Finding Bargains - Business Methods Monday

Last week I wrote about the changes to the Discounts or Incentive portion of the USPTO Class 705 schedule. Today we'll review major changes to the Advertisement section (705/14.4 -- 705/14.73) of the schedule.

As with discounts, the USPTO greatly expanded the detail concerning advertising inventions. They expanded from one subclass (705/14) to 34. You might want to refer to the Class 705 Schedule Page in another window and locate subclass 705/14.4 as we examine the recent changes to advertisement patents.

To be classified as an advertisement, the claimed art must include the act "of promoting or calling to the attention of the public any goods or services to induce the public to buy or use the goods or services." As of today, March 3, 2010 as I write this post, the USPTO has placed 1,680 patents with an original or cross-reference classification within the 705/14.4 array, including all its subclasses. 164 patents (10%) are located within the advertisement subclass (705/14.4).

The advertising art section of the business methods schedule is composed of several major sub-arrays. Indented immediately below Advertising is a section dealing with analysis, introduced by subclass 705/14.41, determination of advertisement effectiveness. The key to being classified in this array is that "an analysis is conducted in order to ascertain the degree to which the intended or expected result of a promotion is achieved." Note that an analysis must be conducted by the claimed art. If the claimed art allows classification here, then additional detail may require classification in one of the four further indented subclasses:

• Comparative campaigns (705/14.42) in which two or more promotions are evaluated to determine which one attains the highest degree of intended or expected results
• Optimization (705/14.43) where there is an analysis of a constraint of a promotion resulting in a reworking of that promotion to improve its current or future effectiveness
• Survey (705/14.44) which is a collection of public opinion about a promotion in order to determine its effectiveness
• Traffic (705/14.45) in which the commercial activity generated by a promotion is analyzed. 89 patents (5%) are found in this array.

Immediately below the analysis section are three subclasses which address calculation of past, present, or future revenue (705/14.46), avoiding fraud (705/14.47), and advertising based on a budget or funds (705/14.48). 58 patents are currently assigned to these subclasses.

This brings us to the largest, most complex portion of the advertising schedule. Targeted advertisements (705/14.49 -- 14.67) cover 19 subclasses, and 678 patents (40%). Inventive art must include "a promotion . . . directed at or to an individual or individuals based on predetermined criteria" to be classified here. Several of the key subclasses in this area include:

• Based on an event or environment (e.g., weather, festival, etc.) (705/14.5)
• During e-commerce (705/14.51)
• Based on user history (705/14.53), and its indented child subclass, user search (705/14.54)
• Based upon a schedule (705/14.61)
• Wireless device (705/14.64)
• At Point of Sale (705/14.65)
• Based on user profile or attribute (705/14.66), and its indented child subclass, personalized advertisement (705/14.67).

The next section of the advertising schedule deals with fees for advertising (705/14.69); inventions classified here must include "compensation or billing for the promotion of a good or a service." Two subclasses are indented under fees: split fees (705/14.7) and auctions (705/14.71). 171 patents (10%) are found here.

Finally, at the bottom of the advertising array, we find a subclass for creating advertisements (705/14.72), and one for online advertisements (705/14.73). This last subclass contains 462 patents, 28% of all the patents found in advertising.

In today's business climate, strong competition for customers might be expected to drive more innovation in advertising, particularly in light of converging technologies such as cell phones that receive text messages, serve as web browsers, and contain GPS transceivers that allow highly targeted, location-specific advertising using "geofencing" concepts -- using a defined geographic area of a map. The increased complexity of the advertising art, as revealed in USPTO's class 705/14.4 schedule array, provides more opportunity for inventors to submit unique patent applications. The U.S. Supreme Court's upcoming decision in the Bilski v. Kappos case could drastically change the patent landscape for advertising, along with all other business methods patents.

Let us know your thoughts.

Until next Monday -- Mike

Business Method Monday - Advertising for E-Commerce

The PTO recently published modifications to the financial, business practice or management (former class 705/1) and discounts and advertising (former 705/14) portions of the class 705 schedule. PTO defined many new subclasses, and increasingly granular additional subclasses indented under them (also known as subclass arrays), to capture the wealth of new inventive concepts in these areas. Other significant changes to the class 705 schedule are underway and anticipated to be published in coming months.

Patent number 7,158,942 for an “Internet advertisement system” illustrates some of the changes to former subclass 705/14, which had covered both discounts and advertising. That has now been greatly expanded, renumbered and split into 705/14.1 (Discount or incentive (e.g., coupon, rebate, offer, upsale, etc.)) and its subclasses, and 705/14.4

Claim 2 of the “Internet advertisement system” states that “... at least one partner web site is at least one of a net-game provider, a chat room provider, and an e-commerce provider” – the 'e-commerce provider' clause puts this claim in 705/14.51, and PTO examiners designated this as the original (OR) classification for this patent. Subclass 705/14.51 pertains to advertising During E-commerce (i.e., online transaction). Because this subclass is indented under subclass 705/14.49 (Targeted advertisement), it is a form of targeted advertising. The 705/14.51 definition also specifies that “[t]he term “electronic transaction” covers a transaction wherein the user uses any kind of network having at one end a terminal to execute the transaction consisting of buying or selling goods or services.” Discounts or incentives provided during an electronic transaction could direct an invention claim to subclass 705/14.23 (During E-commerce (i.e., online transaction)), which is higher in the class schedule and could, therefore, be the mandatory classification depending on the claim language.

This patent is interesting in that illustrates several other new subclasses relevant to advertising for e-commerce sites. These classifications are either mandatory (required by the inventive material disclosed in each claim) or discretionary (provide useful additional information for search purposes and can be drawn from the claimed disclosure or other disclosed information such as the abstract, summary of the invention, or drawings) and can be referred to as cross-reference classifications. The cross-references applied by the USPTO to this patent include 705/14.61 and 705/14.73. Targeted advertising Based upon schedule (705/14.61) is captured in claim 4, stating that the invention “provide[s] a plurality of sets of advertisement banners to said at least one partner web site so as to be carried on the web page and switched on the web page as a set at predetermined time periods.” This meets the subclass definition for a “specific time or day that a promotion is going to be available or exposed to the public.”

The second cross-reference mentioned above is for an Online advertisement (705/14.73). The claim 1 phrase “advertisement banner providing means for providing said at least one partner web site with at least one advertisement banner among the plurality of advertisement banners stored in said first database” is covered by the definition for this subclass. The phrase 'banner advertisements' is key here – when encountered it should direct one to consider a 705/14.73 classification. Because of the broad nature of the definition for this subclass, where “a promotion is presented on the World Wide Web”, we might expect that this will be a very common mandatory or cross-reference classification for applications and patents dealing with e-commerce site ads.

The significant changes to the class 705 schedule and definitions make it imperative that inventors and applicants have a good understanding of the new level of detail being applied to classifying business methods patents and patent applications. This includes not only the schedule and definitions, but also the prior art in these new subclasses which USPTO uses, in part, to support or reject proposed new inventions. In previous posts Sean Henderson and I discussed risks associated with misclassification and inadequate prior art searches. Another lesson is . . . do your homework when USPC schedule changes are released.

Until next time . . .