Should Business Methods be Patented?

The argument of whether business methods should have the ability to be patented at first sounds irrelevant and ludicrous that anyone would care. command_line Upon closer inspection, the ramifications of such a change go beyond men in suits and high-rise bureaucratic empires. It could affect everything from software and pharma, to the teaching methods used to teach children in schools. On November 9th 2009, the U.S. Supreme Court hear the oral argument of appeal for the re Bilski patent for a method of hedging risk in commodities trading. More specifically, re Bilski was rejected for a patent on a business model that asses risk for an energy payment plan based on upfront payment (before use). The patent was rejected on the grounds that the patent was an abstract idea and had no practical technological application thus, not a technological invention.

So what does this have to do with software and education? Justice Antonin Scalia explained the ramifications of this by equating a patent for business methods with standards in horse training. “Let’s take training horses, don’t you think that some people, horse whisperers or others, had some, you know, some insights into the best way to train horses? And that should have been patentable on your theory.” Why shouldn’t he make this outlandish comparison?

The decision of the appeal will and is being used in similar cases with IBM to combat the rejection of appeals for software. If a business method or more generally, an idea can be patented, what is to stop large corporations who can afford patent lawyers from claiming ownership over standard business practices? Imagine not being able to put in an IT ticket at work when something on your computer goes wrong. What would it be like if Dominos Pizza was the only pizza shop that could offer free delivery?

This could hit software the hardest. Software moves and develops very quickly. Computers and their capabilities have moved very far and fast over the past 20 years. Hardware has changed, and made it possible to do things made of 1960’s science fiction a reality in a very short period of time. Software innovates and grows along with the hardware to do new and powerful things. Software is able to innovate and progress so quickly because much of the development happens through virtual communities. Developers are able to share, inspire, challenge, and ultimately learn from each other. Sure, people may argue that open source is the epitome of socialism. But it would be a crime to argue that open source offers little in terms of innovation and peer-education for the purpose of moving software forward.

It comes down to companies claiming ownership not simply of their own products, but of mathematical algorithms used in their software. Patent ownership comes with over a decade of free monopoly type reign over a piece of technology or technological process before it enters into the public domain. In the world of software, falling a year behind is to become archaic and obsolete let alone 17 years. Patent ownership of a business model would therefore slow development to a halt. It is important to be able to build and improve on existing technology and software.

The ability to own a patent can be used as a defensive measure for companies. Suppose that a hugely successful e-marketing firm somehow solves the age old problem of spam with an algorithm. They could know how to offer complete and total spam protection without the need to aggregate large databases in order to block messages. The company could file a patent for this algorithm, and do nothing with it. Why would they do this? The company would loose all high ground on being able to profit from email spam by releasing the solution to the problem that they themselves create. So why not sit on the solution for a few years and keep their business profitable?

Sure a lot of the things I argue are worst case scenario if things go unchecked. It’s important to understand how far this decision for changes to patent law can reach. It must be dealt with delicately in order to ensure the modernization of technological ownership while keeping good business practice in check.

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