Supreme Court Should Avoid Overhaul of Patent Protections

 

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

There are 29 comments.

Become a member to join the conversation. Or sign in if you're already a member.
  1. Mike H Coolidge
    Mike H
    @MikeH

    What about all the innovation which is stifled by defensive patenting? This keeps many start ups from competing because almost anything they do infringes on the big company’s patents so the big companies make deals among themselves not to sue each other while they stamp out all up and comers, all backed by the government. It’s a de facto type of crony capitalism and too big to fail.

    • #1
  2. user_961 Member
    user_961
    @DuaneOyen

    I disagree with Richard here.  There is no reason that copyright and trade dress look-feel protections are not enough protection for something like this.  When “one click” is seriously considered for business method claims allowance, it is obvious that the scope of patents has gone far beyond the explicitly stated goal of Art. 1, Sect. 8, Clause 8.

    Further, there should be specific limitations placed on medical composition of matter allowed claims where the effect would be to block a superior item from being deployed, as in biologics where an antibody protection can prevent a superior mAB from being put out there.  If someone creates a new chemical compound, OK.  Where a natural variant like a biologic is involved, we need a scheme more like what exists for recording a song- mandatory background licenses with specific reasonable royalties and no blocking.

    The US government need not be enforcing monopolies and then paying the resulting inflated prices to crony companies that bribe politicians to protect their rice bowls.

    • #2
  3. ctlaw Coolidge
    ctlaw
    @ctlaw

    Duane Oyen:
    …There is no reason that copyright and trade dress look-feel protections are not enough protection for something like this. When “one click” is seriously considered for business method claims allowance, it is obvious that the scope of patents has gone far beyond the explicitly stated goal of Art. 1, Sect. 8, Clause 8.

    Copyright and trade dress have absolutely no relevance here.

    You are presumably pooh-poohing “one -click” because you believe it to have been obvious. Then it should be found invalid on the ground of obviousness, not because of a made up rule that any use of a computer is not patentable no matter how non-obvious.

    It is frequent feature of major patent cases that the patent is likely invalid for reason A, but only reason B is being litigated. Too many litigators, judges, and, worst of all, judicial clerks have an unhealthily high combination of arrogance and ignorance and do not appreciate the difference.

    The result is the creation of bad law.

    • #3
  4. MJBubba Inactive
    MJBubba
    @MJBubba

    The patent application for the first spreadsheet was denied, on the basis that a mathematical algorithm is not patentable.   That was a crime, but it sure allowed a tremendous increase in worker productivity to roll across the world.

    • #4
  5. ctlaw Coolidge
    ctlaw
    @ctlaw

    One of the seminal errors in this stems from the fact that the average person does not know the difference between patents, trademarks, copyrights, etc. in addition to not knowing the difference between factors within each of these fields.

    In Baker v. Selden, the Supreme Court appropriately asserted a bookkeeping method was not subject to copyright. That case was long popularly misinterpreted as a patent case even though it actually mentioned that patent was the appropriate protection.

    • #5
  6. user_961 Member
    user_961
    @DuaneOyen

    ctlaw:

    Duane Oyen: …There is no reason that copyright and trade dress look-feel protections are not enough protection for something like this. When “one click” is seriously considered for business method claims allowance, it is obvious that the scope of patents has gone far beyond the explicitly stated goal of Art. 1, Sect. 8, Clause 8.

    Copyright and trade dress have absolutely no relevance here.
    You are presumably pooh-poohing “one -click” because you believe it to have been obvious. Then it should be found invalid on the ground of obviousness, not because of a made up rule that any use of a computer is not patentable no matter how non-obvious.
    It is frequent feature of major patent cases that the patent is likely invalid for reason A, but only reason B is being litigated. Too many litigators, judges, and, worst of all, judicial clerks have an unhealthily high combination of arrogance and ignorance and do not appreciate the difference.
    The result is the creation of bad law.

     Sure they do- they provide the only level of relevant protection that ought to be protected in any way regarding the kind of visible business method.  Copyright for the specific software code, and trade dress for the look and feel of the web site.  Period.  McDonald’s Golden Arches, not how many buttons you click to buy from a web page.   

    That is precisely why I referred to Art. 1- there is a group of crony capital rent-seekers, of whom the patent bar are loudly enthusiastic beneficiaries, who want the government to enforce their competitive advantages via regulation in ways never sanctioned by the founders.  “One-click” may be obvious, but even allowing any type of protection for something so obvious should never be patentable; there should be a recognized statutory bar in place long before we get to specific examination of claims.  “Business methods” are very very seldom advances in the state of the art.  They are usually just standard evolution.

    Obviously, those with a dog in that fight disagree with me, but I’m a moderate- a lot less rigid than, say, Russ Roberts or Alex Tabarrok.

    • #6
  7. ctlaw Coolidge
    ctlaw
    @ctlaw

    Duane Oyen:

     

    …. “One-click” may be obvious, but even allowing any type of protection for something so obvious should never be patentable; there should be a recognized statutory bar in place long before we get to specific examination of claims. “Business methods” are very very seldom advances in the state of the art. They are usually just standard evolution….
     

    That’s an incoherent canard. If obvious, something gets no patent protection whatsoever.

    What is at stake in cases like this is the legal issue of whether, no-matter how brilliant and nonobvious something is, no matter how much of an advance in the state of the art it is, it is barred from patentability due to being computer implemented or being called a business method.

    • #7
  8. ctlaw Coolidge
    ctlaw
    @ctlaw

    Huh? Where does McDonald’s come in. That’s trademark law. Again, this highlights the fact that the law is being screwed up by those who do not know basic principles. How do copyright on code and look and feel provide any meaningful protection for a brilliant business method or computer-implemented invention?

    Duane Oyen:

    ctlaw:

    Duane Oyen: …There is no reason that copyright and trade dress look-feel protections are not enough protection for something like this. When “one click” is seriously considered for business method claims allowance, it is obvious that the scope of patents has gone far beyond the explicitly stated goal of Art. 1, Sect. 8, Clause 8.

    Copyright and trade dress have absolutely no relevance here.

    Sure they do- they provide the only level of relevant protection that ought to be protected in any way regarding the kind of visible business method. Copyright for the specific software code, and trade dress for the look and feel of the web site. Period. McDonald’s Golden Arches, not how many buttons you click to buy from a web page.
     

     

    • #8
  9. ctlaw Coolidge
    ctlaw
    @ctlaw

    Actually, the overwhelming  extra-Constitutional rent-seeking in intellectual property law has involved extending the domain of copyright beyond Science and the Useful Arts into the Useless Arts and making the term practically infinite.

    In terms of patents, there is a good case that the current domain is much smaller than the Constitution’s “discoveries”. The term is also well under control.

    Duane Oyen:

    ctlaw:

    Duane Oyen: …There is no reason that copyright and trade dress look-feel protections are not enough protection for something like this. When “one click” is seriously considered for business method claims allowance, it is obvious that the scope of patents has gone far beyond the explicitly stated goal of Art. 1, Sect. 8, …

    That is precisely why I referred to Art. 1- there is a group of crony capital rent-seekers, of whom the patent bar are loudly enthusiastic beneficiaries, who want the government to enforce their competitive advantages via regulation in ways never sanctioned by the founders… 

    • #9
  10. ctlaw Coolidge
    ctlaw
    @ctlaw

    BTW, who came up with a copyright photo (“All Rights Reserved”) to highlight a patent post?

    Clearly, that person should never be appointed to the Federal judiciary.

    • #10
  11. user_961 Member
    user_961
    @DuaneOyen

    ctlaw:
    Huh? Where does McDonald’s come in. That’s trademark law. Again, this highlights the fact that the law is being screwed up by those who do not know basic principles. How do copyright on code and look and feel provide any meaningful protection for a brilliant business method or computer-implemented invention?

    Duane Oyen:

    ctlaw:

    Duane Oyen: …There is no reason that copyright and trade dress look-feel protections are not enough protection for something like this. When “one click” is seriously considered for business method claims allowance, it is obvious that the scope of patents has gone far beyond the explicitly stated goal of Art. 1, Sect. 8, Clause 8.

    Copyright and trade dress have absolutely no relevance here.

    Sure they do- they provide the only level of relevant protection that ought to be protected in any way regarding the kind of visible business method. Copyright for the specific software code, and trade dress for the look and feel of the web site. Period. McDonald’s Golden Arches (look and feel of a brand), not how many buttons you click to buy from a web page.

     

     Thanks for the snide comment about understanding of IP law- I’ve done IP work for almost 20 years; those kinds of personal digs are not appropriate in this kind of forum. 

    What we disagree about is policy under the Constitution- whether or not a “a brilliant business method” ought to be protected- I don’t think that it should be.  If it is that brilliant, there is virtually always some way to use it for advantage with some level of trade secrets in the implementation; if it is so revolutionary, the implementation is self-enforcing.  If it is not in any way self-enforcing, it is probably obvious- as “one-click” is visually obvious, a look and feel that can be implemented in many ways back-office.  The patent system was originated to advance “science and the useful arts”; business implementation- that is, execution play competition- doesn’t fit that description.  Amazon wins not by its ordering system- half of the internet orders roughly the same way in the eyes of a consumer- but because of its brand, its trusted service, its varied product lines availability.

    The biggest problem with our patent system now (copyright is also overdone due to international Bern pressures, but that is a different issue, equally corporate-crony-driven) is that companies are using patent protection as a substitute for market performance and to block sometimes superior solutions, with the government as enforcer. 

    Enough.  That is neither “small government” nor conservative.

    • #11
  12. ctlaw Coolidge
    ctlaw
    @ctlaw

    Duane Oyen:

    ctlaw: Huh? Where does McDonald’s come in. That’s trademark law. Again, this highlights the fact that the law is being screwed up by those who do not know basic principles. How do copyright on code and look and feel provide any meaningful protection for a brilliant business method or computer-implemented invention?

     

    What we disagree about is policy under the Constitution- whether or not a “a brilliant business method” ought to be protected- I don’t think that it should be. If it is that brilliant, there is virtually always some way to use it for advantage with some level of trade secrets in the implementation; if it is so revolutionary, the implementation is self-enforcing. If it is not in any way self-enforcing, it is probably obvious- as “one-click” is visually obvious, a look and feel that can be implemented in many ways back-office. The patent system was originated to advance “science and the useful arts”; business implementation- that is, execution play competition- doesn’t fit that description. Amazon wins not by its ordering system- half of the internet orders roughly the same way in the eyes of a consumer- but because of its brand, its trusted service, its varied product lines availability.
     

    Then say that and make your argument. Don’t hide behind irrelevant arguments about other issues such as obviousness intended only to confuse and incite the ignorant mob.

    • #12
  13. user_961 Member
    user_961
    @DuaneOyen

    ctlaw:

    Duane Oyen:
    …. “One-click” may be obvious, but even allowing any type of protection for something so obvious should never be patentable; there should be a recognized statutory bar in place long before we get to specific examination of claims. “Business methods” are very very seldom advances in the state of the art. They are usually just standard evolution….

    …………
    What is at stake in cases like this is the legal issue of whether, no-matter how brilliant and nonobvious something is, no matter how much of an advance in the state of the art it is, it is barred from patentability due to being computer implemented or being called a business method.

     Baloney- give me an example of a “brilliant business method” that ought to be protectable in its own right with the government providing a monopoly so that it will be implemented in society, and an advance in the state of the art that is “denied necessary protection” because it is “computer implemented”.  The Constitution specifically offers protection only to enable dissemination of technical advances, not to provide monopoly profit to some outfit that sells a product.  The source code is copyright-protectable, the concept is a trade secret unless it is essentially not enforceable.  My organization forgoes method patents on true technical advancements all the time because they are not enforceable.  That’s competition in a free society. 

    ctlaw:
    Actually, the overwhelming extra-Constitutional rent-seeking in intellectual property law has involved extending the domain of copyright beyond Science and the Useful Arts into the Useless Arts and making the term practically infinite.
    In terms of patents, there is a good case that the current domain is much smaller than the Constitution’s “discoveries”. The term is also well under control.
    I disagree about the term being “well under control”; it take constant vigilance to keep creative patent bar types and trolls from gaming the system as Ventor tried to do.  But you notice that I specifically referred to the Bern copyright extension problem, so we agree there at least.

    • #13

Comments are closed because this post is more than six months old. Please write a new post if you would like to continue this conversation.