There has been an alarming rise in patent infringement claims asserted against advertisers, their marketing agencies, and related service providers, partly due to the increasing number of business method and software patents being issued.
Business method patents cover new ways of conducting business, and can be worded so broadly as to arguably cover a wide array of e-commerce business practices. Additionally, older business method and software patents are being bought and used by those who believe that they can extract money from companies whose activities are potentially covered by the patents they purchase. Many advertisers and their agencies have been recently hit with claims for such common online technologies as the use of drop-down menus, geo-location of retail stores, tools that allow users to manipulate their photos to make humorous videos of themselves, and the use of product placements in online ads.
Patents differ in many ways from other types of intellectual property. These differences are why companies involved in the online marketing of goods and services need to be aware of the risk of business method and software patent claims. In the past, service agreements between advertisers, their agencies and other service providers, as well as the subcontracts between the agencies and service providers, typically lumped patents in with trademarks, copyrights, rights of publicity and trade secrets. With the proliferation of business method and software patent claims being asserted for commonly used marketing techniques, this approach needs to be reconsidered. This is because patents, both legally and practically, have some unique qualities when compared to other intellectual property:
- patent infringement is a "strict liability" tort, meaning no bad faith or copying is necessary to assert a claim.
- patents are not easily searchable.
- patent rights are long-lasting, while technology is fast-changing.
- patent risk is not realistically insurable.
Therefore, the real question is not necessarily whether a patent might cover certain technology, but rather, whether someone will use it offensively to seek a license fee and/or litigate. Given these concerns, a company needs to consider carefully whether, or to what extent, it will agree to take on patent infringement responsibility for their marketing efforts where other parties are involved in the creation of the marketing materials.
>> The Bottom Line
Until adequate legislation alleviates some of these burdens, the risk of having to defend a business method and/or software patent claim is a reality of today's e-commerce world. Patent infringement is no longer a risk limited to the technology and life sciences industries, and acknowledging patents as a unique form of intellectual property is the first step towards developing practices and procedures to reduce potential liability from patent claims.
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