Last week was a big one: if we are lucky it may have been the week in which the US patent system imploded under the weight of its own recent ludicrousness, hopefully to be replaced by a saner one. I am no fan of patents: they are government-granted monopolies and distortions of the market; I can understand their usefulness for encouraging research and development in important but non-lucrative areas (drugs and technologies suited for the 3rd world problems, for example) but it seems to me that without patents companies would still innovate: they would just do so differently,
Speaking at a conference this week, I mentioned that the innovation of the WWW, which surely has dominated the shape of modern IT and production more than any other technology of the last fifteen years, is notable for its use of standards (IETF, W3C, ISO, etc) and for the irrelevance of patents (except as a distraction and brake). Now I know that the physical side (the big pipes of CISCO and so on) do have a lot of IPR involved, but I suspect that the owners of the IP would be making their products and profits regardless: removing IPR would lessen the chance of super-profits, reduce the gambling short-term view of VCs, but not prevent market demand.
A later speaker at the same conference pushed the “you won’t get anywhere unless you aggressively respect IPR” line: non-Western countries get a lot of this. Because of the manifest failure of the US patent system, I have not been able to subscribe to this: an unfair, eager-to-please, monopoly-encouraging IPR system directly reduces the ability of R&D-poor countries to compete, and distorts production away from consumer products and towards products for rich people. But at the same time as we were speaking, on April 30, a bomb was waiting to go off in the US that may force me to change my mind, or at least to temper my opposition.
If we are seeing the start of the reform of the US patent system, so that the bar to patents becomes extremely high, there may be a sliver of merit in very temporary monopoly grants as long as it encourages bringing products to market: granting patents that then allows the holder to sit on the patent and protect their current technologies is a terrible abuse, and, indeed, should be an offense: if a company does not want to take up its patent rights, they should lapse. (The Japanese had a similar thought in their old patent system, which IIRC had five year grants to force products to market: this perhaps shaped the form of Japanese technology and innovation towards the practical and quickly realizable, not a bad thing in my book.)
The bomb that has caused this implosion is of course the recent US Supreme Court decisions on KSR Int’l Co. v. Teleflex Inc., which has raised the bar for “obviousness” so that it means something more like…err… ‘obviousness’ and to re-urge caution in granting patents merely “on the combination of elements found in the prior art”, and Microsoft Corp. v. AT&T, which was to do with extraterritoriality and the issue of whether non-physical software was a component of a patentable device. Groklaw has the judgments here.
KSR Int’l Co. v. Teleflex Inc.
In prior courts proceedings for the KSR case, the question of obviousness came up: obvious to whom? So a legal figure is used of “a person with ordinary skill”: an undergraduate degree in mechanical engineering (or an equivalent amount of industry experience) [and] familiarity with pedal control systems for vehicles. A patentable design has to be “not obvious to those skilled in the art”, for example as evidenced by going against conventional wisdom.
Justice Kennedy has a wonderful phrase “Granting patent protection to advances that would occur in the ordinary course without real innovation retards progress…” The court even mentions “common sense”! Brilliant. That the court is quite strongly determined can be seen in both in its claims that it is merely restating what it has previously said (of course, courts would be loath to say they have about-faced, but they clearly did not get their message across previously) and also in the penultimate paragraph, which begins We build and create by bringing to the tangible and palpable reality around us new works based on instinct, simple logic, ordinary inferences, extraordinary ideas, and sometimes even genius. These advances, once part of our shared knowledge, define a new threshold from which innovation starts once more. And as progress beginning from higher levels of achievement is expected in the normal course, the results of ordinary innovation are not the subject of exclusive rights under the patent laws. Were it otherwise patents might stifle, rather than promote, the progress of useful arts. +1 Music to my ears
KSR seems to include quite a serious rebuke to the US PTO as well (s. III B): the presumption of validity based on “that the PTO, in its expertise, has approved the claim - seems much diminished here”.
Companies thinking about patenting schemas should very seriously consider the KSR case. A schema that is an obvious way to do things to a person with ordinary skill is not patentable: and a person with ordinary skill would be someone with say an undergraduate CS degree or experience, with familiarity with schemas for the same and unrelated areas. Now schemas have only limited copyrightability, except for their natural language portions and any onerous-to-collate lists, in some legal systems; one would have to suspect that patents on schemas are, on the face of KSR, junk patents.
Microsoft Corp. v. AT&T
The Microsoft case is of lesser interest, and concerns the limits of extra-territorial application of patents: AT&T claimed a speech synthesizer patent applied to Microsoft software sent outside US jurisdiction and used as master copies; the US Patent Act has a section to prevent subverting the patent law by US firms outsourcing assembly of parts sent from US; the court held that a master copy of software was not used directly to run the software, therefore it was not captured.
The first interesting part of the judgement is that the court interpreted the clause very conservatively, as appropriate for cases involving extra-territorality. But on the general principle that it is a good thing to rope in monopoly grants, I think the outcome was good there too. The judgment restates the principle from 1857 that “our patent system makes no claim to extraterritorial effect“. Presumably AT&T would have to go one of the countries where Microsoft had sold the speech synthesizer and which had some kind of patent-recognition treaty, and try there.
The second interesting part of the judgment is that it displays a strong hint that software, independent of a medium, is an intangible rather than (a “component” of) something amenable to patenting, at least as far as the particular clause under consideration. Justice Alito: a component of a machine,whether a shrimp deveiner or a personal computer, must be something physical. The decision cites the Digital Millennium Copyright Act as the law in force in relation to copying and piracy: “Congress is doubtless aware of the ease with which software … can be copied, and has not left the matter untouched”, though not to the extent of feeding the ravenous IP monster with extra-territorial effect. I bet the lobbyists are revving their engines to get Congress to close this “loophole”, which would be entirely the wrong thing to do.
Discalimer: IANAL (I Am Not A Lawyer.)