2HRS2GO: Patents move in the right direction

2 min read

COMMENTARY--At least the legal front has some good news.

You might worry about falling corporate profits, economic slowdowns spreading around the world, and a greater-than-expected increase in consumer prices. But at least there might be fewer One-Clicks in the future.

Today The Wall Street Journal reports that the U.S. Patent Office has slowed its approval of "business method" patents such as the One-Click feature used by Amazon.com (Nasdaq: AMZN) and "Name Your Own Price" models of Priceline.com (Nasdaq: PCLN). Tech and Internet companies (except the ones with those business method licenses) should applaud.

Government overseers granted 36 percent of business-method applications in the fourth quarter of last year, compared with 56 percent in first quarter, when the Patent Office started requiring a second review for all business-method patents.

Some intellectual-property lawyers point to the numbers as evidence of a double standard, since the overall approval rate for patents was 72 percent. "The court said a business-method patent is as good as any other," noted Boston attorney Paul Gupta.

This is true. Judges have done many stupid things in the past. Distant relations of Dred Scott can tell you all about it.

Speaking of stupid, some of these patents certainly look that way now. "Name Your Own Price" seems to work only with industries that lack an easy way of clearing excess inventory. One court believes Barnesandnoble.com (Nasdaq: BNBN) could succeed in overturning Amazon.com's One-Click ownership. And the dreaded e-commerce patent claim of Gupta's client, DE Technologies, has been sent back even though the Patent Office last year sent the company a letter saying the patent would soon be issued.

Attorneys can criticize the Patent Office for essentially rewriting the law, but I prefer to focus on the results. Patenting the entire concept of e-commerce would be as silly as giving Dr. J royalties every time an NBA player does a tomahawk dunk. Imagine if Netscape patented the "concept" of a browser; we might still be stuck with Navigator 3.0.

Anyone can word something broadly enough, but you're not supposed to get patent for something that is obvious. Automating international trade processes falls into that category. "Name Your Own Price" is really nothing more than a computerized auction; the only difference is that you don't know what anyone else is bidding.

The biggest problem with business-method patents is that they could discourage someone from improving a particular service. Why bother developing an improved online wallet system if you have to pay Amazon.com (Nasdaq: AMZN) every time it's used?

Better to stick with patents for products and inventions. Then the focus remains on real innovations, instead of collecting tolls for vaguely worded licenses.