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As I reported yesterday, the Supreme Court has issued its ruling in the Bilski v. Kappos patent law case. While both sides in the case made their arguments before the Court back in November 2009, my posts on the Bilski case have provoked arguments a little closer to home. A friend, and former boss, of mine (let’s call him Jack) has taken me to task on the role of patents, patent attorneys, the Bilski decision and how, as he puts it, ”the effect on small companies will be devastating.” The exchange has gone something (the posts have been slightly edited to protect the innocent!) like this:
JackNice article. I guess the reason I’d like to see patents for “business processes” is that the next time some Wall Street douchebag figures out another derivative scheme that wrecks the economy, we could sue him on the grounds that it was his idiotic idea.Seriously though, can you imagine the can of worms in the Patent Office as they try to sort through that mess?
Rob Thanks, Jack. My point in the article is just that I don’t want to see the Federal Circuit narrow the threshold of patentable subject matter. Let the other patentability criteria separate the wheat from the chaff.Jack So you don’t like my idea of suing the b@$T@RD$ with stupid financial ideas? And I thought you gave a very objective analysis there. As a guy that develops products for a living, I like a definitive test of patentability. No offense to you but I’m not sure I trust the average examiner to make these kinds of analyses and decisions. I think this would be a HUGE boon to lawyers and would be very damaging to business. IMHORob The issue at stake here is not whether Bilski’s claims are patentable… I think they are not. The issue is “where do they fail”. If SCOTUS narrows the threshold to patentability, then I believe that THAT would be far more damaging to business and innovation. As I mentioned in the article, the patenting process needs to be viewed like a funnel…but let’s make sure that the entry of the funnel is very wide… and the exit is very narrow. That is how you protect innovation and give businesses patent protections that actually are worth the paper they are printed on.Jack Fundamentally I agree but I think that means EVERY patent goes through the courts. That will encourage trade secrets and discourage patents. (I look at it from a management perspective.)Rob then again, the Supremes could just botch the whole thing and go the other direction entirely! Maybe we’ll find out tomorrow…. maybe!Jack I’d settle for them doing a rendition of “Midnight Train to Georgia”
Jack Good for lawyers but IP just got way more expensive for businesses. Now the USPTO will be flooded with crap patent applications and the courts will be full of challenges. I agree the old test was too restrictive but I think the ruling was a bad thing. I’m sure our glorious Congress will fix it…Rob The Court noted that business methods cannot be categorically eliminated from the scope of patentable subject matter, as 35 U. S. C. §273(b)(1) specifically contemplates their existence.But notice that the Supreme Court also noted that failure to set a high enough threshold for the patentability of business methods would create a flood of patent claims on the United States Patent and Trademark Office, “that would put a chill on creative endeavor and dynamic change.” This is what I think your argument is. Just because a particular business method constitutes a “process” under 35 U. S. C. §101, does not mean that a patent claim on the method should be granted. The business method must still meet the requirements of 35 U. S. C. §102 (novelty), 35 U. S. C. §103 (nonobviousness) and 35 U. S. C. §112 (full and particular description).
Jack Exactly. If IP is essentially processed in the courts then we’ll have nothing but problems. The effect on small companies will be devastating. [...]it’s become impossible to budget for IP Legal expenses. Every single application goes through at least three cycles at the PTO because the Examiner has no clue what you’re talking about and then you fight the challenges after the bloody things issue. When I was at [large tech company] 12 years ago the average patent cost us $50K. The last one I was involved with was granted after 5 years of work and the company has spent over $300K enforcing, defending, etc. It’s hard to sit in a management meeting and suggest pursuing more IP!Rob If the “examiner has no clue” about what you’re talking about and you issued claims are constantly challenged, then it sounds like you need a better patent attorney. Seriously, if you are spending 5 yrs and $300K putting together a legal document that doesn’t hold water… I would be looking at the drafter, not blaming the system. (but that’s not to say that the examiner corps don’t need a lot of hand holding. they do! but that’s where a good patent attorney vs a not-so-good one makes a difference.)Jack All excellent points. Trouble is, once you hitch up the horse and get down the trail, it can sometimes be difficult to go get yourself another horse or another trail.
I’m no fan of patents in the tech sector. Time and time again we see patents being used to stifle competition (Vonage/Verizon – voip; RIM/Motorola) and to provide less of a choice to customers.
While patent rights don’t last as long as other IP rights (14-20 years depending) by the time the patent expires in the tech sector, generally the usefulness of the patent has expired.
Tech is driven by ideas and is often constrained by hardware breakthroughs that allow the ideas to work. Ten people can have the same idea but there maybe only two ways to make idea work. Whoever discoveres the two ways to make the idea work first and files for a patent has successfully cornered the market and innovation comes to a dramatic halt.
If patents are to be useful in tech, shorten the lifespan of the patent.
Thanks for your comment, Penter.
It’s a common mis-conception, or over simplification, that patents stifle competition or that they chill innovation. Let’s see if the no-patent theory works: Let’s assume that, as is the case currently, most technological advances are not discovered by “garage-based” inventors, but rather by companies that are investing in R&D in order to have a competitive advantage in their marketplace. In your hypothetical, “Ten people can have the same idea but there maybe only two ways to make idea work.” In your analysis, “Whoever discoveres the two ways to make the idea work first and files for a patent has successfully cornered the market and innovation comes to a dramatic halt.” I must disagree. First, shouldn’t the person that discovered the two ways to make it work be rewarded for his innovation? It has been proven time and again that when a person has an incentive to do something, they are more likely to continue than if they are not. This is the basic premise behind “promoting the useful arts.”
But then comes the “monopoly” argument. Since the inventor has filed a patent on the only two ways to make the idea work, your argument contends, then every other inventor is forestalled from any further innovation in that field. Let’s turn it on it’s head and consider trade secrets as opposed to patent protection. If the inventor would not have filed for a patent on the “two methods that work” and instead kept them as trade secrets, yes, you are correct in that other inventors would not be foreclosed from coming up with the exact same “two methods that work”. But is that really innovation? If ten people come up with the same two methods that work, the marketplace still has only two methods that work… only two choices. Now, let’s say we incentivize the first inventor to publish his findings. Now, other inventors in the field are able to look at those two methods that work and build upon it… make it better… differentiate it… come up with other options that the market can choose from. In exchange for that sharing of information, we’ll give the first inventor a limited monopoly on exactly those “two methods that work”. The inventor has an incentive to publish his invention. The other players in the market are able to improve and differentiate with derivative or different inventions. The consumers now truly have choices. That is true innovation. That is what patents offer in the tech sector.