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Putting an End to Patent Madness

May 25th, 2007 · by Tim Minahan · 3 Comments · supply management, supply risk

The rule of business these days seems to be: Those that can, do. Those that can’t, file a patent-infringement lawsuit. 

In tech circles, patents have traditionally functioned as the intellectual property equivalent of the Cold War, with each company’s arsenal of patents deterring the other from firing the first shot. Unfortunately, it is fast becoming modus operandi for businesses to use patents to squelch competition and artifically inflate revenues.

Patent cases have flooded court dockets and business headlines in recent weeks, with long-time holders dusting off patents on everything from graphical user interface and e-mail approaches to core data processing methods. Now I’m all for intellectual property protection, particularly when it comes to truly innovative technologies. (Indeed, today’s leading desktop applications owe a yet unpaid debt to innovations originally created by Xerox.) But the recent flurry of infringement filings have gotten way out of hand.

Consider recent patent infringement suits filed by erstwhile supply management technology companies on the use of software to support common processes, such as spend analysis and certain features of reverse auctions. (You can read all the details on recent SpendMatters posts.) While I neither know nor care about the merits of these recent cases, I have grave concerns about attepmts to squash innovation through litigation. I have particular concerns about patents that have been awarded for replicating common processes, such as placing an order in an electronic form. I mean, should the U.S. postal service (or the Pony Express) be able to lay claim to royalties for all the e-mails that have ever been sent? (Okay, an exaggeration, but not by much.)

While delivering near-term competitive advantage, such lawsuits will only wind up damaging the entire supply management sector — introducing new risks, stalling solution investments, and adding costs and delays to product development as vendors spend less time creating innovative new features and more time questioning, “Will this hold up in court.”

In my unlearned opinion, the patent office has fanned the flames of such ludicrous lawsuits by awarding patents on core business processes. And news this month that industrial distributor Consumers Interstate Corporation has been awarded a patent for core lean procurement principles – such as value engineering and waste reduction initiatives – threatens the very core of supply management transformation. 

Patent law was meant to foster and protect innovation. Not stifle it. I fear that we are sliding down a slippery slope that could further diminish the competitiveness of U.S. industry. The Courts and lawmakers seem to agree. Recent Supreme Court rulings indicated that limits must be placed on the scope and applicability of patent-related claims. Reform legislation being considered by Congress would, among other things, allow more peer review before awarding patents and make it more difficult for patent holders to sue and collect large damage awards in infringement cases.

If such reforms don’t pass, I’m tempted to file a patent on the patent-infringement filing process. Then retire to Tahiti on the royalties. Pass the coconut oil, please.

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3 responses so far ↓

  • 1 Doug Hudgeon // May 25, 2007 at 9:45 pm

    I understand and appreciate the rationale behind the patent system - certain capital investment would not be worthwhile if the investor was not granted a time-limited monopoly in which to recoup the investment. The inequities apparent in the patent system stem from two problems: 1) granting the monopoly for time periods longer than required to recoup the investment, and 2) granting the monopoly to non-novel inventions.

    As to the first point, the equity of the patent system correlates highly with the differential between the time required to originally manufacture the product and the time required to replicate it. Compare drug manufacture to software creation: a drug may take 10 years to design, develop and bring to market and 2 months for a competitor to replicate. Whereas a software application that takes a year to write may still take 6-9 months for a competitor to replicate.

    As to the second point, novelty is determined by whether the invention is obvious to an experienced practitioner in the industry. The issue faced by the patent office is that a limited number of people are adjudicating on an infinite (or nearly so) number of industries. Inventions that appear novel to an examiner may in fact be obvious to a truly experienced practitioner. I hope that the US Patent Office’s foray into crowd-sourcing is going to help address this point http://www.washingtonpost.com/wp-dyn/content/article/2007/03/04/AR2007030401263.html.

  • 2 Supply Excellence » An Aussie’s Take on Patent Madness // May 31, 2007 at 8:57 am

    [...] Last week’s rant — “Putting an End to Patent Madness” — put the spotlight on a critical issue for enterprises considering supply management software investments. It also sparked some great debate among Supply Excellence readers looking to balance intellectual property (IP) protection with the insatiable need for continuous innovation and improvement. [...]

  • 3 Supply Excellence » Hope on the Patent Horizon // Jun 7, 2007 at 8:25 am

    [...] Just when it seemed patent madness might strangle progess of supply management methods and systems, the Bush Administration has announced plans to overhaul the patent filing and award process. [...]

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