Patent Law - the Open Source Movement of the 18th Century

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Patent Law - the Open Source Movement of the 18th Century
C. McNulty -May 8, 2000

Event Summary

In March, Q. Todd Dickinson, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office, announced a new initiative to ensure that patents granted for software-implemented business methods are of the highest quality and benefit to the growing electronic commerce industry.

In remarks to the San Francisco Intellectual Property Law Association Conference on Electronic Commerce and Internet Issues, Dickinson revealed the details of a new Business Method Patent Action Plan. Among the highlights of this action plan are to formalize a customer partnership relationship with the software, e-commerce, and Internet industry and enhance quality management in the patent application process.

Dickinson, noting that e-commerce related patent applications had doubled between 1998 and 1999, stated that the issue of patentability of such software patents, while a continuing matter of public discussion in some quarters, is firmly established legally. "The patentability of software has continued to be upheld, " Dickinson said, "therefore the role of the USPTO is to ensure that the patents issued are of the highest quality, and that means doing the best job that we can."

Other aspects of the Action Plan include a new formal customer partnership with the software, electronic commerce, and Internet industry; enhanced training of patent examiners; a new second-level review of all Class 705 (business method patents) applications; and the convening of a roundtable forum with stakeholders on the issues surrounding this technology area.

Market Impact

The brouhaha over this issue really got going when founder Jeff Bezos was issued a patent for's [NASDAQ:AMZN] one-click ordering process. (United States Patent 5,960,411 Hartman, et al. Sept. 28, 1999: "Method and system for placing a purchase order via a communications network".) Some technology pundits have noted that patents are creating monopolies that will make it more difficult to compete with [NASDAQ:AMZN] or [NASDAQ:PCLN]. The pundits are right, in a sense.

But patents are supposed to create monopolies. The public policy bargain of patents goes like this: If you invent something new, that's great. We want everyone to be able to share it. But we also want to encourage innovators to earn a profit from their inventions. So we'll make a bargain with you: Tell us your invention - tell us exactly how to do it - so we can share the benefits in the future. In exchange, you, the inventor, get seventeen years of exclusivity. After seventeen years, we'll let other people enter your market.

The formal requirements of a patent are that the invention should be new, useful, and nonobvious. But there's another procedural requirement that can be used, conversely, to invalidate a patent. It's called the failure to disclose the best mode. Patents usually cover a range of methods - so the inventor is protected whether the underlying network transport protocol is TCP/IP, or IPX/SPX, or NetBEUI, or GOSIP, or even a phone call you get the picture. Patent applications try to cover the widest range of possible uses so that competitors can be enjoined from making trivial changes to the invention while claiming those changes weren't contemplated in the original patent.

Courts have clarified the concept during the past two centuries. Inventors can't bury the "true" invention amongst a list of all conceivable variations. Somewhere in the patent application, the inventor must reveal, to the best of his/her knowledge, the precise procedure which is fastest, cheapest, most efficacious, or, as we could say, best.

In the computer world, how can an inventor document the "best mode" source code? The "open source" software movement, which has reached a 21st Century zenith with Linux, can trace its origin to the 18th Century notion that innovations are best when shared. The Bezos patent, and most others of its ilk, don't open up their source code.

Another complicating factor is Internet time. U.S. patents grant the holder seventeen years of exclusive use. 17 years is a long time anyway, but it's much too long on the Web.

The USPTO needs to rework its policy for Internet business method patents. Since the Internet seems to run in dog years - one year for a dog equaling six for a human - let's apply that divisor and come up with a three-year term for such patents. It's a fair balance between tradition and the pace of contemporary economic development. The PTO also needs to push legislation through Congress requiring open source disclosures as part of satifying best mode requirements on patent applications. Finally, the USPTO needs to adopt the international practice of making applications public - not just issued patents - as required by Article 93 of the regulations for the European Patent Office.

User Recommendations

The USPTO isn't backing down. The legality of Internet business method patents is no longer in dispute. If you have developed a technical innovation for your e-business, keeping it "secret" isn't enough. Talk to an intellectual property attorney. If you don't, your competitors will.

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