In 1997 Lester C. Thurow of MIT wrote an insightful article entitled “Needed: A New System of Intellectual Property Rights” (ref. #1) that was published in the Harvard Business Review. He proposed an overhauling of the world’s one-dimensional system for protecting intellectual property to a more differentiated one for addressing the realities of today’s fast-paced, technology-oriented world.
Fast forward to 2017. Thurow’s article was published long before court decisions such as Alice v. CLS Bank and its progeny created an unprecedented level of derision and confusion over software-based intellectual property rights. Since the Thurow article, tens of dozens of software patents have been invalidated by either the courts as the result of a patent infringement lawsuit where patent validity becomes an issue or the PTAB through the inter partes review procedure created under the America Invents Act of 2011.
In an article entitled “Enfish, – Some Light at the End of the Tunnel for Software Patents Since Alice?” written by me and posted at www.IPwatchdog.com in June, 2016, I suggested that Congress entertain the possibility of establishing a different class of patents for software-based patents. At the time, I was unaware of Thurow’s article and had never even seen it quoted. I now highly recommend it to those who are interested in also getting an economist’s detailed perspective on intellectual property rights in a “high tech” world. For some background information on software patent issues, an excerpt from the IP Watchdog article is provided below:
In conclusion, technological developments are changing at a faster rate than ever before as the result of computers and software. Opponents to patents involving software-based claims argue that these patents stifle innovation and generally involve nothing more than automation of human activity. Yet clearly the grant of patent-associated monopolies over the years has resulted in investment and innovation just as the founding fathers envisioned. As Mark Twain stated through the protagonist in A Connecticut Yankee in King Arthur’s Court, “[t]he very first official thing I did, in my administration—and it was on the very first day of it, too—was to start a patent office; for I knew that a country without a patent office and good patent laws was just a crab, and couldn’t travel any way but sideways or backways.”
Perhaps the bigger issue is that with the changing “fast-paced” landscape of innovation in computers and software, the current in-place patent laws covering all utility patents should be revisited by Congress. There is no reason why Congress could not carve out a class of patents specific for software-based inventions perhaps with a shorter patent term relative to utility patents. Federal law need not necessarily be limited to just one type of patent protection and indeed patent protection is available today in the form of design patents and plant patents as well as utility patents. Such an approach would “reward” innovation efforts as U.S. patent law has always done since 1783 and at the same time address the reality that today’s technology itself lends itself to substantially reducing the time frame for innovation thanks to software-driven computer technology. The suggested approach provides balance between the public policy behind patent term monopoly grants to foster investment and innovation and at the same time recognizes that technology will continue to develop far more rapidly than it ever did in the past thanks in part to software technology.
The foregoing suggestion is not intended to circumvent the requirement for subject matter eligibility under § 101. It is intended to encourage the introduction of updated patent laws that are commensurate with today’s computer and software-based technology and better define the requirements for patentability as they pertain to such technologies. In the meantime, the courts will likely continue to invalidate patents based on the current state of post-Alice jurisprudence. In today’s post-Alice world, the concept of patent validity has been turned on its head. And patent applicants will continue to puzzle over what will pass muster under a § 101 analysis. Perhaps the Enfish case, now along with the DDR Holdings and Motio cases, will give some much-needed clarity – that all software-based inventions are not per se subject matter ineligible and all software-based inventions do not merely represent mere automation of a previously automated human endeavor.
© 2017 by Troy & Schwartz, LLC
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(1) Available at https:/hbr.org/1997/09/needed-a-new-system-of-intellectual-property-rights.
