Friday, January 20, 2006

Two attacks on business method patents


Across the country, Rocco Monteleone was getting set to open Bowls, a cereal cafe in Gainesville, Florida, (near the University of Florida) when he found out that Cereality had beaten him to the punch. OK, he figured, no harm, no foul: It's America. Anyone can open a restaurant selling cereal. Right?

Well, kind of. In May, Monteleone received a letter from Cereality's attorney warning him that he may be in violation of a patent application the company had filed for its "methods and system" of selling cereal. These included: "displaying and mixing competitively branded food products" and adding "a third portion of liquid."

Cuckoo for patent law

Just 10 years ago, this kind of a patent would have been impossible even to consider. But a landmark shift in the law has made it possible to patent entire ways of doing business -- a change that has prompted a rush on patent claims, opened a Pandora's Box of litigation and threatens to put large swaths of American innovation under the control of big business. Given the transition from an industrial to digital economy, changes in patent law were inevitable and necessary. But critics argue that when it comes to business methods the traditional rationales for granting patents -- they incentivize expensive research and encourage inventors to share their knowledge -- don't apply.


A report from the Cutter Consortium, an IT advisory firm, says that the U.S. Patent Office should carefully re-examine its rules and regulations regarding software patents. Cutter believes the U.S. software patent scheme is "badly broken" and that, in light of the European Union's ruling not to grant patents on software, it is time for the U.S. to give serious thought to revamping its patent system.

Prior to the 1950s, the U.S. Patent Office didn't patent abstractions, such as algorithms, or those that existed in the limited software of the time, according to Tom DeMarco, fellow at Cutter Consortium. Starting in the 1960s, and picking up steam in the 1980s, patents started to be awarded for software and elements of software, including such innocuous items as formatting of footnotes. Some believe that, by awarding patents to firms for common things that can't be attributed to any one person or firm, the U.S. Patent Office is making it much harder for smaller software companies to not only develop new products but also just stay in business.

[IPBiz: One still can't patent algorithms or abstractions. Separately, State Street did not really change the law.]

Also, from on David W.R. Brown:

To keep patents, essentially legal monopolies on an idea, inventors must pay a maintenance fee, ranging from $450 to $1,900, after four, eight and 12 years of securing the patent. Brown, in the midst of moving when his fee was due, didn't have the money to cover it and assumed he could pay it later.

Brown, whose first patent was for a film-editing machine (his timing was ill-fated, it coincided with the advent of video), came to realize that those fees - which are doubled for large companies - still tripped up the tinkerers.

Until Brown got involved, those inventors would have to submit personal information to prove they were down on their luck when the fee came due.

Brown, a Republican, didn't think the government should be privy to such information.

He sued. Without talking to an attorney. Without ever having sued before.

To prove that the Patent Office knows too much about inventors, Brown's lawsuit exhibited agency records on those who missed their deadlines. The files included death certificates, tax returns, psychiatric records and itemized hospital bills.
[See earlier post on IPBiz.]

"And here's this poor guy Charlie (a patent lawyer) who is an alcoholic and Jerome, another alcoholic who is going to be Charlie's counselor," Brown says, flipping through one of his binders.

Patent Office employees are directed to tell inventors not to send credit card and bank account numbers or any information that could lead to identity theft. And the agency is in the process of redacting such information from its files, Maulsby said.

Brown called the settlement a "cream puff" for the government. He would have preferred to have gotten back his patent and to have reinstated lost patents for other inventors.

But his wife, Jean, couldn't stand all the legal boxes living on the sofa, chairs and even in her laundry room.

"One inventor told me I had sold my birthright for a bowl of cold porridge," Brown says with a sigh.

Brown secretly hopes the Patent Office doesn't comply, so he can sue again.

Until then, he has found time to work on perfecting the doughnut-shaped motor. He says it should require less energy than traditional motors. But he hasn't entirely given up his crusade.

Late at night, in an office covered in Albert Einstein posters, the one-man watchdog works on his Web site, where he offers advice to inventors and chronicles his experience fighting what he calls the corruption and incompetence at the Patent Office.

He can tell who views his Web site.



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