End The Patent Wars

Even as the current Internet patent wars began, I called the whole thing Clueless.

Since then, things have only gotten worse. Amazon and Barnes & Noble are in court over “one-click ordering.” Priceline and Microsoft’s Expedia unit are battling over reverse auctions. Now AskJeeves is fighting for its right to life against two MIT professors who say they invented its basic search function.

The problem is a basic Clue I have learned the hard way. An idea itself is not a business. It’s the ability to come up with ideas, or the ability to execute ideas, that can become a business.

Patent protection is important. When someone works for years to invent a better mousetrap, they need protection from distributors who would tweak it slightly, send it to China for production, and steal their profits. When a drug company invests tens of millions of dollars to find a new treatment for high blood pressure (which I have), they deserve the protection a patent provides.

But a patent on a mousetrap doesn’t stop another inventor from building an even better mousetrap. A patent on a blood pressure medication doesn’t stop a rival drug company from creating a better one.

That, in a nutshell, is the problem with offering patent protection to business processes like reverse auctions or one-click ordering. The patent in this case doesn’t just protect the way you did something; it protects all ways of doing that thing. Rather than supporting innovation, business process patents stop it in its tracks.

This was not what the Patent Office and Congress had in mind when they extended patent protections in the 1980s. Congress wanted to keep competitors from benefiting from delays in granting patents. It was also seen as a key to maintaining U.S. competitiveness with Japanese manufacturers.

Since then, of course, patents have been used as a competitive bludgeon rather than a pry bar. When the U.S. Court of Appeals ruled in 1997 (the case was State Street Bank vs. Signature Financial) that U.S. law didn’t prohibit business methods patents, it added that they had to be new, useful, and non-obvious.

The good news today is juries are being read that last portion of the decision before going in the back room. (It’s a legal decision, as opposed to written law, that is at issue here.)

In October, a U.S. jury in Virginia sided with a defendant, EnTrust Technologies Inc., which had been sued by rival Surety.Com over “hash-and-sign” digital time dating, a rather obvious technique Surety had somehow been given a patent on.

Legislation is also moving forward that will let companies accept information from patent applications in their own research, while affirming that the 17-year clock starts when the patent is approved, not when it’s filed.

So here’s my wish for the new millennium. Let’s have some patent sanity, OK?