The Death of Business-Method Patents

But that's an impossible standard to implement. No one, and certainly no governmental institution, can reliably assess whether patents help or harm particular forms of innovation. The U.S. Congress often drowns in the conflicting analyses supplied by partisan players, as recent experience with patent reform amply demonstrates. The courts, for their part, aren’t supposed to make social policy, which partly explains why they prefer to reason by analogy, deciding what can be patented by comparison to what is or isn’t already patentable.

But reasoning by analogy doesn’t always work well for new forms of innovation. Software, for example, is on one level just zeroes and ones. Yet it transforms a general-purpose computer into a specialized, task-specific machine. Indeed, a program’s very ability to run on any suitable platform means that protecting that program can affect an entire industry.

The upshot is that these endless debates about whether software is more like a patentable machine or an unpatentable abstraction are completely beside the point. What we really need to know, but lack the tools to reliably assess, is whether software patents help or hinder innovation.

If that question is obvious to ask but impossible to answer, then how are we to decide whether to admit a new candidate into the pantheon of patentable subject matter? Perhaps the best place to begin is where the world’s various patent systems tend to agree. One common feature is the focus on what’s made (as opposed to merely thought) by man. Other well-established boundaries include the universal unpatentability of laws of nature, physical phenomena, abstract or disembodied ideas, and pure math. Maybe we should exchange lofty expressions of legal principle for practical standards based on these recognized exclusions. Perhaps if patent claims call for hardware and operations that don’t reduce to ”numbers in–crunch numbers–numbers out,” we should consider the subject-matter eligibility bar cleared.

Qualifying as patentable subject matter, after all, is only the first hurdle that any invention must clear. The invention must also be different from past efforts and, critically, sufficiently innovative beyond them to merit the distinction of a patent. This latter requirement of ”nonobviousness” is a tough standard, and the courts have been making it tougher. Even the most creative way of teasing your pet or playing on a swing would surely fail to meet this standard today.

Let’s also not forget the system’s existing capacity for self-correction. Competitors who feel (or fear) a patent’s sting can ask the PTO to reconsider its decision to grant the patent, challenge the patent’s validity informally or in court, design around it, or pay a license fee. While none of these options may seem attractive to the party on the receiving end, their very existence ensures that most patents ultimately hinder rather than destroy competition. Legislatures will also act when the social costs seem too high, imposing restrictions on patents for surgical procedures, for example.

In fact, if judges conceived of themselves as practical surgeons rather than visionary healers, excising the dangerous outliers with a fine scalpel but otherwise doing no harm, then the system they preside over might well be healthier.