How Do Software Patents Affect E-Commerce?

In the United States, patent law extends to practically "anything made by man under the sun". Patents generate a form of property right in any invention that is new, unobvious and useful such as machines, devices, chemical compositions, as well as manufacturing processes. Software can also be patented.

With the growth of the internet and software technology, there is also a growing need for patents. However, some of the patents being issued on software technology pose some issues like whether the patent protection will suppress the growth of e-commerce for the reason that the patents declared to extend to the basic transactional processes that are commonly known and used in the business world. Like for example, the symbol "shopping cart" that was patented by one company has been existing and been widely used in the retail industry.

Therefore, what other innovations should be covered by patent protection? By protecting technological innovation, should the patent extend to protecting the business models that could lead to new business models? This is a very difficult issue to tackle when the software technologies are being associated with the business models. Technological innovation can always result to business innovations because a lot of companies are now inventing their very own ways of conducting e-commerce using software technology.

How can companies protect their integrated software-based innovations? One legal means to do this is to consider changing or modifying patents laws on these innovations by granting patents only for expressions of those business models instead of granting patents on the business models itself. To be more specific, the government could also try to consider combining some characteristics of the patent law and the copyright law. Like for example, one company's patent for reverse auction, the term reverse auction has long be used and existed and could well be considered as prior art. The patent granted on the company for the implementation of reverse auction over the internet; however, the patent did not rule out other companies from embarking on different kinds of implementations of the business model of the so-called reverse auction.

It should be noted that even despite the fact that the U.S. government has already ordered that the private sector should lead in e-commerce; the government should also have to attend to the impact of impending suppression on e-commerce caused by the software patent laws. If the companies granted with internet software patents may possibly corner the market on the commonly available business transactional models and processes, the patents may possibly demoralize and weaken the growth of e-commerce. The private sector is now starting to take this matter as a sleeper legal issue that may bring about lengthy and wasteful legal action which may probably slow e-commerce. It is not yet clear as to which path the government may take. The U.S. government needs to review the existing patent legislation in order to agree on how the laws may properly reproduce the needs of e-commerce as well as the speed of internet innovations.