thereof.
(iii) Implementation by software of functions which are otherwise performed by hardware
It is within the ordinary creative activity expected of a person skilled in the art to try to realize such function by means of software that has been so far performed by hardware, such as circuits.
(iv) Systematization of human transactions
It is within the ordinary creative activity expected of a person skilled in the art to systematize existing human transactions in an applied field in order to realize on a computer, if the said systematization
can be realized by a routine activity of usual system analysis method and system design methods.
(v) Reproduction of a known event in computerized virtual space
It is within the ordinary creative activity expected of a person skilled in the art to reproduce a known event in a computerized virtual space, provided that the said reproduction would have been made by a routine work by using usual system analysis and system design methods.
(vi) Design modification on the basis of known facts or customs
When different features between the invention and the cited invention are based on known facts or customs, the said different features is of the nature to be decided at the discretion of a person skilled in the art, and there is no blocking factor for combination, the difference is no more than a design modification decided depending on the need of a person skilled in the art, therefore, it is within the ordinary creative activity expected of a person skilled in the art.
6) As described, (a) inventions could have easily been made by using publicly known information processing systems; (b) inventions could have easily been made by using publicly known business methods; and (c) a combinations of inventions made up of publicly known information processing systems and publicly known business methods are not granted as patent. All the cases with → in the following table may satisfy "Inventive Step".

7) The whole part of the invention is observed to determine whether or not the invention satisfies "Inventive Step". Therefore, for example, even when a systemized technology for realizing a business idea is made up of publicly known technologies, the whole part of the idea may satisfy "Inventive Step". Namely, it is determined depending
on "How to realize what kind of idea" of the invention. And when it also corresponds the definition of "a creation cannot easily be made even by a person who has common knowledge in the technical field", the invention may satisfy "Inventive Step".
Accordingly, when the invention is apparently common and therefore seems unpatentable, it is still possible to approach in other various terms including its business process. The following are factors which will possibly satisfy "Inventive Step"
•a new business (never existed before)
•a new business process (the revised method (process) of an existing business)
•an introduction of a new infrastructure

7. (Reference) How to claim BM invention
(1) Claims should be made up of (a) a conceptual claim having the scope of right as broad as possible, (b) a claim of the business form to be protected, and (c) claims of various forms such as an adoption form or a dealing form. Also, a specific description is required for the software or the combination of software and hardware used for the invention.
The following is specific example of claims
•with regard to the principle of "1 claim has 1 right", respective claims, for example, for a server computer, and for a client computer
•a claim for clarifying the part to obtain a profit (service, mediation, sales)
•a claim not limiting specific business field
•a claim expecting revisions of examination standards or guidelines in the future
• For US applications, a claim excluding unnecessary limitation with respect to the use of hardware resources
(2) When the invention is not an idea but a specific form or a specific product, claims of such form or product should be added to ensure the right and protection.
Further, the claims should cover peripheral fields, and related fields which may be relevant for future development, so as to broaden the scope of right of the picture claim. Also, embodiments corresponding to the picture claim is preferably added for ease of future amendments.

8. References
Visit our Japanese Homepage for the references