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
    Dave, 5 Apr 2006 @ 2:23pm

    Where in the Constitution is it written...

    that Congress should offer protection to business models:

    "To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries."

    It should be no surprise that the loudest voices in support of the status quo are patent lawyers. This isn't meant as lawyer-bashing, but just a pragmatic recognition that humans are inclined to slant things in a way that serves their own self-interest. For example, look at the Congress and its recent attempts at lobby and campaign finance reform.

    I am serving as an expert witness in a patent case. The benefits of the current system to the law firm are pretty obvious when I meet with a room full of associates - probably billing at $300/hour each - and try to explain why this particular patent should have never issue due to the enormous amount of prior art that was never disclosed in the patent application or discovered by the examiner.

    Perhaps 30 years ago, individuals could keep pace with the progress of "science and useful arts" within broader fields. I think we need to recognize the fact that the capacity of the human race to invent far exceeds the capacity of individuals to keep up with it. The patent office cannot hope to keep pace with innovation within the constraints of the current system.

    On the litigation side, the economics are such that defendants often settle out of court no matter the merits of the case because it is far cheaper than fighting when you figure in the cost of litigation, the distraction to the business, the negative effects on the market, and the risks of losing the case.

    As long as a costs/benefits analysis shows that it is lucrative to litigate meritless cases, we will continue to see them used by companies to stifle competion, and by "patent trolls" as a means to extort money from hapless defendants.

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