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What is even more noteworthy is not only the number of applications but also the fact thatthe patent grant rate (right grant rate) exceeds 80%. There was a time when it was said that business models could not be patented, but now, with the advancement of DX (digital transformation) and AI technology, business-related inventions are recognized as important intellectual property that influences the competitiveness of companies.
This article provides a comprehensive explanation of the background behind the record high number of applications for business-related inventions, the essential conditions for being granted a patent, practical application strategies, common failures, and the benefits of hiring a patent attorney. If you are a business owner or someone in charge of intellectual property who wants to protect your company's business model with intellectual property, please read this book to the end.
Table of Contents
The number of applications for business-related inventions peaked during the "business model patent bubble" around 2000, but has since declined significantly. However, from around 2015, the number of cases started to increase again, and in recent years, the number of cases has reached approximately 19,800 per year. This is the highest level ever.
The arrival of this "20,000-case era" is not just a passing boom. With the promotion of DX and the spread of AI and IoT, business models that utilize digital technology are being built in all industries, and the movement to protect the results as intellectual property is rapidly expanding. It is characterized by an increase in applications not only from the manufacturing industry but also from a wide range of fields such as finance, logistics, medical care, agriculture, and education.
📊 Latest data on business-related inventions
What is more noteworthy than the increase in the number of applications is the fact that the patent grant rate is over 80%. This means that more than 4 out of 5 applications that have been requested for examination have been granted patents.
Behind this high appraisal rate is "improved quality" on the part of applicants. During the bubble period around 2000, many applications had weak technical support, resulting in a large number of applications being rejected. Applicants now have a correct understanding of the examination standards for business-related inventions and are now creating specifications with technical specificity. The Japan Patent Office is also working to improve predictability by clarifying examination standards and publishing examination case studies.
💡"Past common sense" has been overturned
There was a time when it was said that "business models cannot be patented." However, current data with an appraisal rate of over 80% shows that business-related inventions can be patented with a high probability if filed appropriately. It is well worth considering a strategy to protect your business model with intellectual property, without being bound by the conventional wisdom of the past.
The biggest drivers of the increase in applications for business-related inventions are the spread of DX (digital transformation) and AI (artificial intelligence). As companies promote DX, various business models are emerging, including automation of business processes, decision support based on data analysis, and optimization of customer experience.
In particular, the number of AI-related business model patents is rapidly increasing, and representative examples include demand forecasting systems that utilize machine learning, automation of customer service using natural language processing, and quality control systems that apply image recognition technology. These inventions combine the core technology of AI with business process optimization, forming a new category that goes beyond the traditional framework of "software patents."
In addition, with the spread of IoT (Internet of Things), applications for business models that combine physical products and services with digital technology are increasing. Cross-industry innovations such as smart factories, connected cars, and telemedicine are increasingly recognized as intellectual property.
The most important point about business-related inventions is that business "ideas" themselves are not subject to patenting. For example, business concepts alone such as ``increase the repeat rate through point redemption'' or ``obtain stable income through a subscription model'' do not fall under the category of ``inventions'' under patent law.
⚠️ Note: Mere business ideas do not become patents
You cannot file a patent application just by ``coming up with a business system called 〇〇.'' In order to be recognized as a patent, it must specifically describe the technical means (IT systems, algorithms, data processing methods, etc.) to realize the business structure. An invention becomes a "business-related invention" only when both a business mechanism and a technical means are present.
Article 2 of the Patent Law defines an invention as "a highly advanced creation of a technical idea that utilizes the laws of nature." The business model itself is an artificial arrangement and does not take advantage of natural laws, so it does not qualify as an invention. However, if the business model is a system or method realized using ICT technology, the use of natural laws is recognized and can be patented as an invention.
In order for a business-related invention to be recognized as a patent, it must be clearly stated that hardware resources (servers, terminals, communication networks, etc.) and software (programs, algorithms, etc.) work together to perform a specific process.
Specifically, the following elements are required to be included in the statement.
Only when these elements are met, the examiner will determine that "this application is a technical idea that utilizes the laws of nature" and will recognize the invention as patentable. Conversely, no matter how innovative a business system is, if the technical implementation is unclear, it will not be recognized as an invention.
It's hard to understand with just an abstract explanation, so let's look at a concrete example. Below is a comparison of what can and cannot be patented.
📋 Specific examples of business-related inventions
| Item | Patentable example ✅ | Examples that are not patentable ❌ |
|---|---|---|
| Point system | A server system that analyzes purchase history data with AI and calculates and applies the optimal point return rate for each customer in real time | Only the business rule "Give points according to the purchase amount" |
| Subscription | A system that builds a cancellation prediction model from usage frequency data and user attributes and automatically delivers special offers to users with a high risk of cancellation | Only a business model of "providing services with a monthly fee" |
| Matching | Processing method that combines a scoring algorithm based on multiple parameters and location information to optimally match supply and demand | Only the concept of "intermediary service that matches demand and supply" |
| Pricing | Dynamic pricing system that collects market data, competitive prices, and inventory status in real time and calculates the optimal price using machine learning | Only a pricing strategy of "fluctuating prices according to demand" |
A strategic approach is essential to successfully patenting business-related inventions. Below, we explain four strategies that are effective in practice.
🚀 Key points for early application
It is important to file an application as soon as the technical structure is solidified, even before the development of the business model is complete. Especially in highly competitive fields, a delay of a few days can be fatal. The basic policy is to complete the application before the service launches.
⚡ Don't forget the first-to-file system
Japan's patent system adopts the "first-to-file system." If the inventions are the same, the right is granted to the person who filed the application first. It is important to always be aware of the possibility that competitors are developing similar business models, and to take the attitude of ``filing as soon as possible'' rather than ``filing after creating a perfect specification.'' If necessary, it is also effective to utilize the domestic priority system and supplement the statement later.
In order to achieve early filing, collaboration between the development team and the intellectual property team (or the patent attorney in charge) is essential. Establish a system to hold regular hearings on inventions and consider the timing of filing according to the progress of development.
🛡️ Points of multifaceted claim design
For business-related inventions, the scope of protection can be maximized by creating claims in multiple categories such as "system," "method," and "program." Design multifaceted claims so that you can exercise your rights according to your competitors' service formats.
For example, the following claim structure can be considered for a certain business model.
This allows you to have a basis for exercising your rights not only when a competitor builds a system, but also when you distribute a program or provide it as a cloud service.
🤖 Application points for AI-related inventions
AI-related business model patents are required to clearly describe the specific implementation of AI technology, such as the type of training data, characteristics of the learning algorithm, configuration of the inference model, and format of input and output data. Abstract statements such as "optimizing with AI" are not sufficient.
The Japan Patent Office has published "Examination Cases Regarding AI-Related Technologies," which provides guidelines on what kind of descriptions affect the determination of eligibility and inventive step. When filing an application for an AI-related business model patent, it is important to incorporate the following points into the specification while referring to these examination examples.
🔓 Points of open and close strategy
Rather than filing patent applications for everything, you can maximize your competitive advantage by strategically using parts that are disclosed and protected by patents (open) and parts that are kept secret as know-how (closed). Deciding which method to protect the core of your business model is the key to your intellectual property strategy.
In business-related inventions, there is also the disadvantage that the technical content will be made public by filing a patent application. In particular, it may be advantageous to protect server-side processing and algorithm details that are difficult to reverse engineer as know-how (trade secrets) rather than filing a patent application.
| Comparison item | Open (patent application) | Closed (know-how confidential) |
|---|---|---|
| Protection period | 20 years from filing (statutory) | Indefinitely as long as the secret is kept |
| Exclusive Rights | Yes (injunction/damage claims possible) | None (cannot compete with original development) |
| Information disclosure | Published (1 year and 6 months after application) | Can be kept private |
| Risk | Technical content will be made public and will serve as material for avoidance design | Leakage risk, difficulty in proving prior user rights |
| Suitable scenes | Front-end processing, API specification, UI flow that allows the user to see the implementation | Server-side processing logic, training data preprocessing method, unique parameters |
The most effective strategy is a "hybrid strategy" in which inventions related to front-end processing and user interfaces are protected by patents, while back-end core algorithms and data processing know-how are kept confidential as trade secrets. By using this properly, you can protect the source of your true competitive advantage while maintaining a check on your competitors.
There is a common failure pattern that many companies fall into when applying for patents for business-related inventions. Learn lessons from these three cases.
❌ Failure example 1: Applying with just a business concept
A startup has filed a patent application for the idea of ``a service that uses AI to suggest the optimal insurance plan.'' However, the specifications did not include specific AI algorithms or system configurations, and only provided an overview of the business model. As a result, the invention was rejected by the Japan Patent Office as "not eligible for invention."
Lesson learned:You need to specifically describe not only what your business does, but also how you will achieve it technically. Technical details such as system configuration diagrams, process flow diagrams, and data structures are essential.
❌ Failure example ②: Loss of novelty by filing after the service is released
A company has developed an innovative fintech service and launched it with an extensive press release. After that, we considered filing a patent application to prevent competitors from entering the service, but as the content of the service had become publicly known, the loss of novelty became an issue. We attempted to apply the exception to the loss of novelty (Article 30 of the Patent Law), but as more than six months had passed since the publication, we were unable to apply.
Lesson:The golden rule is to complete the application before releasing the service or press release. If the publication is unavoidably preceded, it is necessary to carry out exception procedures for loss of novelty within six months of publication.
❌ Failure example 3: Claim scope is too narrow and easy to avoid
A company has obtained a patent for its payment system. However, because the complaint was excessively limited to the company's system configuration, competitors could easily avoid the complaint by simply changing some of the configuration. The patent that we had taken the pains to obtain ended up having no power to effectively eliminate competition.
Lesson:Claims should be designed to be reasonably broad to cover not only your own implementation, but also alternatives that your competitors may have. A claim design with a hierarchical structure of superordinate and subordinate concepts is effective.
Patent applications for business-related inventions are a highly specialized field. We will explain the main benefits of hiring a patent attorney from three perspectives.
🔗 The role of a patent attorney as a "translator"
The most difficult part of filing a patent application for a business-related invention is converting the business structure into a form that the patent office examiner recognizes as an "invention." Patent attorneys are professionals who translate engineers' technical language and business-side ideas into legal documents called "specifications" that meet the requirements of patent law. The quality of this "translation" greatly influences the success or failure of obtaining a patent.
Especially in the case of business-related inventions, there is a tendency to end up explaining the business mechanism from start to finish, but patent attorneys have the ability to accurately extract technical elements and create specifications that meet the requirements of inventability, novelty, and inventive step. Through interviews with developers, we sometimes uncover technical features that even the inventors themselves were unaware of.
📝 Importance of intermediate processing
Many patent applications receive a notice of reasons for refusal during the first examination. How you refute and amend these reasons for refusal is an important aspect that will determine whether or not you will succeed in obtaining a patent. A patent attorney who is familiar with the patterns of reasons for refusal specific to business-related inventions can quickly formulate effective countermeasures.
Common reasons for refusal for business-related inventions include ``no patentability (use of natural laws is not recognized)'' and ``no inventive step (nothing more than a combination of publicly known techniques)''. Effective refutation of these reasons for refusal requires deep knowledge and experience based on past examination cases and judicial precedents. Patent attorneys use this knowledge to strategically prepare written opinions and amendments to increase the likelihood of obtaining rights.
💼 Patent attorney as an intellectual property strategic partner
A good patent attorney will not only prepare application documents, but will also understand the company's overall business strategy and propose the construction of the optimal intellectual property portfolio. We provide intellectual property consulting at the management level, including deciding which inventions to apply for patents and which technologies to protect as know-how, whether or not to file overseas applications, and planning licensing strategies.
Especially for startups and venture companies, deciding which technology to prioritize and acquire rights to with limited resources is an important business decision that will determine the success of the business. A patent attorney who is familiar with intellectual property can propose a cost-effective intellectual property strategy based on the business plan and competitive situation. You can also expect support to appropriately highlight the value of your IP portfolio during presentations to investors and VCs.
In this article, we have comprehensively explained the current situation where the number of applications for business-related inventions is at a record high, the background to this, the requirements for obtaining a patent, practical application strategies, common failures, and the benefits of hiring a patent attorney.
The points are summarized as follows.
With advances in DX and AI, business model innovation is accelerating. Efforts to protect your company's business model as intellectual property and establish a competitive advantage are no longer something you do when you can afford it, but an essential element of your business strategy.
If you are considering filing a patent application for a business-related invention or have any questions, please feel free to contact us.
Are you considering filing a patent application for a business-related invention?
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AUTHOR
Takefumi SUGIURA （杉浦 健文）
EVORIX Intellectual Property Law Firm Managing Patent Attorney
Supports clients across IT, manufacturing, startups, fashion, and medical industries, covering patent, trademark, design, and copyright filings through trials and infringement litigation. Specialized in IP strategy for AI, IoT, Web3, and FinTech. Member of the Japan Patent Attorneys Association (JPAA), Asian Patent Attorneys Association (APAA), and Japan Trademark Association (JTA).