Does Your Business Model Have an Edge?

Every company has a business model.
If that business model has something special—an edge—it may be protected by a business method patent.
 
A business model is the way a company makes money.
It includes things like how the company attracts customers, how it keeps costs low, and how it increases repeat customers.

An “edge” means a reason why your company can create value that other companies cannot.
If you protect that reason with a business method patent, your business can become very strong and stable.

 
Business method patents are different from traditional patents that protect physical products.
They protect services.
The idea of patenting services is quite new in the long history of patents.
However, this change is very important.

Expansion of Patent Law

Not only research-based companies, but also retail companies, financial companies, and educational businesses have business models.
Business method patents have opened patent law to companies outside traditional R&D fields.
You do not need deep technical knowledge to invent a business model.
Most business models do not require difficult new technology.
They are usually created by applying existing technology in a clever way.

We can say that patentability often lies in the clever way existing technologies are applied.
In many cases, that clever application itself is the business model.
Because of this, business method patents can be invented not only by engineers, but also by managers, sales people, and marketing professionals.

If a business model is copied or blocked by competitors, the business itself may fail.
For this reason, business method patents can be a very powerful weapon—or a serious threat.

Is the Business Model Driven by Software?

To obtain a business method patent, software must play an important role in making the business model work.
Patent law exists to promote technological development, such as software.
Business method patents are a branch of software patents, and an important one.

It is critical that the business model is driven by software.

If the invention is written so that the business model cannot realistically work without software, it is more likely to be patented.
If not, it may be rejected—even if the idea itself is the same.

What Is the Key Point of the Business Model?

When aiming for a business method patent, it is important to understand the whole business model and identify the key points.
These key points are the parts that would make it impossible or very difficult for others to copy the business model if they were exclusively controlled. 

Instead of claiming the entire business model in a vague way, it is much stronger to protect each key point clearly.
Many business method patents look broad but are easy to avoid.
They appear strong but are weak in practice.

Uber’s business includes many elements, such as:
・Selecting a car based on location data
・An easy-to-understand booking process
・Allowing customers to choose preferences (such as car type)
・Splitting the fare between Uber and the driver
・Customers rating drivers
・Drivers being able to reject rides in advance
 
From these elements, you choose the ones that:
・Can reach patent level, and
・Are essential or very important to the service
You then design patent claims to protect those key points.
If many key points are protected by many patents, a competitor can be stopped even if they infringe just one of them.

It is like placing landmines at important positions so competitors cannot come close.

If the patents also cover related services, such as Uber Eats, they become even more powerful.

Even for patents on physical products, the basic approach is the same.
You identify several key features of the product and protect each of them with patents.

However, a business is a large system that involves many people and many processes.
Because of this, it is harder to see the whole picture.
Therefore, business models require a more broad and high-level analysis than physical products.

In summary, you should first examine whether a business model has an edge.
If it does, you then identify its key points.
By protecting those key points with patent rights, you can effectively control the business model.

These patent rights may also be applied to similar business models or new businesses in the future.

Is the Software Making Decisions?

Even a very unique business model cannot be patented simply because it uses software.
If the software is viewed as nothing more than a set of human-defined rules or procedures, the patent application will be rejected.
This kind of judgment is subtle, and while examination guidelines exist, examiners may apply them differently.

From experience, patents are more likely to be granted when the claims show that:
・The software makes decisions, or
・The software supports human decision-making

Today, many business models are supported by AI (Artificial Intelligence).
In many cases, an invention looks like an AI patent, but is actually a business method patent.
AI is a tool that replaces or supports human judgment.
Because of this, AI-driven business method patents will likely increase in the future.

In practice, however, if a claim includes “judgment by software” as one of its elements, it may have side effects.
For example, it can become difficult to identify infringement, or it may become easier for others to design around the patent.
Therefore, it is necessary to find appropriate claim wording by carefully balancing the likelihood of patent allowance with the ease of identifying infringement.