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The New Yorker on Business Process Patents
caledon writes "The New Yorker has a clear, concise, nontechnical essay by its finance columnist James Surowiecki criticizing business process patents: Patent Bending.
'Although we have always had a vibrant patent system, we've managed to strike a balance between the need to encourage innovation and the need to foster competition. As Benjamin Day, Henry Ford, and Sam Walton might attest, American corporations have thrived on innovative ideas and new business methods, without owning them, for two centuries. In the past decade, the balance has been upset.' Makes the argument persuasively."
I wouldn't abolish them altogether, but they should be restricted to physical devices that must be built from components. Not chemicals, not software, and most certainly not business methods!!
-uso.
Dreams, dreams, don't doubt dreams, dreaming children's dreaming dreams. Sailor Moon SS
Let's not throw out the baby with the bathwater. The total lack of patents would put the indivual inventor out of business, because he/she would never be able to compete with large corporations.
Not really a lot I can say, but seeing as I seem to be first(ish) here, I'll say some stuff anyway :)
It is nice to see this kind of coverage in the popular media. It no longer seems as ridiculas as it did to imagine a general shake-up of patents, which is good. The article also describes the problem well, with good examples (as opposed to some of the more usually used stupid examples).
I don't think we should get rid of patents, I don't even think "software patents" are a bad thing (if anyone tries quoting the 'all software is produced by a turing machine, so is all obvious argument, I'll hit them!), but hopefully we can reach a sensible system!
Combination - fun iPhone puzzling
Previously, there were checks and balances placed in society to prevent the atrocities of the Industrial Revolution from happening again. And life was good.
As more and more people forgot about the conditions of labor which were impressed upon the workforce, these checks and balances were overlooked and neglected, and big business took over. Like a kid in a candy store, these entities destroyed the system which fostered competition, and made it a tool to oppress the people. Big Business became Government, and further cemented the position as our overlords.
The current patent system is just a tool used for this purpose.
I think to a certain degree software should be patentable. If you go out and develop new, innovative, and suddenly popular software - you should have a time when you don't have to worry about being deluged with copycats. That being said, a more intelligent idea might be to have time limits with variance per the item being copyrighted.
Software (methodology) patents could be what, a few years, and business methods perhaps one. It allows the creator to enjoy the fruits of his/her labour for awhile, while still allowing competition to foster and innovation to flourish in later years.
Oh yes, and you should not be allowed to patent something that already exists in a previous medium (online XYZ based on real XYZ).
Patent pending, 2003, All rights reserved
"values of beta will give rise to dom!"
Abolition of patents is a simple-minded, reactionary solution, and if you think it hasn't been brought up plenty of times, you apparently haven't been reading this board for long.
Patents serve a valuable purpose to spur development through economic incentives while ensuring ultimate constributions to the public domain. That they've been abused and overextended is not a reason to throw them away. I agree we need massive changes in how patents are granted, but I've yet to hear a single compelling argument for their abolition that wasn't tinged with drool...
Trouble making decisions? Just flip for it.
At the same time, I think there are pitfalls. Take Netflix for example: the idea of renting DVDs over the Internet does not seem unique to me. As a matter of fact, I thought of the very same thing in 1997 but couldn't get capital.
The more I reply to these topics, the more I realize that there is no clear answer, so I begin to wonder why I reply at all.
But in July, 1998, the U.S. Court of Appeals for the Federal Circuit did away with that principle.
I wonder if this case (or a similar one) ever made its way to the Supreme Court. It might help matters, and it would be much more likely than waiting for Congress to do something about the situation. Any action in Congress limiting these kinds of patents would certainly be opposed by entrenched corporations (which might not control Congress yet, but do have substantial influence in it).
This is the real signature
(Beats those shadows on the cave wall, don't it?)
there was no legally guaranteed "right to profit" and that if they couldn't make it in the "New Economy", they should get a different business model. "That's how capitalism works" was the libertarian cry.
Heh ... I remember the new economy.
There's no legally guaranteed right to share music or copy software, either -- quite the opposite. Don't forget that without strong intellectual property laws, the GPL would not exist, and it would be in nobody's interest to share code or ideas for fear that they would get stolen. Beware the law of unintended consequences.
Toronto-area transit rider? Rate your ride.
"As Benjamin Day, Henry Ford, and Sam Walton might attest, American corporations have thrived on innovative ideas and new business methods, without owning them, for two centuries."
Yes, and now every idiot who went through business school wants to get in a piece of the action, despite frequent majoring in "Business" is more like highschool++ rather than serious post-secondary education for many. I'd have a lot more respect for "businessmen" if several of the small businesses that I've worked for didn't ignore their employees when it came time to make technical decisions, and would consider long term effects. These people even have a financial stake in what they're doing, compared to those that control other peoples' money, and they still are screwups. I don't see why we should let any company or business person patent a business plan, when they think that one good idea without heavy technical implementation should be something that they can solely profit on.
Besides, most of the actually successful business people that I have met don't feel a need to patent business ideas or processes. Of course, these generally are people who liked working in a field and started their own companies because of that, and knew the tech and work, not simply how a spreadsheet worked.
Do not look into laser with remaining eye.
I've devised many algorithms that could save companies many man hours by speeding up their applications by Olog(n) however I refuse to use them unless I can be certain that they won't simply take the algorithm and use it elsewhere. I'm not talking about reverse engineering code mind you, I'm talking about the actual ideas that go into the code. For instance lets say, hypothetically, that I devise a sort routine that works anywhere from 35 - 40% faster than the quick sort in with all datasets. I would have to be a fool to just give this away after spending months of research on it when my time and my intelligence are the only things I have that I can charge for.
I think the patent system is pure capitalism at it's best and may the best and brightest and first to market be the guy who wins. Patents are as American as Apple Pie and Baseball as far as I'm concerned.
Wagner LLC Consulting Co. - Getting it right the first time
This is such a tough issue for me. On the one hand, this post makes a very valid point - businesses with new methods have thrived without the help of patents. But these days, there are so many more businesses where the business model essentially is the product, so why not have some sort of protection? Look at NetFlix. Nobody (including them) could make a go of online rentals, until they came up with a new method. Now if they have no protection, they can be wiped out in a matter of months by a corporate behemoth that has the resources to basically take their business out from under them once they're sure it will work.
Before you slam me for defending business model patents, understand that I'm just voicing the other side of the coin - and I don't mean that big companies should be protected - this can protect the little guy that can only become big with at least some temporary protection. I agree that there are massive abuses in all areas of patent law, but I don't think wiping out certain types or all of them is the answer. While big corporations may have perverted the patent system into being its bitch, if it's obliterated completely, then only the largest companies with the most resources will profit from innovation, and when that happens, there will be far fewer innovators.
666-607: 6th floor apartment of the beast
Makes the argument persuasively.
I'm not so sure there's anything persuasive in the article. All it really asks you to do is agree that patentability of fast food is ludicrous.
You can make a short persuasive analysis and reach the same conclusion, just by hitting those same sort of historic ideals: a patent system was created to 'promote the useful arts' with (among others) limited monopoly justified by getting ideas clearly into the public domain sooner and allowing for further innovation. The first steam engines were patented, from there you get internal combustion.
A patent for selling auction items at a fixed price, or many of the business method patents we see, however, are dead ends. (Oooh, I know, I'll sell fixed price items at a fixed price!!) By failing to promote further steps on a technological ladder, business method patents don't give back to the public what the patent system was created to do.
Perhaps in the beginning such radical ideas weren't even considered for patenting because they were so radical who ever thought they'd work out so well.
And afterwards it was too late.
Most people trying to make a radical idea work are usually too busy to think about patents.
"It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
Using your example, if you've implemented your new process properly, you should have a BIG leg up on the competition -- even if they do copy your innovation. While you're selling your cheaper-to-produce widget (either undercutting your competition, or reaping higher margins), they are scrambling to work the new business process into their existing assembly lines, figuring out how to pay for it, etc.
You say that "the idea of renting DVDs over the Internet does not seem unique to me" -- to which I say, a streamlines manufacturing process to produce widgets does not seem unique to me. You're still producing the exact same widget as your competitor, albeit at a lower cost.
I could see patenting a method of creating a widget with the same functionality, but using different components. But I'd have to drink an awful lot to be convinced of the merits of patents on business processes.
Black and white solutions rarely work as well as was intended, but this is one place where I think a gray area may be a killer.
For all you people who think that McD's came up with everything, remember that the first fast food place to come up with the drive-thru window was Wendy's. May seem obvious now, but back then it was huge that you could get your food in less then 10 minutes.
Who knows how long we wouldn't have the drive-thru had McD's stifled all the Wendy's and Burger Kings out there from making their own innovations.
The biggest problem is that business patents essentially open up patenting ideas, which you are not supposed to be able to. Over a hundred years ago, you actually needed to build one of your gadgets and bring it to the patent office to be able to patent it. This became unpractical and the USPTO allowed diagrams instead. But now I can walk up to the patent office and patent the idea of using computers for selling sex services over the internet and it would get a green light as a 'business method' patent.
In reality the hard part of selling sex over the net is coming up with the actual mechanical interface (ick!). That is what is worthy of patent protection.
Ditto for one-click purchase. This is trivial. What is not trivial is coming and should be patentable is a specific method for tracking state using a cookie with enough security features to make it fool proof.
There are no individual inventors tinkering in their garages without corporate sponsorship anymore, except maybe Dean Kamen.
The vast majority of patents are held by coroporations. The inventions of individual inventors are owned by corporations because of an employment agreement or are sold to a corporation for a pittance for fear that the corporation will win any legal battle owing to their superior financial resources, regardless of the merit of their claims.
Individual inventors already are out of business. Make patents non-transferrable and make ip agreements that assign ownership invention to corporations illegal and they'll be back in business.
microsoftword.mp3 - it doesn't care that they're not words...
The article clearly points out that the problem is in patenting business procedures, rather than true inventions.
If you review the history, there were two changes in the recent interpretation of patent law.
The problems are related to granting patents for things that are a) not specific solutions, merely statement of problems, and b) obvious.
So I believe we need to restore the orignal presumption that a proposed patent is not sufficiently innovative. The other thing that has changed since when the patent system was mostly considered to be working is that the world has sped up. A 17 year period may have made sense in the 19th century, it is way too long for the 21st.
But none of those are arguments against the inherent ideas of patents. Citing the current abuses of the patent system as an arguments against patents in general is like citing Windows 95 as an argument against having an OS.
The idea that patents help the individual inventor is a myth.
The best resource I know is Don Lancaster's "The Case Against Patents": Don Lancaster is a old-school hardware/AppleII hacker. On his website he lists a lot of alternatives to patenting that are actually helpful to the individual inventor.
You have a good point. If you don't like the system, find a way to change it. That takes active participation. Bitching about the political system in an online forum does NOTHING to change it. Getting off your lazy ass and getting down to the voting booth, or working for a political party takes guts, but it gets YOUR agenda taken into account.
Regardless of what I think of the people running for office, I STILL VOTE, even if it's for NONE OF THE ABOVE.
1f u c4n r34d th1s u r34lly n33d t0 g37 l41d Capitalization really works: i helped my uncle jack off a horse
Instead of applauding their innovations and acknowledging their right of first use on ideas they made up, ...
Had the US Patent Office granted Henry Ford a patent for the assembly line, the world would be a very different place indeed. But then again, under the way we are doing things now one of Henry's competitors would patent it and then sue him for using his own idea.
The core of the problem is that we have a legal system that does not understand nor fully comprehend the impact of its decisions and has allowed anyone who can think up and idea (even after the fact), grab an attorney and go out and blackmail buisnesses into paying them off.
The net effect of this is to chill the competitive business environment. When a business finds a new and successful method of doing business it forces their competition to a) copy them and try to do it better b) find a different way to beat the competition or c) fold up and go out of business.
The way that patents are being awarded for business methods is more akin to the Microsoft Business Model. Dismiss the innovation, create a pile of FUD over the innovation and then buy up the innovator and close them down/assimilate them into the collective. Stifiling isn't it.
Kiss ass while you bitch so you can get rich but the boss gets richer off you. --Dead Kennedys
Congress is where the change has to come from because our court system normally avoids deciding cases based on broad public policy concerns where narrower issues can decide matters. Also, the Court of Appeals defers to their precendents and is rarely inclined to overturn them.
Unfortunately, the patent system is based more on who gets there first with an application for an idea rather than who invents first - although that still is an important factor. As a result, while a method idea may be applicable in many different areas, i.e. algorithms can be used to model financial transactions as well as used in code, he who files first wins. And applications are filed with claims designed to provide as broad protection as possible.
Patent applications are published after 18 months from the filing date or on the date they are granted, whichever comes first. With a publication before the grant, a party can file an interference with the PTO but they have to KNOW about the filing. Most small concerns do not have time or the money to do this.
Furthermore, with the way that Congress has extended the terms for copyrights in the last 10 or 15 years something tells me that enacting such legislation would be an uphill fight.
Alas, if you have what you believe is a novel method or process, write it down, date it, have it notarized, and protect it as soon as you can.
Or how about the idea of digitally compressing music using a computer program to result in much smaller file sizes with minimal loss of quality, and then refused to license the patent for use. (Note: Macrovision has done something similiar when they patented all the ways they could think of to beat their system, and refuse to permit their use.)
I believe no one should be allowed to patent something in order to prevent its use. Compulsary licensing under fair terms should be enforced, or we all will be worse -- not better -- off from this system intended to foster inovation.
"It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
Cert. was denied in State Street Bank in 1999.
That's why it's still good law.
The Supreme Court has smacked down CAFC on quite a few occasions when they produce completely strange opinions.
This happens because CAFC seems to have a bunch of judges who think patents are god's gift, and that everything should be patentable under the sun, and a bunch of judges who think that patents should be strictly limited and enforced.
I find myself agreeing with about half the decisions, and vehemently hating the other half.
In this case, however, you are correct, and the Supreme Court thought Congress should do something about it.
Which they did.
They passed the "Intellectual Property and Communications Omnibus Reform Act of 1999".
It contains the so-called "First Inventor Defense." This defense provides a first inventor (or "prior user") with a complete defense in patent infringement lawsuits, whenever an inventor of a business method (or prior user) uses the invention but does not patent it.
(Sumamrized from a lecture by Richard M. Stallman).
The argument against software patents is made on three grounds:
1. the products of the software industry are so large and complex (because of the lack of physical constraints) that the scale of 'invention' is hundreds times greater than in the physical world.
2. patents are expensive (10k Euro in Europe) and rarely can small businesses or individuals afford to aquire them.
3. even when people overcome point 2, they find that the large patent portfolios of large companies render their patents useless.
Conclusion: large companies purchase patents in order to protect not their inventions, but their competitive advantage. Since innovation comes from smaller teams, patents thus work against innovation.
Software patents exaggerate what is a manageable problem with physical patents, and turn it into a serious problem for smaller designers. Basically patents allow large businesses to collaborate with burocracy to create barriers against the entrance of smaller groups.
This is bad, corrupt, and economically stupid.
End of argument.
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The first written evidence of a patent was probably around Aristotle's time (Aristotle's Politics). Here, Hippodamus calls for a system that rewards people who discover useful things for the STATE (whic Aristotle condemns, saying that law should not change so quickly). Honor the creator of a useful thing and we will recieve more usefull things.
The first "real" patent system probably came about in Venice in the 1400's for corn mill designs, and to Brunelleschi for a marble transportation barge.
The Venetian law reduces to writing the basics of the modern patent law:
1. Devices
2. Registered with and agency
3. new and useful
4. not previously made
5. reduced to perfection
6. 10 year term
However, it did give Venetian rebublic the rights to use any invention without paying the inventor.
I wouldn't abolish them altogether, but they should be restricted to physical devices that must be built from components. Not chemicals, not software, and most certainly not business methods!!
:)
The view expressed in the parent post (partly) tallies with older understandings of what the patent (and copyright) clause in the US Constitution meant, where it talks about promoting the progress of useful arts. 'Useful arts' were understood to mean anything about how to make useful things. Processes, as a patentable category, were then understood to mean processes for making useful things or doing something to them for practical purposes. The parent poster goes further than many, in wanting to exclude chemicals too, after all they are manufactured products of a different kind, and making them is clearly one of the useful arts, but business methods have hardly been considered inventions till now.
The Federal appeal courts come very close to taking over lawmaking roles that belong to legislators, when they interpret words in the patent act (such as 'process') in isolation from their context and history. They (in this example) inflate the word to cover some unheard-of category, never previously considered to amount to an invention.
Interestingly, one of the early extensions of patent law going specifically beyond 'useful arts' or 'manufactures' occurred in the former Soviet Union, where the law allowed patents for [business] 'rationalization proposals'. I wonder (perhaps too flippantly, considering the seriously repressive results of this sort of legal development) if the US judges realize that they are following a communist example?
About a hundred years ago, an official committee of enquiry into patent law wrote that "the grant of invalid patents is a serious evil insomuch as it tends to the restraint of trade". They meant that honest business people were being harassed and intimidated by the owners of patents that never should have been issued because they were not substantially new. In earlier times, it used to be decided that it was not substantially new just to do something that had already been done, but now to do it in any mechanical way -- the broad idea of mechanising was common currency. IMO it would also be better to consider the broad idea of adapting some existing thing for software, or for the internet, as common currency. Current law surely is not going far enough to protect the business community in the right to do things that should remain open for public use.
"A great democracy must be progressive or it will soon cease to be a great democracy." --Theodore Roosevelt
I think the basic problem is the patent system is not designed to handle software or business method patents. It was set up from day one to handle physical objects and processes, and it does that tolerably well. It's possible to look at two processes or objects and make a reasonable determination whether they are the same. The equivalent is not really possible for software or business method patents.
Remember one of the purposes of patents was not to lock up entire ideas, but lock up one implementation, encouraging others to create other implementations to stimulate market competition. Since the patent system is fundamentally unsound in this domain, and has no reasonable way to determine if two things are the same, the patent system has "defaulted" to the broadest possible interpretation of "same" (as opposed to the narrowest possible, in which case it would be virtually impossible to violate a patent, patents would be nearly worthless, and by extension, the Patent Office would be nearly worthless and powerless, which is the Number One Anathema to a beauracracy). As a result it's not possible to create alternate implementations without automatically infringing.
Patents do not belong in this domain, they are downright oxymoronic.
n addition to what's in the article, I have my own observation: the default action now for companies is to run out and get a business method patent - not because they believe it will make them money, but to prevent others from getting the same frivolous patent and suing them. It's become necessary as a means of survival under the current interpretation of the laws. My guess is that's why netflix.com got their patent on DVD rentals. They saw what was happening to Ebay, etc, and didn't want to get buried under that kind of litigation. Pretty sad. I think the law is broken and that ruling needs to be overturned or superceded.
You're obviously confused over the meaning of the word communism. If we were "whiny little communists" we wouldn't have money and neither would the other guy. In fact, the state would have everything and would distribute goods to people as they needed them. Reality is that there has never been a communist government, rather they were all Marxist governments with no intention of ever progressing into communism. The unattainable goal of a "communistic society" was just a carrot used to make totalitarian rule more palatable to those they were oppressing. Marx and Engles were social idiots who probably drank way too much absinthe while in Paris to even realize that their crappy papers were based on anything but reality. Back to the subject ...
Under capitalism, the goal of the state is to promote open competition. You can reconcile this with anti-trust law since it's goal is to restore open competition. However, patent law prevents open competition. It creates state controlled monopolies whose sole purpose is to prevent free market competition. State granted monopolies are a facet of fascism, not capitalism. I don't see how you can call yourself a free market capitalist but still believe in patents.
Good people do not need laws to tell them to act responsibly, while bad people will find a way around the laws-Plato
There are lots of comments about software patents, but that is really a seperate issue. The issue here is with patenting "ideas". Imagine you want to create a service that uses Apache and MySQL to serve some sort of content based on user form input. I'll bet you a quarter you'll find patents describing this process, granted to people who had nothing to do with either software program. Could it be more insane to grant a patent to someone who describes a way to use software? We're not talking about the developer, we're talking about using the software - in essence, these patent whores inhibit the adoption of existing works that they did not create. That's BS.
And say all you want about prior art invalidating the patent. That's only valid if the small-business person can afford the fight.
What changed under Obama? Nothing Good
First, I would need to see why this is necessary at all. I understand businesses and some individuals desire it and are now getting used to having software patents, but history shows most of the history of computer software development went along without these patents (or without them being exploited, depending on the timeframe). To me that says we don't really need them. Also, there are instances of organizations not being able to provide computer users with a lively competitive arena for computer software (including through cross-licensing which kills the competition-exclusion nature of patents). To me this says they are not victimless.
I want to encourage a lot of individuals, organizations, and small businesses to make and distribute software. And I want them to be able to compete with larger firms like IBM, HP, and Microsoft (each holds a lot of patents and licenses to deal in other patents). So I favor completely ceasing issuing or renewing any more software patents and letting all current ones expire (I'm not aware of any being renewed, but I wouldn't want to let any organization think they can continue to keep old software patents in force). Thus businesses will be minimally disrupted for the software patents they've acquired, and the field of software development can return to the time where there was fierce competition on features.
Furthermore, I think it's fine to depend on copyright law (with a reasonable term of copyright, but that's a different discussion).
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