Regardless of what you sell, if you are an online entrepreneur with a unique way of doing business, you may be sitting on a very valuable, patentable product.

The rise of e-commerce brought with it new terminology, new practices, and new business models. Along with the advent of these business models came a seemingly new idea: business model patents.

In fact, Internet and software companies in Japan were the first to patent business models, but the idea arrived in the US and gained prominence in the late 1990s. In 1998, a Federal Court ruling assigned the U.S. Patent and Trademark Office (USPTO) with the responsibility of issuing patents for unique automated technologies that process data or generate revenue (i.e. business models).

Suddenly, e-commerce features such as subscription-based access, targeted advertising networks, portal sites, online auctions, virtual malls, and even forums were now considered business models that could be patented. More and more software and Internet businesses began lining up at the patent office's doors, and the interest continues today.

Why are Business Model Patents Important?

Companies believe that their business models are a form of "intellectual property," and as such should be protected under patent law. Successful patent applications for business models include a client-server system for delivering online information, an access control and monitoring system for network servers, electronic mail systems that display advertisements to remote users, and Amazon.com's 1-Click system.

Business model patents, like all other utility patents, are valid for a period of 17 years and prevent other companies from using that particular business method without the permission of the patent holder. The importance of business model patents was illustrated recently when the leading online video rental company, Netflix, was awarded a patent for its computer-implemented approach for renting items to customers. Immediately after the company received the patent, they filed a patent infringement suit against their primary competitor, Blockbuster.

Can Every Business Model be Patented?

Not every business model can be patented. In fact, the USPTO maintains strict classifications for patentable business methods. The most common class for business model applications is financial data processing (705). Under this class, only computer-related processes involving finance, business practices, management or price determination are eligible. However, there are other eligible classifications for business model patent applications, including education (434), gaming (273), and agriculture (47).

There are also four criteria that a business must meet to qualify for a business model patent:

1. The model, method, or software must be able to be patented (i.e., not an abstract idea);
2. it must be a useful idea;
3. it must be new (in other words it cannot have been used more than one year before the patent was applied for); and
4. it must be something that is not obvious and ordinary.

Fortunately, there are opportunities for small-business entrepreneurs to easily and inexpensively patent their business models. LegalZoom.com offers customers a simple three-step process to obtain a Provisional Application for Patent from the USPTO. The Provisional Application is a relatively new service that provides applicants with 12 months of patent pending protection and an immediate filing date while they prepare their full patent applications. Visit www.LegalZoom.com to learn more.