Most folks know about the Amazon.com “business method patent” that allows a registered buyer to purchase an item with “just one click.” Anyone infringing on that “creation” (by having a one-click option on your commercial Website) can get zapped and slapped with a patent infringement lawsuit from one really big, powerful company. Unlike design patents and what we traditionally think of patents for new physical inventions, these patents for “processes” were originally created by judge-made law – they did not originate in a Congressionally-authorized bill(s), signed by the President, that became a federal statute or two.
And with the flood of patented methods, people trying to wade through the Internet with their new businesses are constantly tripping over processes that are so basic that they never even think that they may be infringing on someone else’s patent and wouldn’t even begin to know how to check on exactly what patents they may be stepping on. Further, they could not afford to do a thorough patent search if their lives depended on it; it’s just too expensive. There is a movement afoot to reign in patenting the obvious, and in a world of hideous unemployment, cutting off some of the most basic, entrepreneurial self-help, job-creating efforts with business-stopping stupid business method patents would seem to be a non-starter.
On Monday, the U.S. Supreme court heard oral arguments in the case of Bilski vs. Kappos; the Court will consider whether a new standard should apply to this nefarious world of business method patents. It may not sound earth-shattering, but the decision could have far-reaching effects on your life. Writing for Lexology.com (Nov. 17), lawyers Eric Hutchins and Gary Ritchey addressed this watershed case: “In 1997, Bernard Bilski filed a patent application with claims directed to a method for hedging risk in commodities trading.” A federal appeals court upheld the denial saying: “[T]he proper inquiry under section 101 [the actual statute] is not whether the process claim recites sufficient ‘physical steps,’ but rather whether the claim meets the machine-or-transformation test. As a result, even a claim that recites ‘physical steps’ but neither recites a particular machine or apparatus, nor transforms any article into a different state or thing, is not drawn to patent-eligible subject matter.”
In English? Patent statutes and the resulting case law have been moving steadily away from letting people with pretty mundane ideas get profoundly restrictive rights for really ordinary processes. The old test, set out in State Street Bank & Trust Co. v. Signature Financial Group, Inc. (Fed. Cir. 1998), had been the more permissive "useful, concrete and tangible result” (pretty low threshold!) was being changed in Bilski into a tighter showing that you’ve either created a new machine or that your “process” really transforms your input into something entirely new and useful.
The impact on technology growth – increasingly found in software and complex processes as opposed to mechanical or electrical inventions – will be extreme. “[T]he Court was aware of the consequences a broad ruling could have not just for claims for business methods, but also in other areas such as computer software and diagnostic methods. The problem which the Court seemed to be confronting was one of line drawing, and the unintended and undesired consequences if the line for patentability were drawn too narrowly.” Above article.
It’s clear that Congress needs to act to “fix” the litany of anomalies that have grown within the system; a new era requires our elected representatives to take a new look at patents. As we get ever-increasingly complex, it is equally clear that many patent examiners are way over their heads in evaluating new applications. But as the Nov. 17 New York Times points out, there are, once again, special interests that have put the “lobbying” brakes on statutory patent reform: “Gary Locke, the secretary of commerce, has urged Congress to overhaul the nation’s patent law by the end of the year. Although a bill has been circulating since 2005, a fierce fight involving the high-tech and drug industries on a technical issue — how to measure damages when a company violates a patent applying to one component of a larger product — has kept it from reaching a vote.”
Patents, trademarks and copyrights effectively grant a monopoly to the rights creator at the expense of the general public. It is a calculated formula. While patents are necessary to spur inventors to push the technology envelope, and in so doing, to create great value to themselves, allowing protection for the obvious, for analytical thought itself, clearly has the very opposite effect. What the Court decides – since Congress appears to be stymied from doing its job – will change America’s competitiveness and will have a significant long-term effect on job creation and economic growth.
I’m Peter Dekom, and I approve this message.
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