Business model patents

2008-02-25

in Economics, Law, Rants

Lights outside Ottawa city hall

Intellectual property remains one of the most hotly contested areas in law and politics right now: with everything from the cost of patented drugs in third world countries to the illicit downloading of television shows under contention. What is important to recall throughout all of this is the reason for which the patent system exists: to encourage (a) innovation and (b) the disclosure of how new inventions work by offering a time-limited monopoly to the inventor. On the basis of this fundamental purpose, it seems fair to say that ‘business model’ patents should be eliminated.

A famous example is Amazon.com’s dubious patent on ‘one click shopping.’ To begin with, the idea probably fails the obviousness test. Something immediately obvious to almost anyone well-studied in the field is not supposed to be patentable. More crucially, the Amazon patent doesn’t represent genuine innovation, and it serves no public purpose to have the details explained in a patent. As such, society as a whole only suffers when such legal rights are granted.

A more recent case also illustrates the point. A couple in Utah is suing Starbucks and Apple for patent infringement. Starbucks is giving away gift cards that can be used to download particular music tracks from the iTunes music store. The couple claims that they have a patent on this idea. Can anybody legitimately claim that society would be better off if everybody who gave away such gifts cards had to pay licensing fees to the couple? You can argue that the premiums people pay for patented drugs are essential to ensuring that pharmaceutical firms have sufficient funds for further research; no comparable argument can be made for business model patents. Such patents are useless and parasitic and, as such, should be done away with.

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{ 15 comments… read them below or add one }

tristan February 25, 2008 at 6:21 pm

“Can anybody legitimately claim that society would be better off if everybody who gave away such gifts cards had to pay licensing fees to the couple?”

becomes

“Can anyone legitimately claim that society would be (is) better off if (for) [intellectual property for X existing/being respected]?”

I think this is a good test. Probably all current intellectual property debates could be had under it.

tristan February 25, 2008 at 6:21 pm

I’m going to revise my claim, as the “legitimate objection” move is extremely problematic – it involves a notion of legitimacy which probably begs the question for any moral problem utilizing it.

Instead, I think the Rawlsian approach is more apt.

Anon February 25, 2008 at 6:21 pm

Lots of people have a false libertarian idea about intellectual property.

They think “I invented this, so I own it. The law should respect that.”

What they are actually asking for is quite different: “I was the first person to formally state this idea to the patent office, therefore the government should force other people to pay me to use it.”

Inventors aren’t asking for the inaction of the state; they are asking for the state to be their enforcement goon, demanding cash from other people using ‘their’ idea.

Of course, this all gets even more absurd when a pharmacorp studies the traditional remedies of some tribe, then rushes to patent the molecules in the US or EU.

Emily Horn February 26, 2008 at 3:54 am

I like that shot.. Sort of captures a kind of bleak monotony.

Milan February 26, 2008 at 8:52 am

Emily,

I just liked the geometry of it.

It would be better with a less complex background.

Milan February 26, 2008 at 9:42 am

I quite like this photo.

Emily Horn February 26, 2008 at 2:53 pm

I really like that one as well. The black looks neat against the blue and white.

Milan February 26, 2008 at 3:03 pm

Instead, I think the Rawlsian approach is more apt.

It is very challenging to adopt a Rawlsian approach when it comes to policies affecting innovation. For instance, it is better to help the worst off people right now (voiding patents on AIDS and malaria drugs to reduce prices for those suffering) or gamble on helping future poor and sick people more by allowing patent royalties to fund additional innovation.

Big pharmaceutical companies get lots of criticism – much of it well deserved – but they also do critical research. Mechanisms for directing more of it towards those with a heavy burden of disease and limited financial means is a big challenge for governments and NGOs.

Milan February 26, 2008 at 3:09 pm

Inventors aren’t asking for the inaction of the state; they are asking for the state to be their enforcement goon, demanding cash from other people using ‘their’ idea.

True, and this is why the state has a legitimate role in establishing the scope and nature of patents and other forms of intellectual property protection.

Of course, this all gets even more absurd when a pharmacorp studies the traditional remedies of some tribe, then rushes to patent the molecules in the US or EU.

I agree that this is unjust, though perhaps the firms should get some compensation for performing clinical trials on traditional remedies and making the results widely known. In any case, pharmaceutical patents are quite different in nature from the business model patents being described above.

Anon March 6, 2008 at 12:52 pm

“Bilski” Case May End Business Method Patents

By kdawson on good-riddance

hey sends us to a blog at NYTimes outlining the upcoming appeal of the case known as “re Bilski,” which could spell the end of patents on methods of doing business later this year. One patent expert is quoted: “I think this is the unraveling of business method patents… I think there is a process we are going to go through to get there and the Supreme Court is going to be the one that decides it.” But another expert thinks the case is unlikely to bring down the whole class of patents: “Definitions of business method patents always end up being circular. You can’t really ban something unless you can define it and no one is offering a definition we can use.”

Anon March 6, 2008 at 12:54 pm

New Patentable Idea: A Way to Invalidate Vague Patents

By Brad Stone

There’s not much love in legal circles for the so-called “business method” patent, an exclusive intellectual property right over a novel way of doing business. Critics of such patents – think Amazon “One Click” or Priceline’s “name your own price” patents – argue that they clog up the U.S. Patent and Trademark Office, lead to excessive litigation and have little connection to real, physical invention.

ToryC July 24, 2008 at 1:08 pm

“The proposal of any new law or regulation which comes from [businessmen], ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it. “

. March 11, 2009 at 10:11 am

Economists call for patent and copyright abolition

By Cory Doctorow on Economy

Two economists at Washington University in St Louis have published a paper arguing that copyright and patent are a net drag on the economy and should be abolished.

“From a public policy view, we’d ideally like to eliminate patent and copyright laws altogether,” says Levine, John H. Biggs Distinguished Professor of Economics. “There’s plenty of protection for inventors and plenty of protection and opportunities to make money for creators. It’s not that we see this as some sort of charitable act that people are going to invent and create things without earning money. Evidence shows very strongly there are lots of ways to make money without patents and copyright.”

. November 12, 2009 at 9:40 am

US Supreme Court Skeptical of Business Method Patents

“The US Supreme Court held oral argument Monday in Bilski, a business-methods patent case that might also have important implications for software patents (We have previously discussed the case several times). The tone of the argument appears to be good news, as the justices were very skeptical of the broad patentability claims. They even brought up a parade of absurd hypothetical patents quite similar to the ones Slashdotters tend to mention in these kinds of debates. Roberts surmised that ‘buy low, sell high’ might be a patentable business method, Sotomayor wondered if speed-dating could be patentable, Breyer questioned whether a professor could patent a lesson plan that kept his students from falling asleep, and Scalia brought up the old-time radio soap opera Lorenzo Jones, featuring a hare-brained inventor with delusions of getting rich.”

. September 29, 2010 at 11:17 am

Patently obvious

SIR – Please do not perpetuate the myth that “without patents…inventors would have little incentive to invent” (“Patent lather”, September 4th). Patents, particularly in software, serve nobody except large companies who have already crowded the space of ideas and want to block entry, and small companies whose business strategy is akin to buying a lottery ticket: it might pay off if you are lucky and can sue someone in the future, but it is very likely to be a waste of money. That there should now be firms collating patents and offering defensive portfolios to companies for a fee should strike anyone as being a perverse excess caused by an anachronism, not as innovative.

Christian Nentwich
Director
Model Two Zero Ltd
London

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