E-commerce
Why Havent Leading Companies like Groupon, Yelp, and Foursquare Patented Their Business Methodologies?
Why Haven't Leading Companies like Groupon, Yelp, and Foursquare Patented Their Business Methodologies?
Companies like Groupon, Yelp, and Foursquare are at the forefront of their industries, transforming the way businesses operate and interact with their customers. Given the competitive landscape, one might wonder why these companies haven't patented their business methodologies, a process that can provide significant legal and financial benefits. This article will explore the reasons behind such decisions and the considerations companies take when deciding whether to patent their business methods.
Understanding Business Method Patents
In the realm of intellectual property law, a business method patent covers a process, method, or algorithm for performing a business task. These patents are complex and can be challenging to obtain, as a recent study suggests that only about 12% of business method patent applications survive the re-examination process. This makes the process of obtaining a valid and enforceable business method patent both expensive and uncertain. As a result, many patent brokers and licensing ventures are hesitant to handle such patents, considering them to be of low commercial value.
The Chances of Success
Despite the potential benefits, companies like Groupon, Yelp, and Foursquare have made strategic decisions not to pursue business method patents. One significant factor is the low likelihood of success. The re-examination process can be rigorous, and even with strong patent claims, the chances of a patent being granted are not guaranteed. Moreover, even if a patent is granted, it may face challenges in enforcement, as other companies may find ways to work around the claims.
Commercial Sense
The decision to patent business methods also depends on the company's current strategic goals and financial situation. For companies like Groupon, Yelp, and Foursquare, which have already established themselves as market leaders, the focus is often on growth, innovation, and maintaining market share. Patenting business methods might not offer the immediate return on investment that other strategies, such as continuous innovation and customer acquisition, do. Additionally, the cost of pursuing and maintaining a patent can outweigh the potential benefits, especially if other businesses can easily replicate the methodologies with slight modifications.
Competitive Landscape and Implementation
One of the key factors in the success of a business method is its implementation. Even if a company patents a method, other businesses can often find ways to circumvent the patents by merely altering the process slightly. For instance, if Groupon patented its deal-based marketing strategy, competitors could introduce similar strategies with subtle differences, potentially undermining the value of the patent. The skill and resources required to implement and refine a business method are often as important as the method itself.
Case Study: Groupon and Patents
Groupon is one of the few companies among the leading tech firms that have made efforts to patent its business methods. Groupon has at least one published patent application, and there may be more unpublished applications from the company as well. Patent applications are preliminary documents that describe the claimed invention and are subject to examination by the patent office. The publication of these applications serves as a warning to competitors and gives the company a chance to seek protection for its innovative methods.
Conclusion
The decision to patent business methods is a complex one that requires careful consideration of various factors, including the likelihood of success, the potential return on investment, and the strength of market competition. For companies like Groupon, Yelp, and Foursquare, the focus on innovation, customer engagement, and strategic growth often takes precedence over the pursuit of business method patents. However, as the competitive landscape evolves, the strategic value of such patents may become more apparent, prompting companies to reassess their decisions.