July 2, 2022

Archives for October 2008

Federal Circuit Reins in Business Method Patents

This has been a big year for patent law in the technology industry. A few weeks ago I wrote about the Supreme Court’s Quanta v. LG decision. Now the United States Court of Appeals for the Federal Circuit, which has jurisdiction over all patent appeals, has handed down a landmark ruling in the case of In Re Bilski. The case dealt with the validity of patents on business methods, and a number of public interest organizations had filed amicus briefs. I offer my take on the decision in a story for Ars Technica. In a nutshell, the Federal Circuit rejected the patent application at issue in the case and signaled a newfound skepticism of “business method” patents.

The decision is surprising because the Federal Circuit has until recently been strongly in favor of expanding patent rights. During the 1990s, it handed down its Alappat and State Street decisions, which gave a green light to patents on software and business methods, two categories of innovation that had traditionally been regarded as ineligible for patent protection. Even as the evidence mounted earlier this decade that these patents were hindering, rather than promoting, technological innovation, the Federal Circuit showed no sign of backing down.

Now, however, the Federal Circuit’s attitude seems to have changed. The biggest factor, I suspect, is that after a quarter century of ignoring patent law, the Supreme Court has handed down a series of unanimous decisions overturning Federal Circuit precedents and harshly criticizing the court’s permissive patent jurisprudence. That, combined with the avalanche of bad press, seems to have convinced the Federal Circuit that the standards for patenting needed to be tightened up.

However, as Ben Klemens writes, Bilski is the start of an argument about the patentability of abtract inventions, not its end. The Federal Circuit formally abandoned the extremely permissive standard it established in State Street, reverting to the Supreme Court’s rule that an invention must be tied to a specific machine or a transformation of matter. But it deferred until future decisions the precise details of how closely an idea has to be tied to a specific machine in order to be eligible for patentability. We know, for example, that a software algorithm (which is ultimately just a string of 1s and 0s) cannot be patented. But what if I take that string of 1s and 0s and write it onto a hard drive, which certainly is a machine. Does this idea-machine hybrid become a patentable invention? As Ben points out, we don’t know because the Federal Circuit explicitly deferred this question to future cases.

Still, there are a lot of hopeful signs here for those of us who would like to see an end to patents on software and business methods. The decision looks in some detail at the Supreme Court’s trio of software patent cases from the late 1970s and early 1980s, and seems conscious of the disconnect between those decisions and the Federal Circuit’s more recent precedents. Software and business method patents have developed a lot of institutional inertia over the last 15 years, so we’re unlikely to see a return to the rule that software and business methods are never patentable. But it’s safe to say that it’s going to start getting a lot harder to obtain patents on software and business methods.

DMCA Week: Predictions Are Hard, Especially about the Future

My previous post on DVD jukeboxes has prompted an interesting discussion among our commenters. There seems to be a lively difference of opinion about how useful a DVD jukebox would be, what it would look like, and who would use it. Personally, I had envisioned a high-end video device that DVD collectors would buy to help them organize their libraries. But some commenters pointed out something I hadn’t thought of: a DVD jukebox—either a set-top device or a portable one—would be a godsend to parents with small children. Children not only like to watch the same video repeatedly, but they’re also far more likely to damage a DVD. Having a sealed, rugged hard drive on which to store a few dozen of junior’s favorite movies seems like it would be extremely convenient.

Of course, I don’t really know. Maybe parents already have devices that fill this need. Maybe the devices would be too expensive or too fragile. But that’s why we have markets: so people can try things to see what works.

It’s worth remembering that new technologies almost always wind up having a “killer app” that their creators didn’t expect. The creators of the Internet didn’t have email in mind, but it was the dominant Internet application by the mid-70s. Visicalc, the first spreadsheet, wasn’t on Steve Wozniak’s radar when he built the Apple II. And Apple didn’t invent podcasting, although they were smart enough to jump on the bandwagon relatively quickly once other people did.

None of these applications could have been developed if the technologies on which they relied hadn’t already been created. But if you’d tried to explain what the Internet, the microcomputer, or the MP3 player was good for before you could create the first one, you wouldn’t have been able to make a very convincing argument. I think the same is true of the kind of products we’d see if DVD ripping were legal. I’m pretty confident that we’d have some useful new technologies, but I can’t say exactly what they’d be.

This is one of the reasons I think DMCA supporters are wrong to point to the DMCA’s triennial review process as mitigating the DMCA’s negative effect on technological progress. The triennial process requires entrepreneurs to explain in advance how a given act of circumvention will benefit society. If we’d held the inventors of the Internet, the personal computer, or the MP3 player to that standard, we might not have any of those technologies.

Wikipedia as a Public Good

My post about Wikipedia and public goods prompted an interesting response from Judd Antin at Berkeley’s School of Information. He makes a number of sharp points, but let me focus on this response to the idea that free-riders don’t hurt Wikipedia:

This completely depends on what your goal is. On the one hand, sure, once you reach critical mass, the marginal cost of providing the good is zero (or near-zero), so who cares how many free-riders there are. On the other hand, there are lots of benefits to adding to the group of contributors. Wikipedia isn’t perfect – not even close. It’s wrong on a lot of topics. It’s poorly written in many places. It’s skewed heavily towards CS and popular culture, and away from things like history and literature. There’s a lot to be gained for Wikipedia by converting free-riders to contributors. And let’s not foget about the many, many systems that never get to critical mass.

Notice the background assumption in this passage that the numbers of free-riders and contributors are inversely correlated. That is, it assumes that each free-rider is in some sense detracting from the overall effort by failing to contribute. And it suggests that a better-designed institution might be able to convert more of those free-riders into contributors and thereby increase the total value of the public good that’s being provided.

The problem with this, I think, is that it gets the sign of the correlation between free-riders and contributors backwards. That is, on the Internet, the potential audience is so enormous that the most effective way to get more contributors is to increase the total number of users. For Wikipedia, there isn’t so much a “free-riding problem” as there is a “free-riding opportunity”: the more free-riders there are, the easier it will be to recruit new contributors down the road.

Antin also seems to be under the impression that I’m suggesting that we need to “rethink 100 years of theory” about public goods, which is certainly not the case. Standard arguments about public good problems work perfectly well for in cases like national defense and clean air, and I’m certainly not suggesting that we need to re-think those cases. My claim is simply that the standard model (and especially the focus on free riding) just isn’t a helpful way to think about online content creation, a public goods problem with dramatically different characteristics from clean air or national defense.