The link between patent law and kids

Patents, like bridges, are prime attractions for trolls.

But while their bridge-dwelling cousins ​​have a taste for goats, the patent trolls have a more expensive appetite for tech companies and their work. Patent trolls hunt for cheap intellectual property and then demand spoils in the form of royalty payments or legal settlements from companies that actually make things that other people buy. This tactic has become so common and aggravatingly effective that some tech companies began to emulate it with their own patent portfolios.

The prevalence of companies aggressively acquiring and litigating computer-related patents has led to calls for legislative reform. Meanwhile, the status of such patents ranges from perfectly legitimate to semi-absurd. (In a high-profile example, patent owner Jim Logan sued multiple podcasters, claiming that his 1996 patent on reading magazine articles aloud and distributing them via cassette tapes means he has a right about the idea of ​​any syndicated audio content sent directly to the listener.)

Software patents are undoubtedly important, because new and better software innovations have yet to be invented. But patents on “business methods” are another matter. Many business method patents amount to little more than the hypothetical or trivially challenging application of a well-established principle to some aspect of everyday business. Patents are supposed to protect genuine inventions, not mere ideas. (Time travel would be great. Maybe the idea of ​​using a computer to run a time travel machine is patent.)

For a more immediate example, consider Amazon.com’s “1-Click” ordering system. 1-Click is not just a registered trademark; Amazon also patented the process. At least, he sought to do so, with varying degrees of success. Europe flatly denied the patent application. The Canadian patent office eventually granted the patent, after the courts ordered it to re-examine the initial rejection of the patent. The United States granted the patent; When that patent was challenged, Amazon lowered it slightly, and the patent office re-examined and finally approved the amended version.

Why the differences between patent offices? It has to do with the nature of what Amazon was seeking to patent. If you think of Amazon as a large department store, 1-Click is the equivalent of allowing the customer to say, “Upload it to my account and send it to my house.” Wealthy midwives have said the same thing in physical stores for the past 100 years. All 1-Click did was compress and consolidate many existing steps: entering your address, entering your credit card information, checking everything, and clicking confirm. Amazon did not invent cookies (the way that information is stored) and the patent had nothing to do with how the payment was processed. It was simply a matter of eliminating redundant steps.

The idea of ​​optimizing multi-step processes has been around forever. There was a particular movement toward business efficiency a century ago, led by Frederick Winslow Taylor, whose disciples included Henry Ford. Taylor’s ideas are credited with leading to the principles of mass production that drove industrialization in the early 20th century. Today, efficiency consultants are common in business. In general, they don’t do completely new processes. Instead, they look at existing business practices and suggest ways in which those practices can be carried out more quickly or accurately.

The Amazon 1-Click method simply said, “What if we save customer information when they first entered it, so customers don’t have to enter the same information again?” If that idea is a patentable business process, we have a problem.

The government has decided that it is patentable, at least in the United States. The recently disputed Supreme Court case Alice Corp. v. CLS Bank International indicates that we do indeed have a problem.

What is at stake in the case is a claimed invention that serves as a kind of computerized custody system. Alice Corp. succeeded in securing a patent on the system because, although escrow agents are not generally patentable, the computerized component of the system was considered an integral part of the process. CLS Bank arguably infringed Alice Bank’s patent when it also installed a computerized system to track the various transactions banks make with each other throughout the day to prevent parties from promising more than they can deliver.

A trial court annulled Alice’s patents, claiming that they represented abstract concepts, that they are not eligible for patenting. The Federal Circuit Court of Appeals upheld the trial judge’s ruling. However, that appeal decision was divided into seven directions and did not yield a clear majority opinion.

It is unclear whether the Supreme Court will go further than it has in previous intellectual property cases. While many observers expected Alice to be a decision specifically affecting software patents, the arguments seemed to suggest that the Court will instead focus on when, if ever, business method patents are appropriate. In the absence of Congress writing clear rules, the courts must decide where the boundaries of patent law lie.

Judge Stephen Breyer expressed concern that allowing patents that simply protect the idea of ​​using a computer to do something useful, like time travel, will divert the system’s focus from encouraging genuinely useful innovation.

Experience shows that patents are currently being issued widely to cover ideas rather than inventions. Amazon did not invent the computer, the mouse, the click, or the credit card. He patented the idea of ​​combining these existing tools more efficiently, an idea that is exactly what business schools have been teaching for decades. While the Supreme Court may not be prepared to effectively ban patents on business methods, I hope it will at least limit such patents to inventors who develop both a genuinely novel idea and a practical way to apply it.

And I will not regret at all if the Supreme Court concludes that business methods are ideas, not inventions, and therefore cannot be patented. Some trolls may go hungry, but I trust they can find more useful ways to earn a living.