To Patent or Not To Patent: Supreme Court to Judge

Most historians recognize the development of the legal framework of patents as an important, if not essential, part of the Industrial Revolution. The proper function of patents and patent law can perhaps be understood best by considering two extremes.

For most of history, the world was at one extreme: no patents or patent law at all. If a clever inventor came up with a new way of doing something or building a useful device, he had to keep it secret in order to maintain the competitive advantage his invention provided for him. Because if the goldsmith or millwright next door found out how the invention worked, the original inventor had no legal way to stop the imitator from using his invention. Consequently, processes and techniques were handed down from father to son or closely held in small guilds whose members were sworn to secrecy. And the pace of technological development during much of this time was consequently slow.

Now suppose we have a patent law, but instead of providing a limited-term monopoly to the inventor of twenty years (in current law), suppose it provided protection in perpetuity. Once somebody invented something, no one else could ever use that invention without the inventor's permission. Paradoxically, this opposite extreme would land us in a situation not too different from the one that prevailed before there were any patents at all. More information would be available, but you couldn't use it legally. Or at best, people would spend most of their inventive time and energy trying to get around the ever-growing forest of issued patents, rather than simply concentrating on inventing new stuff that the market needed.

In the last few decades, the situation in U. S. patent law has moved closer to the extreme of perpetual patents on anything—not so much in terms of the time limits on patents, but in terms of what can be patented. Unfortunately, the effect is much the same. If you can do one little tweak on someone else's patented idea and get a patent on it yourself, the situation is ripe for exploitation by patent lawyers and general confusion. By many accounts, that is more or less the state we're in today. Given enough money, I'm pretty sure you can patent anything these days, whether it's been around for decades or not, because the patent office has tended to neglect its former duty to make sure that inventions are original and worthy of patent protection. Although I haven't checked this to be sure, there is the legendary patent on a way a child swings in a yard swing. If this patent really exists, thousands of kids all across America unconsciously risk falling afoul of the patent laws every time they head for the playground.

Today (Nov. 9) the U. S. Supreme Court is scheduled to hear their first patent case pertaining to the scope of the patent laws in many years. At issue is more than a single patent decision, although a patent claimed by businessmen Bernard Bilski and Rand Warsaw having to do with energy-price trading started the ball rolling. In a 2008 decision by the Federal Circuit (a special court that tries appeals of patent cases), Chief Judge Michel radically restricted his court's earlier generous interpretation of the kinds of things that can be patented. The rule he proclaimed says that a patentable process can only be issued if it is related to a "particular machine or apparatus" or transforms an article into "a different state or thing." If carried to its logical conclusion, this decision could invalidate or cast into question thousands of esxisting patents on business methods, software, diagnostic techniques, and many other technologies. A blogger at the intellectual-property website ipwatch.com excoriated Judge Michel for going way beyond the matter at issue, since whatever the Federal Circuit says about patents is the last word unless the Supreme Court says otherwise.

Sudden invalidation of a lot of patents would certainly be disruptive, especially at a time when the technology industry is not doing that well financially. Many high-tech companies are watching this case closely for that reason. The hope is that the Supreme Court will correct what many people perceive as a blunder on the part of the Federal Circuit, but how far they go in correcting the earlier decision could have important implications for the future of patent law in the U. S.

Patent law is a creature of the legislative branch, not the judicial branch, and perhaps all this attention will lead Congress to revisit the state of patent law with a view toward streamlining and modernizing the system. One practical problem that has led to the flood of dubious patents in recent years is the fact that the Patent Office is grossly understaffed. The sense is that rather than give patents the attention they need at the price of taking many years to issue a patent, the Office simply does something close to rubber-stamping in a matter of two years or less. Another problem is that two years is still only a little less than eternity in some businesses such as software, where entire generations of products rise and fall in a matter of months. But Congress is busily engaged on other matters for the time being.

The Supreme Court will take some months to decide this case, so we look forward to revisiting it in the spring, by which time a lot of things will look better, I hope.

Sources: I used material from the following websites: http://www.huffingtonpost.com/2009/11/08/supreme-court-to-hear-key_n_349964.html (the Huffington Post is not something I routinely visit, but showed up first on a Google search—I don't recommend it for general viewing!), http://www.ipwatchdog.com/2009/11/09/argument-day-in-bilski-at-us-supreme-court/id=7209/, and http://online.wsj.com/article/SB10001424052748704328104574517882062296034.html?mod=googlenews_wsj.