7.21 Controlling innovation with patents

To date we have been focusing almost exclusively on the copyright element of intellectual property law. Patents are also very important. This page will briefly examine some of the issues.

According to the UK Intellectual Property Office:

A patent is an exclusive right granted by government to an inventor, for a limited period, to stop others from making, using or selling the invention without the permission of the inventor.

In the UK we are theoretically prevented from patenting ‘a scheme or method for doing business’. However, business process patents have been granted in the US and Europe, of which the most widely known is Amazon's ‘one-click’ patent (US Patent No. 5,960,411 ‘Method and system for placing a purchase order via a communications network’). In 1998 the US Patent and Trademark Office issued 125 business process patents for ways of doing business on the internet. In 1999 there were 2600 applications for ‘computer-related business method’ patents and the numbers have been increasing year by year since then. Online ordering with a credit card can only be done in a limited number of practical ways, so granting someone a monopoly right over such a process could create a problem for commerce.

In the UK, theoretically, a computer program alone cannot be patented. There are some complex exceptions to this and software patents are the subject of much controversy both in Europe and the US. Software patents are allowed in the US, despite a 1972 Supreme Court decision which stated that a computer program was not patentable (Gottschalk, Acting Commissioner of Patents v Benson et al., 409 US 63 (1972)). They have also been granted in the EU. Article 10 of the 1994 international TRIPS (Trade Related Aspects of Intellectual Property) agreement declares that computer programs ‘shall be protected as literary works under the Berne Convention’; this suggests that software is protected by copyright, not patents.

Lessig covers patents briefly in Chapter 11 and makes a number of observations about them:

  • Some patents are good and some are harmful.

  • The US Patent Office, without appropriate authority, expanded the scope of patents, i.e. the kinds of thing that patents can cover.

  • The US Patent Office is under-resourced and individual patent examiners over-worked.

  • The 1998 State Street Bank appeal court case opened the floodgates for ‘business process’ patents.

  • Patents are not the only incentive for innovation – being first to market is one good example of an alternative.

  • The patent system is supposed to encourage inventors to reveal their invention to the public, yet software writers do not have to reveal the source code to patented software.

  • Patent litigation is expensive, so only those with deep pockets can use the system.

  • The patent system inhibits innovators because too many people can block their ideas – it is a sort of anti-commons where everyone has the right to block the use of a resource by others.

Lessig's main problem with the current state of the patent system in the US is that the scope of patents has become too broad. The result is that rather than covering the practical application of an idea, patents are covering ideas themselves. It is equivalent to saying that someone can patent the idea of fishing and then demand royalties from anyone who goes fishing, regardless of the method they use to fish.

7.20 Consequences of control

7.22 Gene patents