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In the newest installment of my column for the Hoover Institution’s Defining Ideas, I look at Alice Corporation vs. CLS Bank International, a case that went before the Supreme Court for oral argument yesterday.
The case turns on the question of whether a computing method used in electronic funds transfers is patentable, a query ripe for a clear answer, given that a 10-judge panel on the Federal Circuit produced seven different opinions on the matter. Critics such as Professor Robin Feldman and the New York Times editorial board have argued that the practice is too abstract to deserve intellectual property protection. I have a different take, as I note in the piece:
That computer-implemented inventions should in principle be eligible for patent protection comes clear from a side-by-side comparison of the highly specific programs and devices at issue inAlice with the general building blocks of mathematics and the basic sciences. The preclusion effect brought about by this invention, if it meets the tests of novelty and non-obviousness, is small relative to the advances that it makes in a particular area of business risk. Such would clearly not be the case with, for example, Newton’s three laws of motion. And remember the monopoly profits that patents generate, at least in the short-run, may block some sensible uses of the patented technology. But the alternative of delayed innovation generates zero gains for inventors and users alike—a far worse alternative. It is simply another version of Harold Demsetz’s Nirvana fallacyto assume that we can wish major inventions into being in some ideal world, without providing a financial spur.
To rule these devices out of bounds will not only impact the particular device and method in Alice but also upset a full range of current software and business method patents that are in widespread use today. Medical instrumentation will also be at risk given that much of it involves using biological measurements for the basis of devices that provide needed diagnosis and treatment. No matter what one thinks of this particular patent, a single swallow does not make a summer, and the broader step to deny protection should be taken only if there are powerful reasons to believe that even the best method and software patents are on balance a net disadvantage to social progress.
Those interested in a thorough examination of the question of patentability can read the whole thing here.