Patent Lawyers And Business Model Patents: Perfect Together

from the think-they-have-a-bias? dept

With all the discussion concerning problems with the patent system, it's no surprise that we often get patent lawyers contacting us, claiming that we misunderstand patent law. We have spent plenty of time discussing things with them, and the summary always seems to boil down to a tautology: "the patent system works fine, because it works." However, as we see case after case where the patent system is clearly stifling innovation and rewarding those who either failed in the marketplace or chose not to compete at all, what's become even clearer is that the patent system works for patent attorneys. They make a killing off of the system, and have every incentive in the world to keep it as is -- even to the point of rationalizing all sorts of reasons why the system "works" in the face of increasing evidence that there are real problems with the system. There's a concise article over at News.com that points out that making business model patents legal (such as the one Netflix is now threatening Blockbuster with) was almost entirely the work of one specific patent attorney. Almost no one had been pushing for business model patents, but the judge who wrote the decision allowing such patents had been one of the patent attorneys who helped draft the patent law it relied on (the article doesn't mention him by name, but it's Giles Rich). In his decision, he claimed that it was "Congressional intent" to allow business model patents -- which he should know if he helped draft the law, which is why he's sometimes referred to as "the father of the patent system (though, it makes you wonder why he was presiding over this case). Unfortunately, that very same judge had written elsewhere that there was no real Congressional intent in the redraft of the patent law. They had been too busy to think about it, and simply turned it over to the patent attorneys (such as himself) to draft the new law as they saw fit. So, we have a patent attorney, who stands to greatly benefit from getting more patents out there writing the law -- and then later being the very judge who said business model patents were perfectly legal.

Meanwhile, if you think this is only a US-based issue, that may not be true for long. Simon Hart, who was involved in the case, alerts us to a new patent ruling in the UK, that also touches on the issue of business model patents. While the decision in the US noted there was no such thing as a "business method exception" to patents (claiming such a concept was obsolete), such an exception does still work in the UK -- and is apparently used quite frequently to reject questionable patents. However, in this latest rulling, the judge appears to have made something of... well... an exception to the business model exception. He recognized that it could be possible to allow a patent for business models if the business model is simply a component to the overall business, rather than an entire description of the business. If this sounds both confusing and potentially problematic, there are probably plenty of patent attorneys out there who are willing to start using this new loophole in the UK to push through some fun new patents there as well. In other words, it doesn't look like things are going to get better any time soon.
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  1. identicon
    nonuser, 5 Apr 2006 @ 7:58pm

    Netflix patent is absurd

    Let's separate this discussion from the more difficult topics of ferreting out "obvious" inventions and patents with prior art. Patenting business models is a radical step. Suppose Wal-mart had patented the use of computerized supply chain management to support a nationwide chain of discount stores. Maybe some individual gas station owner could've patented the idea of a mini-mart. Home Depot could've locked up the idea of a home improvement warehouse. Maybe only one mall in America should have the right to showcase a new car with the factory sticker attached. How about drug stores that are open 24 hours a day, 365 days a year? I haven't seen that concept applied to electronics stores that sell HDTV sets, maybe that patent is up for grabs. Yahoo! wouldn't have to worry about Google, had their founders had the foresight to apply for the web portal and search site patents. Dell could've patented building PCs to order, etc.

    What these have in common is that they are all merchandising and operations ideas, they're not inventions. Many do involve imagination and creativity, even guts, but they are far from what the Patent Office was designed to protect. You can review Adam Smith's "The Wealth of Nations" and gather that these are exactly the sorts of things that should NOT be given legal protection, since they throw a big fat wrench into the workings of the "invisible hand".

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