Congress Happy To Knock Out Patents That Impact Financial Institutions… But Everyone Else?

from the funny-how-that-works dept

For about five years now, we’ve been discussing the ridiculous rise of “tax strategy” patents. There have been a bunch of them. Three years ago, an attempt was made by Congress to effectively dump such patents. It didn’t go anywhere. What I hadn’t realized is that this particular provision has made its way back into Congress in the current patent bill, and it seems likely that such tax strategy patents will effectively be killed off as well as one famous patent on digitally scanning checks that the big banks have been trying to get Congress to dump for years.

Make no mistake about it: these are ridiculous patents that have no business existing. So I’m happy that they’d be ditched, but I’m troubled by the fact that Congress seems to see no problem carving out such patents when they hurt financial institutions, but doesn’t do it in other cases. Senator Schumer, who is a major backer of this, highlighted the check scanning situation specifically in supporting the bill: “This is a case where one company has made a cottage industry out of extracting legal settlements by exploiting a fuzzy part of the law on patents.” But couldn’t this be said about pretty much all patent trolling? So why isn’t Congress dealing with that?

Again, it’s a good thing that Congress recognizes that there are bad patents, but it seems to only cherry pick the bad patents that harm the financial sector. In fact, when people bring up all the bad software and business method patents, all you hear is how it would be “impossible” to reasonably carve those out of the patent system. Yet, for some reason, they seem to have no problem doing that when it comes to Wall Street and other financial institutions?

Separately, highlighting just how ridiculous this is, it appears that this carve out of tax prep patents has a separate negative carve out that says it won’t apply to tax prep software patents. Think of it as the Intuit exception. Basically, you can’t patent tax preparation strategies anymore, because that hurts big financial institutions… but you can patent tax prep software, because that helps Intuit.

Instead of creating special carve outs in the patent system for big special interests with massive lobbying budgets, how about if Congress actually did its job and fixed a broken patent system to get rid of all bad patents?

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Comments on “Congress Happy To Knock Out Patents That Impact Financial Institutions… But Everyone Else?”

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27 Comments
Anonymous Coward says:

Instead of creating special carve outs in the patent system for big special interests with massive lobbying budgets, how about if Congress actually did its job and fixed a broken patent system to get rid of all bad patents?

Because that’s the way capitalism works, that’s why. If other industries want their own “carve outs”, then let them go buy their own, like the banks did. Nothing for nothing.

Thomas (profile) says:

thats due to..

the financial institutions slipping large fat envelopes into the pockets of Congressmen. I sometimes wonder if there are any honest Congressmen left? I think the honest ones didn’t accept dirty money for re-election campaigns and were defeated by dishonest ones who were happy to get the dirty money even though there would be payback down the line.

Pitabred (profile) says:

Rhetorical?

“Instead of creating special carve outs in the patent system for big special interests with massive lobbying budgets, how about if Congress actually did its job and fixed a broken patent system to get rid of all bad patents?”

Because that would be representing the citizens, and not the companies that bankroll their lavish lifestyles and employ them when they quit politics.

I certainly hope you meant that as a rhetorical question 😉

Rich Fiscus (profile) says:

Financial processes are certainly the easiest area to demonstrate the problem with business process patents, just because the monetary connections are obvious.

Imagine what would happen if someone were to invent the standard double entry accounting system under today’s patent rules. It would almost certainly be locked up by a business process patent. Instead of everyone using the same accounting system, which we take for granted as essential for our economy to function, there would be 50 different bookkeeping systems. Imagine the chaos that would cause. You would have people getting PhDs in Bookkeeping Analysis just so they could fill out the tax return for a small business. It would take an army of accountants and a room full of supercomputers to figure out the value of a company and whether they’re profitable.

The problem is these same issues apply to other business processes. It doesn’t make any more sense to have 50 ways to turn a document into XML or place an online order using stored information than it does to have 50 bookkeeping systems. But as soon as you say the word computer, the typical judge or Congress critter’s eyes glaze over and they stop hearing anything you say. You might as well be talking about turning lead into gold. As far as they’re concerned, computers are powered by magic.

At the end of the day, financial and technological processes are more similar than different. The reason someone invents a method to scan checks, record financial transactions, convert documents to XML, or streamline the online checkout process is the same. Doing so makes your business more profitable. Anyone who needs an extra incentive to do that deserves to go out of business, and probably will whether they can patent processes or not.

Lawrence D'Oliveiro says:

Slippery Slope

Cherry-picking and selective application are all well-known practices with long-established precedents. But treating something as a principle to be followed in general just sounds so dangerous?who knows what consequences it will lead to? Where will it end? Treat everybody the same, and who knows what kind of world you would end up with!

No, better to avoid these ?principle? things and stick to the tried-and-true, traditional way.

Anonymous Coward says:

Perfectly Simple Fix

The patent system is a conspiracy against the rest of us by the patent bar. There are vast numbers of junk patents which provide no useful information to engineers, but are used to run extortion rackets against companies providing useful goods and services. They also cause a chilling effect against anyone thinking of engaging in actual innovation. Doing things in any way other than the most pedestrian and conventional manner has a good chance of incurring a patent infringement lawsuit, if the innovator ever makes any significant money from it. In other words, any successful innovation gets punished with a patent lawsuit. The long-term economic damage caused by this madness is vast. Promising companies are killed at their most vulnerable time.

It is time to stop the racket. An essential part of making the racket work is the offense of patent infringement. The whole idea of infringement is silly. How can anybody use a patent with the threat of infringement hanging over them? “Why, just get a license!” say the patent lawyers. No, that does not work, because that constitutes making an extortion payment. The extortionist will then demand such a huge payment that the innovative company is doomed. Look at what has happened to RIM (Blackberry) since their huge patent loss.

The answer is simple. Repeal all parts of the law which make patent infringement illegal. Get rid of the concept. Patents should be there to be used. With infringement gone, the racket is gone and the threat to innovation is gone.

Anonymous Coward says:

Re:

Like how its immediately “Capitalism’s” fault…

Fault? Who said it was a fault? What are you, a socialist?

Can’t we just call it what it is Bribery… which last time i checked is a Capitalism or Socialism or any other -ism, maybe Croony-ism or the simple and easy Corrupt Public Officials…

Using money to make money is a feature of capitalism, not socialism.

eclecticdave (profile) says:

Re:

The crazy thing is how shortsighted it all is. A company invents a way to streamline online processing and thinks “not only will this make us more profitable, but if I patent it and prevent others from using it, it will make us even more profitable”

What they fail to take into account is by the time all their competitors have jumped onto the patent bandwagon all that extra profit (and probably more besides) is frittered away on license fees.

This is a lot like someone suing local government after tripping over a broken paving stone and thinking they’re in the money – but failing to appreciate that over the long term the necessarily higher taxes mean they end up effectively paying for their own payout.

Pjerky (profile) says:

But how???

Mike, I completely agree with you that it needs to be fixed and focused on. But what I never really hear from those that say it needs to be fixed is how.

So how should it be fixed? You can complain all day long and talk in generalities all you want, but at the end of the day if you don’t have a solution yourself then maybe the problem is extremely difficult to solve. Far more so than you are making it out to be.

I am just playing devil’s advocate here. But seriously, we can say stop bad patents or make copyright more fair and never actually have a real solution to the problem. Those types of comments are far too general.

Lets stop bad patents, ok how? Who or what determines that a patent is bad? With those factors are we missing anything? Maybe forgetting about a problem these factors create?

I am all for patent and copyright reform, but how about some constructive feedback here. It would be like me saying “Health care is too expensive. Someone should fix it.” Ok, that sounds great but what makes it expensive is a complex list of variables and no magic bullet.

Ok, I am off my soap box. Keep fighting the good fight.

-Pjerky

eclecticdave (profile) says:

This is how...

Ok, I am off my soap box. Keep fighting the good fight.

Well, this is kind of the point. Mike is, day after day, getting on his soapbox and, as you say, fighting the good fight.

You see, the reason why we have such awful copyright and patent laws is because Hollywood, the RIAA and in this case Wall St. all have big lobbying budgets and get the ears of congress – while “We the people” on average tend to be more “meh – I’d rather have a tax break”.

Because, unless you know a few billionaire philanthropists you can get on side, the only thing that’s going to get a bigger voice in congress and the senate than these lobbyists is to get the voting public to start raising a stink en-masse about how IP laws aren’t looking after their interests.

So, every time Mike or someone like him gets someone like you or I worked up enough to write to our representatives or sign a petition, that’s one tiny step closer to hopefully getting this mess sorted out.

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