Thursday, October 21, 2004

Doing Away with Business Patent Methods

["Doing Away With Business Patent Methods" by ND Batra
The Statesman Web Wednesday, September 29 2004. Reprint.]

Vivius, Inc., based in Minneapolis, is a most recent example of companies rushing to patent their unique methods of doing business, thus creating impenetrable walls to hide ideas that should be tested and debated in public. The company, according to Business Wire, calls itself “the architect of a core technology and innovative transaction model that allows consumers to calculate a unique insurance premium for each participating family member, based on their individual preferences and choices of co-payment levels and providers.” The company offers its Internet-based model “to consumers through insurance carriers under a turnkey private-labelling agreement.” Once you call something a business method or a technology, you could ask for a patent. Even one’s swagger or a Dirty Harry look could be called a business method and be patented.But what is “turnkey private-labelling agreement”? If privacy can be protected through any unique business method, let Vivius demonstrate it to the public. The reality is that as soon as a person logs on to a Website, he spills all personal information, in spite of himself. Any promise of a total Web privacy is a business hoax. Nonetheless, I do believe there is an urgent need for developing a system that allows a person to shop for the best and least expensive clinics, hospitals and drug stores whether they are located in the USA, Canada or India. Vivius does nothing of the kind. Cost of drugs and medical malpractice insurance is tearing the health care system apart. Congress should put a moratorium on Internet business method patenting until lawmakers sort out how to regulate the growing field of e-commerce. As a system expert, I believe that every system tends to dissipate and become corrupt. That is now happening with the system of granting patents, which Congress under Article 1, Section 8 established to “promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive rights to their respective writings and discoveries.” But in this swirling chaos of greed and more corporate greed that is threatening global e-commerce, it is time for Congress to intervene. The moratorium on granting e-patents for the next five to 10 years would allow entrepreneurs to use each other’s business methods without any fear of infringement of intellectual property rights. This would serve the societal purpose of expanding e-commerce better than granting an Internet patent for every clever stroke of doing business in a different way. If the constitutional objective of encouraging inventiveness can be accomplished in a less damaging way that at the same time maximises societal interest, it must be tried. Patent should not become a form of corporate aggrandisement. There is a historical precedent of dealing with this kind of chaotic situation, as it happened in the early days of the development of radio. During World War I, radio was beginning to develop into a medium of business, shipping and military long-distance communication. There were many patent disputes between Marconi Wireless Telegraph Company and other inventors. In order to put a stop to patent disputes and advance radio, the US Navy took control over radio technology patents until the end of WW I. Borrowing and raiding each other’s technology hastened the development of radio, which became a dominant cultural and business medium after the War. E-commerce patenting today is in a similar predicament. The present system of granting business method patents began with Street Bank & Trust Co. v Signature Financial Group (1998) regarding Hub-and-Spoke mutual fund system. It picked up steam with “Name your price,” and became a hot issue when claimed victory over regarding the patent on “1-Click” business method. This development is nothing but negation and perversion of the original purpose of the Patent Law and if unchecked, it is going to hurt our vision of global business via the Internet. By imposing a limited moratorium over Internet business method patents, Congress would help e-commerce develop rapidly and encourage inventiveness and creativity. It is time to balance the public interest with the interests of big business.The public interest would be better served by raising the standard of “non-obviousness and novelty” to never-before-experienced extreme uniqueness, which should evoke an expert response: Wow! A variation on an old theme or a method of doing business is not uniqueness. In concrete terms, if a business method is not 90 per cent new and non-obvious, it does not deserve any patent. Anything less is prior technology and belongs to the public domain. The argument that businesses won’t invest money in developing new business methods is baseless. The momentum of e-commerce is so powerful today that nothing could stop investors from pouring money into new e-commerce ventures. I believe e-commerce would have multiplied manifold if “Name your price” and “1-click” were placed in the public domain rather than given proprietary control to already well-established businesses. and as successful business concepts need to be further developed and that can be done only through the challenge of the marketplace. Same is the case with the Vivius business method model. In the age of privatisation, we have been forgetting the public interest. In a nation where monopoly is anathema, we have begun to embrace monopoly as a fundamental right of corporations.

(ND Batra is Professor of Communications, Norwich University, Vermont.)

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