Patent Sharks

by on June 30, 2008 · 23 comments

I’ve just finished reading this amazing paper by Gerard N. Magliocca about the 19th-century phenomenon of “patent sharks.” In the 1860s, the Patent Office inaugurated an experiment with eased standards on design patents for farm tools. The result was a flood of low-quality patents, and the emergence of a new character in the patent system: the “patent shark” who would show up in a small town with a fistful of patents and use them to extort money from hapless farmers whose farm tools may have been covered by the shark’s patent portfolio.

Farmers’ groups reacted with outrage and pushed Congress for legislative solutions that will sound eerily familiar to anyone who’s familiar with today’s patent debates: an “innocent user” defense that would shield a farmer who unwittingly uses a patented tool and changes to the rules regarding damages for infringement. These changes were never passed by Congress because they encountered the staunch opposition of the holders of other types of patents, who feared that they would undermine the rights of all patent holders.

The problem was ultimately solved when the Patent Office—and later the Congress—formally restored the higher bar for patentability that had prevailed prior to the Civil War. In other words, the solution to patenting was to abolish the class of patents that had created the “patent shark” problem in the first place. Magliocca suggests that the solution to today’s patent troll problem may be to abolish software and business method patents, the favorite of today’s patent sharks.

He notes several similarities between utility patents in the 19th century and software patents today. But one factor that I don’t think he emphasizes enough is the simple breadth of the subject matter being covered. The best patents—pharmaceutical patents, say—apply to a well-defined industry. Pharmaceutical companies need to monitor pharmaceutical patents in order to determine what they’re allowed to do. In contrast, every business on Earth uses software and “business methods.” Therefore, every business on Earth is a potential target. That means it’s much easier for trolls to find potential victims. It also means that the targets—many of whom don’t think of themselves as being in the software industry or the “business method industry”—will be ill-equipped to respond to the lawsuit.

Precisely the same observation applies to 19th century patent sharks. Because most people in the 19th century were farmers, patents on farm tools were likely to be infringed by millions of individual farmers who lacked the expertise to evaluate the patent and the resources to hire lawyers to defend themselves. Hence, 19th-century farmers, like 21st-century “business method” users, were easy pickings for patent sharks who preyed on their targets’ lack of preparation for patent litigation.

Magliocca closes his paper with the following slightly frustrating observation:

With respect to design patents granted in the past on incremental improvements, there was no real evidence that they helped anyone. The only concrete result was a school of rabid sharks. By contrast, it is hard to say that patents for software or business methods do not spur creativity in a meaningful way. Abolishing these patents may well cause more harm than the trolls do. Without more evidence on the effect opportunistic licensing has on high-tech investment, this analysis cannot rule out the possiblity that there is a justification for these technology patents that breaks the parallel with the design patents that were abolished during the nineteenth century.

To a large extent, I’m sure this is just an instance of academic caution. But while I suppose it’s true that the analysis in the paper “cannot rule out the possiblity that there is a justification for these technology patents,” I don’t think it’s “hard to say that patents for software or business methods do not spur creativity in a meaningful way.” That is, indeed, what the vast majority of software developers will tell you, and it’s also what most software executives would have told you until they started amassing patent portfolios of their own. It is, moreover, strongly suggested by the evidence Bessen and Meurer have amassed on the subject.

  • Gerard

    Tim,

    Yup, academic caution. The paper that I’m working on now, however, will not be so cautious.

    Gerard Magliocca

  • Gerard

    Tim,

    Yup, academic caution. The paper that I’m working on now, however, will not be so cautious.

    Gerard Magliocca

  • Marc Grundfest

    I look forward to reading this paper. Meanwhile I note that the US Constitution Article 1 section 8 limit the power of congress to grant such patent monopolies for limited times and to useful arts.

    This suggests that the advance must be useful not just minor variations on a know theme, and the they must also be limited in time- that is no patent should outlast the useful life of the invention. Given the advance of technical progress it is likely the current patent period is effectively infinite,and thus eclipses the power of congress to grant.

    Given that patents generally require the holder to take enforcement action they are useless to most small inventors, for whom such a patent fight would be pointless (note the case of STac electronics v Microsoft ) and thus patents are not even remotely associated with protecting inventors, but rather the Corporation, likely in exchange for campaign funds. In short no challenge to patents is likely to be successful if it relies on appeals to “promoting Science and the useful arts” as it is clear to me that modern patent law has no such purpose in mind, but it may be possible to accelerate the expiration of such patents to be more constant with the pace of change technology.

    Other important questions include the issue of the scope of patents over an entire class of inventions — such patents are rarely enforced but they make great fodder for greenmail. If we do not reform our patent system inventors will be forced to take refuge overseas.

  • Marc Grundfest

    I look forward to reading this paper. Meanwhile I note that the US Constitution Article 1 section 8 limit the power of congress to grant such patent monopolies for limited times and to useful arts.

    This suggests that the advance must be useful not just minor variations on a know theme, and the they must also be limited in time- that is no patent should outlast the useful life of the invention. Given the advance of technical progress it is likely the current patent period is effectively infinite,and thus eclipses the power of congress to grant.

    Given that patents generally require the holder to take enforcement action they are useless to most small inventors, for whom such a patent fight would be pointless (note the case of STac electronics v Microsoft ) and thus patents are not even remotely associated with protecting inventors, but rather the Corporation, likely in exchange for campaign funds. In short no challenge to patents is likely to be successful if it relies on appeals to “promoting Science and the useful arts” as it is clear to me that modern patent law has no such purpose in mind, but it may be possible to accelerate the expiration of such patents to be more constant with the pace of change technology.

    Other important questions include the issue of the scope of patents over an entire class of inventions — such patents are rarely enforced but they make great fodder for greenmail. If we do not reform our patent system inventors will be forced to take refuge overseas.

  • buddhakwee

    Thanks for the News and Comments for backlinks for my site
    Kindly have a visit to my site

  • http://hobbywedkarstwo.blogspot.com/ Tom

    In my opinion this tex can teach other so that are more careful in the decision making

  • http://www.club-penguin.org/ Club Penguin Cheats

    In short no challenge to patents is likely to be successful if it relies on appeals to “promoting Science and the useful arts” as it is clear to me that modern patent law has no such purpose in mind, but it may be possible to accelerate the expiration of such patents to be more constant with the pace of change technology.

  • http://nanovornews.com/ nanovor game

    Given that patents generally require the holder to take enforcement action they are useless to most small inventors, for whom such a patent fight would be pointless (note the case of STac electronics v Microsoft ) and thus patents are not even remotely associated with protecting inventors, but rather the Corporation, likely in exchange for campaign funds. In short no challenge to patents is likely to be successful if it relies on appeals to “promoting Science and the useful arts” as it is clear to me that modern patent law has no such purpose in mind, but it may be possible to accelerate the expiration of such patents to be more constant with the pace of change technology.

  • http://nanovornews.com/ nanovor game

    Given that patents generally require the holder to take enforcement action they are useless to most small inventors, for whom such a patent fight would be pointless (note the case of STac electronics v Microsoft ) and thus patents are not even remotely associated with protecting inventors, but rather the Corporation, likely in exchange for campaign funds. In short no challenge to patents is likely to be successful if it relies on appeals to “promoting Science and the useful arts” as it is clear to me that modern patent law has no such purpose in mind, but it may be possible to accelerate the expiration of such patents to be more constant with the pace of change technology.

  • Pingback: sharks - StartTags.com

  • Pingback: John Davis

  • Pingback: surf city nc rentals

  • Pingback: meubelen

  • Pingback: online geld verdienen

  • Pingback: Exchange Traded Funds

  • Pingback: Florida Lottery

  • Pingback: TX Lottery

  • Pingback: jadwal premier league

  • Pingback: 360 Celsius your lifestyle magazine

  • Pingback: Advanced Medical Certification Coupon

  • Pingback: Ashley

  • Pingback: yeast infection cure

  • Pingback: loudbounce

Previous post:

Next post: