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 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
    Jeff, 5 Apr 2006 @ 1:20pm

    More Lawyer Bashing?

    It's becoming a past-time here, isn't it?

    I think you're being a little generous by saying that "case after case shows that the patent system is stifling innovation." And that the only ones benefitting from the system are patent attorneys. Not true, at all.

    Remember that one of the benefits of the patent system is that the applicant must disclose the invention. So, even if the final result is a patentable invention, the public has been apprised of the invention. The resulting benefits are that competitors don't have to waste time 'reverse engineering' - the exact invention is in front of them. They can work around it as they see fit (or take their chances and infringe!).

    The vast majority of patents are NOT for business methods or even software. It seems a little disingenous to say that the whole system is broke because PART of it is less than ideal. To be fair we've only been dealing with business method patents since about 1982 (when the Rich decision came out) and only since the 1990s have they been in serious use and subject to any amount of critical review. Any system takes time to iron out. And that's doubly true of legal systems.

    But, I still don't see how, in any FUNDAMENTAL sense (at least not based on the arguments you've presented), business methods should be unpatentable. If someone has a unique way of doing business, and they want to disclose it and it's unique and non-obvious, the reward for that disclosure is a 20 year monopoly.

    If the patent office issues patents that are obvious or non-unique, that isn't a failure of the SYSTEM. That's a failure of the patent office. What the patent office needs to do is eliminate the requirement of a technical (engineering) degree to obtain a patent license - it's keeping people with real management and business system sense from analyzing the business method patents and keeping the non-obvious ones out.

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