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The Economist on Patent Reform
ar1550 writes "The Economist recently posted an opinion piece on the state of patent systems, describing not just the mess that is the USPTO but flaws present in Europe and Asia. From the article, "In 1998 America introduced so-called 'business-method' patents, granting for the first time patent monopolies simply for new ways of doing business, many of which were not so new. This was a mistake." The article also describes the difficulty of obtaining legitimate patents. "
The article only presents one side of the picture, albeit, the slashbot side.
But, what about the other side? What was the motivation for allowing business method patents? There must have been some reasoning behind it.
Anyone?
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A bit of research and theory suggests that, while these patents are a big pain in the US, there might be a case for implementing them in developing countries, in order to reward entrepreneurs who find successful business models and practices. Currently, there are few incentives for discovery of new industries in developing countries, since as soon as they are discovered, everyone rushes in and the original entrepreneur is put out of business.
And rule one of capitalism: without incentives, there's no innovation.
See for example Ricardo Hausmann and Dani Rodrik, "Economic Development as Self-{Discovery"
Very correct! Most people don't know what a patent is, and most people who do live in countries where they can actively say "screw patens, we don't belong to any international accord on this" and just do whatever they want.
That's why, really, if you have something REALLY valuable you DON'T patent it, you just keep it secret.
IMHO, this editorial piece is a strategic smoke screen to put the emphasis on "patent reform" in front of the growing movements that challenge the scope of patentable subject matter. In the recent Geneva Conference on the Future of WIPO, the USPTO, WIPO and US Trade representative all supported "tuning generic patentability criteria", while critics supported excluding software, information processing, gene sequences and vegetal varieties from patentability. Guess which has more chance to bring the system back to reason ? Guess which is supported by the big patent portfolio holders ?
As TFA seems to state, the principal problem in the patenting system is that it is too easy to get a patent granted on what, after a lengthy legal trial will probably turn out not to have been patentable. The difficulty is that patenting stuff is already a bit expensive, putting off people who aren't big corporations. So how can a better vetting system be introduced to force patent offices to look harder at each application for obviousness/prior-artiness?
The article suggests that competitors could perform this task if the application process were made more open. This makes the patent process somewhat similar to obtaining planning permission (putting up notices saying what you plan, and giving people a chance to object in some period of time).
One thing seems certain, that only if more patents are rejected by the patent office, will people file fewer frivolous patents. But as the system stands, the patent office has little incentive - they just want to collect their fee without too much hassle. Only by changing the system so that the patent office suffers each time a patent it granted is later found in court to be dubious, will they be motivated to improve the quality of the vetting procedure.
I'm not the first to propose this idea, but...
Today in the US, patents are submitted to the USPTO, where they are researched and approved or rejected. If approved, they are presumed valid, unless/until someone else challenges it and requests a review.
The USPTO is overwhelmed and in no position to accurately judge the validity of every one of these patents.
So why try? why bother reviewing them upfront? The USPTO could accept all patent applications, catalog them, make them public, but do not endorse them as valid until proven otherwise.
When patent conflicts arise, as they do today, companies can ask the USPTO to rule on the existing patents. At that time, all parties have a chance to supply relevant evidence to the USPTO about the patent's validity or invalidity.
The plus side is that the USPTO stops pretending it can deal with all this work effectively. It only spends effort on patents that companies think are worth fighting over (and before litigation).
The downside is that companies must publicly submit information about their patentable ideas without a guarantee that they will receive a patent. But, that is a healthy incentive to avoid spurious patents, which is missing today.
What do you guys think?
One could also argue that there is no need for this type of patent, there have always been innovative accounting methods, financial instruments or services, even without the protection a patent affords. However, teh counter agruments were that due to rising costs, it becomes increasingly harder to create this innovative ideas and processes. Further, one could say that those that create these processes work just as hard as those who create physical technology. Why discriminate solely on the basis of subject matter.
Again, another counter argument can be made. When determining 'the cost' to business, what does cost actually mean. Is it more costly to a single business, when there idea is not patentable? Is it more costly to business as a whole, where they are excluded from using a patented method?
Really, IMHO, there are no definite answers. But I just wanted to inject some of the thoughts which go into this type of patent.
For more info, see: Patent Law and Policy: Cases & Materials, Second Edition by Robert Patrick Merges
I suppose that works if you are a young writer and you back up your statements with facts (as opposed to ethos), but this article doesn't even contain facts. Its some vague suggestions and a lot of fluff. I could have written it right here and now, off the top of my head, without any research. Really, a peace of crap article that happened to have the words "Patent" and "Reform" in the title, ensuring its posting on the front page of /..
I believe the Economist politically has a similar readership demographic to ./ as well.
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I wonder would the following simple addition to patent laws fix the bulk problem:
Basically, keep things as is, but limit the patent term to,say, 5 years. After that patent owner can extend it to the full 17 year term but make the extension EXPENSIVE (say, 40K per patent).. Basically, the idea is that 5-7 years of goverment protection should be enough to prove/disprove commercial viability of almost anything...And if idea is commercially viable, then 40K is not that much money, and if a patent is not viable, even IBM is unlikely to pay 40K for a useless piece of paper...
Of course, an (intended) side effect is that most companies will stop filing valueless patents.
(as 5 years is too short a term to bother and full term is too expensive)...The problem of submarine patents would simply go away...
Maybe... but how would it burst? A small company may need a patent to get VC fundend, then they get bought by one of these patent portfolio companies that sue the small companies competitors who can't afford to fight in court. Sounds to me, the only way to change that is to change the laws, there is no economics in it that will make things like this go away.
Also, the EU will probably adapt the US patent system. So the mess in the US will probably transfer to Europe and I can't see any reason why any bubble would burst there either (we already got messy patent litigations over here too).
It will burst but the timescales are not the same as for most other bubbles.
The difference is this: other bubbles work by inflating the prospects of future returns on investment, creating a pyramid scheme in which new investors are lured by the prospect of huge rewards while old investors sell out and actually make the rewards. When the pool of new investors runs out, bubble bursts and granny loses her savings.
The patents bubble is not based on this model at all. Rather, it's a scheme by which a small group of people have turned the law into a tool for extortion. As long as they don't extort more from the system than it can bear, the business of patents will continue. At a certain moment the tax that this creates on normal business activity will cause those economies which allow it to become uncompetitive and thus die.
The end-game for the patent players is to get a global hegemony because then uncompetitiveness does not matter any more. But this is highly unlikely: the advantages to small countries of having unfettered technology will outweigh any advantages of being compatible with the USA's "policies".
So we'll see about 5 more years of fighting for positions, then 10-15 years of ruthless extortion during which technology advancement suffers and stagnates, and then revolt by either government as they start to see the impact on economic growth and tax income, or by smaller to middle-sized businesses as they find themselves unable to operate normally.
A better parallel would be the monopolised telecoms industries in the west, which lasted for 50 years or so, and which caused serious hinderence to technological progress until they were dismantled by regulators.
The patent business will be dismantled around 2025, at the earliest. From 2010 to 2025, if you are a small independent technology producer you will have three choices:
1. illegality, black-market.
2. join a patent club and pay the costs (equivalent to merging with a larger business).
3. relocate to a patent haven such as Liberia.
Options 1 and 3 are pretty similar since any business using foreign software which violates patents will be subject to penalties.
And it won't be sufficient to say "this software does not violate patents", you will need a certificate of conformity, period. Like selling a car.
It's a sad prognosis for OSS, which is my main business, but I think it's inevitable. Money talks, and we are seeing a true gold rush here.
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The article references one of the traditional justifications for patents: that an inventor is granted a time-limited monopoly in exchange for full disclosure of the invention.
But with regard to software patents, particularly ones like Amazon's one-click patent, there are many inventions that are effectively self-disclosing: if you see that it is done, you know how it is done.
I wonder if it would be possible under U.S. patent law to challenge these patents on this basis? I strongly doubt it, but the very fact that such inventions are patented is a measure of how badly the patent system needs reform.
Ideas are not property, and patents do not grant property rights. They grant monopoly rights in exchange for something else. What is the "something else" in the case of things like the one-click patent? What are we, the public, getting that we would not get otherwise?
--Tom
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you should see inventors perusing/searching the patent database on a regular basis
Except that, where I work, engineers are told to avoid looking in the patent database. That way, the company cannot be sued for "willful patent infringement" when they inadvertently develop something that's similar to something that's already patented.
If you understand the USPTO mentality, there's no patent that you can't get through, they are simply that inept. I was once in an R&D position, after a having a few patents under my sleeve, I was able to pass just about anything without the help of a lawyer, true, they reject everything outright, but they simply don't understand what they reject, and are used to being corrected, after a few rounds of bogus rejections, some meaningless concessions on your part, and making them feel stupid enough (refuting their bogus rejections), they'll accept anything. I don't think I ever got a USPTO comment or rejection that was relevant to the invention in question. Knowing that, the temptation to broaden the patent is huge, because you want to leave room for said meaningless concessions, and because employer's greed does play a part once they find out what they can get away with. It's a good thing patent litigation is so expensive, because even the few patents I personally wrote for my employer could be used to wreck havoc on a lot of companies if they were actually used.
http://www.gnu.org/philosophy/words-to-avoid.html
Everything said in the parent post is true.
However, the main critisism of the author was that applying for European wide patents is much too expensive, because you need to pay each national patent office -- and provide a translation.
From my own experience I can say that this is true (and forced us to concentrate on only three big markets in Europe).
However, it is not true that applying for a patent in the US is much cheaper. There the embarassing hight costs stem from the patent lawyers (and you'll need tehm, if you want to get a patent and not yourself a lawyer).
To my feeble mind much of the idiocy surrounding software and business methods patents stems from the premise that if I "create" an idea then it costs me something(in an economic sense - not only cash) if someone else uses that idea. The problem with this premise is that it is false. If I find a method of organizing my company that has the effect that I have increased my profit margin by 20% how does it cost me if someone else uses that method. It seems to me that I will still be benefiting from my "invention".
Even if you insist that it does cost me something(perhaps the overall market will be influenced because my competitor lower's her prices) how is that as a direct result of the patent. It is a choice that they have made to give up economic benefit to increase theit market share.
To my feeble mind it seems that patents are meant to protect things that have real costs if they are taken. An idea is not such a thing. To the contrary, an idea can have a net benefit the more folks that know about it.
the only thing keeping us going is confidence in our economy
The only thing that has kept the economy going since the eradication of the gold standard has been its constituents belief in it. (Or more abstractly, it could be argued, its belief in itself.)
This is aided by the idea that the basic unit of the U.S. economy, the U.S. Dollar, is backed by the "full faith and trust of the government of the United States of America", whatever that means. (For one thing, it means that all Americans are insured for money in the bank for up to $100,000.)
Remember too, that Alexander Hamilton was an enormous proponent of the government operating in a deficit - he felt, among other things, that the debt of a government to its people would incur some accountability (no pun intended) beyond Jefferson's espoused "natural law". One could argue that a government's responsibility to its people is flexible and changing ("...but some animals are more equal than others"), but owed money is owed money in any monetary society, which helps keep the government in check (again, no pun intended).
Laffer, Mundell, et al. can explain this far better, of course.
Actually, they can't. Supply side economics has been nothing but a hoax from the beginning. The problem, of course, is that economics is a rather sophisticated subject, but most people, able to reason all the way from A to B, think they've got it. The professionals are working from A to B to C to D and researching how to get to E and F, but that's too complicated for most people.
Sometimes taxation will spur the economy, sometimes it will hurt the economy, but it depends so very much on the details, like who is taxed how much, and how the economy is doing.
Everyone knows heavy inflation is bad, but most people don't know why. After all, your paycheck is going up with prices. The basic reason it is bad is that it forces people to spend now, instead of trying to optimize over time.
Conversely, heavy deflation is also bad, although here, most people don't even know that much. The reason it is bad is it discourages spending to the point that parts of the economy shut down.
Where is the US today? Look at our record low interest rates. Greenspan is essentially begging people to spend, and he is getting a sluggish response. We are very close to hitting the same disaster that overwhelmed Japan's economy in the late 90s: the demand side collapsed while the supply side was still roaring.
Now, what does this have to do with major tax cuts? Consider a toy economy with three sectors: poor people, rich people, and businesses. Poor people have no savings. They spend their paycheck as fast as it comes in, and they are still probably behind on the rent.
Rich people, on the other hand, save. In fact, when they are really really rich, that is pretty much all they can do with their money! One or two mansions, a football team, a mayoralty, and your multibillionaire is still saving 90+% of his money. This isn't greed on his part, it's just not physically possible for him to spend that much money. (And no, you can't say he's investing it into the economy, when the money came out of other people's investments in the first place.)
And finally, businesses tend to spend most of their money. Salaries, research, advertizing, expansion, lawsuits.
So what is the effect of the Bush tax cuts, skewed heavily to to a noticeably large rich population, and pittances for the poor and for businesses? Money disappears from circulation, and the effect is deflationary pressure, at a time when the economy can least afford such.
Unfortunately, taxes in the US are set by politicians, not for the sake of what's good for the economy (which they are clueless about, like the electorate), but for the sake of what they can sell. Ideally, fiscal policy should be vested in some independent board, the way the Federal Reserve pretty much controls monetary policy. And even this "ideally" is something of a pipe dream, since too much jittering has its own downside.
For those born yesterday, look up some history. The US had its greatest economic growth in the 50s, at a time when personal income over $200,000 was taxed at a predatory 90%. The big money went into businesses, not a few rich people, and the economy roared.
On the contrary, an empty article.
... well, is it an invention that should be patented, or art that should be copyrighted? Or algorithms ... and on and on.
... instead he spent 40 years litigating to extend the patent and prevent the introduction of improvements by competitors. Some historians believe Watt's patent set the industrial revolution back 15-20 years. I'm quite certain the slashdot crowd can think of plenty of contemporary examples where patent abuse and litigation is setting back technological progress.
Everyone knows the current patent system is fscked and overflowing with frivolous applications.
This article doesn't even begin to discuss the existential issues facing IP law in the 21st century: IP concepts from the 1800's that simply can't handle issues of modern technology. Like the protection of gene sequences or genetically modified organisms, which don't really fit, conceptually, under patent or copyright concepts. Or the copyrighting of media in an age when copying is free but design and marketing are expensive. Or software, which is
We also have over 100 years of evidence that patents do not encourage innovation. James Watt didn't use his patent on the steam engine for financial security while he developed an improved version
We need entirely new concepts of IP and new ways of dealing with them. The system needs a complete overhaul, not tweaks, and TFA doesn't even talk about the core problems underlying the disaster that is our IP environment.
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Well, both parent posters have a point.
Maybe a system would be best where patents and copyright (etc.) is granted (exept for software and businessmethods, obviously) for a period of 5 years, being renewable every 5 years untill a total of 20 years. Each time the fee could get up, say from 1000 to 5000 to 25000 to 125000.
With an adequate social correction-mechanism, which allows individuals and small companies to do it for less (for instance 1/10th for an individual developer), and augmenting it depending on the size of the corporation, the problem you and some other poster mention would be greatly diminuished.
In that case, the prime purpose of lingering patents and copyrights that go on almost indefinately or no1 even knows exactly who has the IP rights (with as consequence that many works just go wasted and become lost for society), vanish, while at the same time there is a system in place that gives a more equal chance for small companies/individuals to be able to file patents and protect patents as well.
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