Steve R. points me to this fascinating New York Times article on Wall Street’s patent race:
For now, all the big firms seem to be playing nicely with one another. Many lawyers involved in patenting systems and products on Wall Street label the patents as defensive in nature. They say Wall Street banks are trying to patent products or software systems in an effort to protect themselves from claims or litigation brought by individuals or small companies whose primary business is holding patents–those known to their detractors as patent trolls. But some warn it is merely a matter of time before the patent activity turns from defensive to offensive. Wall Street firms will eventually look for ways to license the technologies or products they have patented, hoping to earn a high-margin revenue stream, or they will begin to litigate against each other, lawyers say. “Right now, people are figuring out they need some playing cards so that if someone comes to us and says ‘You’re infringing,’ well, we have some patents and we can do a cross-licensing deal and everyone goes away,” says Raymond Millien, a former patent lawyer for American Express who is now the general counsel with Ocean Tomo, a merchant bank specializing in intellectual property. “But there are going to be some companies on the Street who are going to start licensing their products and enforcing the patents to get a revenue stream from them.”
It’s hard to avoid the conclusion that the patent system has gone badly awry. The standard theory of patents is that inventors get patents to allow them to share information about their inventions with other companies. But it doesn’t sound like anything of the sort is happening here. A few companies are getting patents so they can extract royalties from other companies for “inventions” they discovered independently. And the rest of the industry is getting patents in self-defense, so that they’ll have some ammunition to defend themselves when the more aggressive firms come knocking.
There’s a weird disconnect between academic discussion of patents and what’s going on in the real world. At least in the realm of software and business method patents, companies have long since dropped any pretext that their “inventions” are genuinely novel discoveries. This is very different from the academic conception of patents, in which inventions are always assumed to be clearly defined and non-obvious. Software and busines method patents might promote innovation on academics’ blackboards, but in the real world, it’s hard to see them as anything but a burden.
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