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. icon
    Mike (profile), 5 Apr 2006 @ 1:35pm

    Re: More Lawyer Bashing?

    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.

    You want to go back through the archives or should I? :)

    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!).

    No one is arguing this point, though I find it hard to see much benefit from a company like Netflix "revealing" their business model in patent form as opposed to... um... just creating the business.

    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.

    We never said the problem was only related to business models and software patents. But they are representative of the larger problem. We're not claiming that there's NOTHING good in the patent system, but there is an awful lot of bad. It seems like a pretty weak defense to say we can't criticize parts of the patent system because it's not all bad. As for "takes time to iron out," that's fine... but it's had an awful lot of time, and yet we still have people (usually patent attorneys) insisting the system is damn close to perfect.

    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.

    A business model is not an "invention" and there's almost no benefit to "disclosing" it via patent. Since it's a business model, it's disclosed by actually being in business. And, the *reward* should be not in the form of 20 year monopoly protection, but in having the business actually work.

    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.

    The system is set up in a way that encourages the patent office to reward bad patents at an increasing clip.

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