Judicial and Legislative Fury Against “Business Method” Patents: A Retreat from the Information Age

For big business, life would be simpler without patents. Then success would be determined by factors related to size such as lobbying budget, marketing prowess, and the combined power of your legal team. Upstarts could be squashed and cleared out of the way or acquired for a pittance. That’s not how our economic system is supposed to work. Patents can and should be a great equalizer, allowing a small company with a valuable product and valid patent to protect itself and prevail, even against a giant. The big guys, especially in the technology sectors, hate the risk of outside patents and are much happier stirring up wrath against so-called “patent trolls” to vilify those with patents.

The assault against patents has been especially forceful in the so-called “business method” area. These vaguely defined patents generally involve processing information and using computers in new ways. While there have been some terrible business method patents issue due to the failure of the USPTO to perform serious prior art searches, the problem is not with business method patents per se, but with the office that issues them with underfunded examiners faced with absurd quotas that limit the time they can spend on a case.

The area of computer-related and software-related innovation is not something where intellectual property should be feared, but celebrated. We have moved from the industrial age, where innovation was largely with physical gadgets and chemical compounds, to the information age or knowledge economy, where unlimited progress is possible through advances in how we manage and process information. Information is every bit as real as a mousetrap, a wheel, or a new drug, and while it is intangible to our physical senses, it is tied to physical processes such as entropy and material transformation of memory and signals as data is processed. It is impossible to implement a practical business method of any kind without physical interaction with reality, but our judges, lacking a basic understanding of science and especially information science, have conjured up the concept that information and its manipulation is “abstract” and this not patentable. This ungrounded believe is based in ignorance and is a tragic departure from reality. Failure to encourage advances in IT, in software, and in knowledge management in general with fair IP will hinder our progress and limit economic growth.

The latest potentially fatal blow to business method patents comes from a Federal Circuit Court case, CLS Bank International v. Alice Corporation. Robins, Kaplan, Miller and Ciresi, a highly regarded law firm, published a somewhat humorous overview of this macabre case. The article predicts that this case will recent in many more patents coming under attack for being inelgible subject matter (this is called a Section 101 rejection) and, worse yet, creating vast new uncertainty for inventors and investors. This weakens our economy and contributes greatly to innovation fatigue in a very broad area with some of the greatest promise for the future.

The recent America Invents Act also struck a blow against business method patents, adding a severe new route for invalidating patents more easily that have some financial component to them. Why give one particular area of patents such unfair treatment? It’s an indication of the lobbying prowess of certain companies that dislike patents in this area. Congress, recognizing the harm that this special invalidity treatment can do to that particular class of patents, is thinking of taking action–to extend this easier invalidation route to even broader classes, thereby further weakening patent protection in some of the most vital sectors of the economy. Innovation fatigue squared–at a time when our economy needs to strengthen innovation and give it ample encouragement with sound IP protection and increased, not decreased, certainty if we are ever going to get this economy off the ground.

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