The Economist on Patent Reform 315
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. "
One-sided article (Score:5, Interesting)
But, what about the other side? What was the motivation for allowing business method patents? There must have been some reasoning behind it.
Anyone?
In developing countries... (Score:3, Interesting)
And rule one of capitalism: without incentives, there's no innovation.
See for example Ricardo Hausmann and Dani Rodrik, "Economic Development as Self-{Discovery" [nber.org]
Re:Patent bubble will lead to burst (Score:2, Interesting)
That's why, really, if you have something REALLY valuable you DON'T patent it, you just keep it secret.
This a nice smoke screen (Score:5, Interesting)
Re:One-sided article (Score:4, Interesting)
I think this was a court decision (State Street?). I think the reasoning boiled down to the fact that the court believed a business method satisfied all the statutory requirements for patentable material, saw no prohibition against it, and said so.
The 'other side' in some sense, then, is legal inertia- good luck getting a law passed that says no to business method patents once someone's benefitting from them.
Frivolous Patents (Score:5, Interesting)
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.
Crazy idea: accept all patents (Score:5, Interesting)
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?
Actually (Score:5, Interesting)
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
Re:Who wrote it? (Score:1, Interesting)
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.
would this fix the bulk of the problem? (Score:4, Interesting)
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...
Re:Patent bubble will lead to burst (Score:2, Interesting)
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).
Re:Patent bubble will lead to burst (Score:5, Interesting)
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.
Re:One-sided article (Score:4, Interesting)
Answer: like any other type of patent, the motivation is to protect the invention and allow the inventor to take advantage of having discovered this business method.
I've written several business method patents involving methods of providing life insurance. When the client first came to us, it was tough to figure out what they had discovered. The did find a unique way to fund life insurance, and wanted to make sure they were the only ones who could provide this service. As they had spent several years developing this method, I see no reason why they should not be able to protect their invention.
One thing I was shocked to learn while drafting the patent application- there are many patents involving insurance funding (our client was unique). There were even some that got through in Europe (which will allow a business method to be included if attached to something that is patentable).
While part of me thinks it might retard competition, I do have to say that companies invest time & money into developing these methods- and want rewards.
Re:One-sided article (Score:3, Interesting)
Do you really write software and not copyright it? That is the appropriate protection for software. You will find very few people around here who actually advocate the elimination of copyrights. After all, it's copyright protection which gives the GPL teeth.
The question the pro-patent crowd needs to answer is why is copyright insufficient? Why do you need additional protection above and beyond the protection automatically granted to software?
Re:One-sided article (Score:3, Interesting)
This is relevant to the current discussion because of the usual argument that "programs are just systems of algorithms, which aren't patentable". An air conditioner is just a system of natural laws, yet nobody would argue that a novel coolant wouldn't be patentable. The appellate court simply said what should have been obvious all along: systems and machines can be built from atoms, but also from bits. If so, then systems and machines built from bits should enjoy protection, just as those built from atoms do.
Re:Frivolous Patents (Score:2, Interesting)
Ahhh, the patent office has fallen into one of the classic blunders-- Never get involved in a paperwork war with a lawyer when a Patent is on the line!
Re:One-sided article (Score:3, Interesting)
Do you really think that The Economist, one of the most respected news magazines in the world, and one with a generally pro-corporate slant, is actually in the business of presenting "the slashbot side" of arguments?
A more reasonable interpretation, IMNSGDHO, is that when a source that is the very embodiment of suit-think agrees with the generally anti-corporate
No Patents for "Self-Disclosing" Inventions? (Score:5, Interesting)
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
Re:How to evaluate the patent system (Score:3, Interesting)
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.
Actually it's worse (Score:3, Interesting)
Re:Superficial article (Score:2, Interesting)
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).
False Premise (Score:2, Interesting)
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.
Re:Not if you are a supply sider (Score:5, Interesting)
The only thing that has kept the economy going since the eradication of the gold standard [wikipedia.org] 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).
Re:Not if you are a supply sider (Score:3, Interesting)
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.
Re:Excellent Article, but Nothing New Here (Score:2, Interesting)
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.
Re:Frivolous Patents (Score:3, Interesting)
How 'bout a fixed, limited number of patents? Companies/individuals/organizations can bid on filed patents & the top $N grossing patents are granted to the winners, and everything which ends up below the cutoff mark becomes public domain. Obviousness & prior art are still allowed to be factors (which would greatly affect the bidding price, since a patent which would be easily invalidated probably wouldn't be worth much).
Throw in the possibility that whoever filed the patent gets the bulk of the winning bid value, I think you'd have a big incentive for creative individuals & groups to submit their best work into the process.
Allowing only a limited number of patents would also make it easier for people to check the database to see if they are violating anything, and make people in general less worried about violating tiny obscure little patents.
patents for the rich/poor (Score:3, Interesting)
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.
Re:This a nice smoke screen (Score:3, Interesting)
If a certain law is faulty, taking it through a slow process where the same people in power are currently involved in making the law worse is definitely not the solution. Right now the laws are being made according the lobbyists. We can all scream all we want on slashdot about the problems and solutions, but that doesn't make a difference. I doubt many people here trully spend the time thinking about the subject and how their solutions fit into the real world. Unfortunately, the radical ideas are the best. To completely scrap a law is not a bad idea in some cases, this being a major one. Seriously consider the worst possible thing that could happen without the patent laws. Now some of you out there conditioned to fear crime will probably talk about mass piracy of ideas and "intellectual rights" and maybe terrorism thrown in there somewhere. I can now in the same instance give you a crazy utopian view. Now for the reality. Things will change, and unpopular as this opinion is, for the better, without patent laws. If you believe the U.S. is a very capitalistic system (monopolies are discouraged), then why USPTO?
"...law and doctrines that have been refined over hundreds of years."
Prooving my point even more so. The law of intellectual property began by some pressuring to put it in the constitution. Thomas Jefferson did not initially agree to the idea. Considering the writings of Thomas Jefferson, he was most likely pressured. It was the wealthy back then that wanted the USPTO to help control their markets and it is wealthy today that take advantage of this legal power. Somehow people seriously still believe in the idea of idea ownership (copyright is a little different, but currently is still far too restrictive). Our entire intellectualy propery system was a flawed concept from the beginning because it was in the interest of keeping power, not promoting science. That were we are today is because of patents. What does that mean, nothing. The one belief that is so absurd, but apparently convincing, is that the patent system actually promotes progress. The patent system is a tool of control. It allows those with a legal document to have limited control regarding a particular idea. Unfortunately, limited is an understatement. We provided a legal tool for the wealthy, and they expanded the power of the tool. Just take a look at the original IP laws and how they have changed since. I will argue that we must nearly eliminate the law because there are no minor changes that can be made to make significant changes. Even worse, the law is already very large. We have split it into various forms and then made larger and larger volumes of material to move through to understand and/or to fight the law. You can nibble all the small and even large cases in court about particular patents, but by then you've accepted this law as a required. By then, everyone is caught up in this process that no one would seriously consider abolishing the law outright. Imagine all the patent lawyers, judges, companies that use it as market leverage, individuals that receive income because of it. All biased because it is that system in which they live and work that they rely on to survive. Only in support of preventing a major problem in finding ways of bringing these people into a new world where ideas aren't fought in court, but in the market, I would agree that we can't abolish the law(s). I can and will argue against IP laws, but it won't make much different here on slashdot. There is an entire system that would be demolished in almost an instant, and there are far too many that will fight to prevent the destruction of this system. It would be great if law changed for the better, but with IP it has become a tool for control and has only expanded. If those with IP wanted to, they could all sue each other into oblivion right now, but they won't. They pick their battles, and use their portfolio for defense. So the question becomes, well, there are far too many actually. The question is not whether it promotes progress or not, because we already know it doesn't in almost all cases.