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   If I want to use an existing business method
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   Author  Topic: If I want to use an existing business method  (Read 1151 times)
maryUSA
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If I want to use an existing business method
« on: Mar 26th, 2006, 2:13pm »
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Hi
 
Could anyone answer the following questions.  
 
1. If it turns out that the business method that my e-commerce would rely on already exists, can the present user-inventor refuse to license it to me?
 
2. I notice so many web sites use the same techniques, features etc. For instance Monster.com has a patent for its employees-employers matching system. But a few sites are now using the same mechanism. I am confused: Does that mean that Monster.com has agreed to license to all his competitors?
 
3. What determines how much one is likely to be charged for being licensed a business method? Can it be very expensive?
 
Thank you so much!
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Isaac
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Re: If I want to use an existing business method
« Reply #1 on: Mar 26th, 2006, 3:42pm »
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How is the business method in question protected?  
 
Generally speaking, merely being first to conceive a method does not give you the ability to require others to obtain a license from you.
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Isaac
JimIvey
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  jamesdivey  
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Re: If I want to use an existing business method
« Reply #2 on: Mar 26th, 2006, 5:18pm »
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To augment slight on Isaac's answer, we don't know for certain that an e-commerce approach in use is necessarily patented.  Generally speaking, it's not cost-effective to go out looking for all patents you may infringe in this or that activity.  There are probably 2 million or more patents in force.  Try reading and analyzing one and you'll quickly see why reading and analyzing them all without some hint as to which ones are likely problematic will show you exactly how un-cost-effective it is.
 
So, let's get to your first question.  You only need a license if they have some right to stop you from using it.  If they have a patent covering what you hope to do, they have such a right and can refuse to license it to you.  There seems to be perpetual discussion of removing the right to absolutely refuse to license, but currently refusal to license is permitted.  And, it seems to me that the negotiation of a fair license rate requires the ability of the would-be licensor to say "No."
 
The answer to your second question is a simple "No.  It doesn't mean that."  A more complete answer lies in understanding exactly who does what in the enforcement of a patent.  A patent gives the owner the right to exclude others from making, using, and selling the thing patented.  There's no patent police that goes out checking everyone; the patent owner must exercise the right to exclude, typically by filing or threatening a lawsuit.  So, how do you know you have to worry about a particular patent?  You get sued or threatened with a lawsuit.
 
Does the patent owner sue all who infringe?  Some do, provided they learn of the infringement.  It's nearly impossible for many patents to be aware of every act of infringement -- particularly patents that can be infringed by individual people at home.  
 
Now, you can't rely on the following, but it seems that most companies don't get noticed by patent holders until they reach a particular size.  And, that size usually includes the ability to defend and survive a patent threat -- i.e., the ability to afford license fees without going out of business.  
 
For your third question, that's hard to say, but I understand that it can be expensive -- perhaps as much as 2% of gross.  Factors include strength of patent (does it look susceptible to challenge in court?), viable non-infringing alternatives, the ability of the respective parties to "ante up" and go through with litigation, etc.  If a patent holder has been through all that before, they may have a standard rate and standard license terms that you can just take or leave.  
 
Regards.
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James D. Ivey
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maryUSA
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Re: If I want to use an existing business method
« Reply #3 on: Mar 26th, 2006, 6:28pm »
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Hi James
 
Thank you so much, you answer is great.
 
So if I understand well, I CAN use a method not patented yet, no one can come after me and ask me to stop or pay to use, is that correct? if the inventor realizes someone else uses the method, she could take action to have it patented. Could she then ask me to stop using it?  
 
You said: “Now, you can't rely on the following, but it seems that most companies don't get noticed by patent holders until they reach a particular size. And, that size usually includes the ability to defend and survive a patent threat -- i.e., the ability to afford license fees without going out of business”  
 
so are you saying the patent owner cannot do anything to prevent you from using their method, all he can do is ask you to pay damages and a license fee?
 
 
Thank you for any clarification you can bring  
« Last Edit: Mar 26th, 2006, 6:29pm by maryUSA » IP Logged
JimIvey
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  jamesdivey  
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Re: If I want to use an existing business method
« Reply #4 on: Mar 26th, 2006, 10:12pm »
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on Mar 26th, 2006, 6:28pm, maryUSA wrote:
So if I understand well, I CAN use a method not patented yet, no one can come after me and ask me to stop or pay to use, is that correct? if the inventor realizes someone else uses the method, she could take action to have it patented. Could she then ask me to stop using it?

Well, the truth is that anyone can pretty much ask you anything, including to stop using some method they've invented -- with or without a patent.  From the legal perspective, what they can get a court to force you to do is the germaine question.  Without a patent or some misappropriation on your part, a court won't force you to stop using their method.  Having invented something, without more, grants one no rights (except for perhaps bragging rights).
 
on Mar 26th, 2006, 6:28pm, maryUSA wrote:
You said: “Now, you can't rely on the following, but it seems that most companies don't get noticed by patent holders until they reach a particular size. And, that size usually includes the ability to defend and survive a patent threat -- i.e., the ability to afford license fees without going out of business”  
 
so are you saying the patent owner cannot do anything to prevent you from using their method, all he can do is ask you to pay damages and a license fee?

No, I'm saying that, if you don't draw attention to yourself, you might escape being noticed by the patent holder and they may not sue you.  Injunctive relief (a court forcing you to do something other than just pay money, i.e., stop using a patent method) is available to a patent holder -- although there are murmurs of efforts to change that, weakening things for patent holders and strengthening the position of well-established companies who'd rather not pay royalties.  One way to draw attention to yourself is become very successful, become a household name like "Google", announce you're going go public, and brag about huge profits.  Of course, if you really have huge profits, it's fairly likely that you'll be able to pay any reasonable royalty or find some agreeable solution with the patent holder.
 
But how can you be sure that reasonable royalties will be enough if they can get injunctive relief?  Assuming a reasonable patent owner motivated by profit, they would want their invention practiced -- without someone making, using, or selling the invention, the patent owner makes no money.  Injunctive relief serves primarily two purposes for a patent owner.  One is to avoid competition if the patent owner is in the business of making, using, and/or selling the invention.  Another is as leverage in negotiating a "reasonable" royalty.  All inventions have alternatives, including merely going without.  So, there is ultimately a finite limit on what people would pay to license a patent.  Eliminating injuctive relief wouldn't really change anything except have a drastic downward influence on "reaonsable" royalties or on royalties infringers would ultimately pay.
 
Now, of course, there's a blatant example of things not working out this way -- NTP v. RIM, in which Blackberries (2-way pagers) are under threat of going dark fairly soon.  While I don't pretend to know all the inner workings of this case, I'm a little baffled why NTP wouldn't accept a half-billion-dollar settlement.  From what I hear, RIM is working on a design-around and non-infringing alternatives (other types of smart-phones, for example) exist.  So, if Blackberries do go dark and RIM declares bankruptcy (I don't know this for a fact, but I suspect it's a real possibility), what would NTP get out of it?  They don't make, use, or sell anything but the right to infringe their patents, so they won't be able to step in the marketplace and take advantage of the absense of RIM.  I think NTP would do well to have RIM continue to be viable and profitable and have NTP tapped into that.  They seem to be like a symbiant intent on killing its host.
 
The thing that you have to realize about these big cases is that they are truly the exception to the rule.  The vast majority of patent disputes end in settlement.  In fact, I'm told that fewer than 1% of patent suits results in actual payment of judgment -- the rest settle.
 
But the bottom line is still that, most likely (but not guaranteed), by the time you're drawing attention to yourself in a way that catches the eye of a patent holder, you should be able to afford top-notch legal counsel to get you through it.  It's not cheap to enforce patents and most patent holders won't do it unless it's worth the effort.
 
Regards.
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James D. Ivey
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