WASHINGTON-Congress, watching dazzling new technological and marketing advances driven by the Internet and its uncertain migration to wireless devices, has been dragged into high-stakes controversy over whether business methods patents are stifling innovation in the New Economy.
The nasty and highly publicized legal fight between Amazon.com and Barnsandnoble.com over Amazon.com’s 1999 `one-click’ patent represents the kind of high-tech patent squabbles increasingly confronting policy makers.
The debate over business methods patents, played out in courtrooms and in Congress, has served as a lightning rod for broader policy issues governing intellectual property protection and how the U.S. Patent and Trademark Office will operate in the Digital Age.
In recent years, the legitimacy of patents and the process by which they are granted have been criticized. But some say the quality of high-tech patents is first and foremost a function of the level of funding and resources accorded to the U.S. Patent and Trademark Office.
Several bills have been introduced that address business methods patents and PTO policy and funding issues.
“My No. 1 priority in Congress is to work to ensure that the PTO can retain all of its fees to improve the quality of examination to be as high as humanly possible,” said Rep. Howard Coble (R-N.C.), chairman of the House Judiciary subcommittee on courts, the Internet and intellectual property, at a hearing earlier this month.
The panel may hold additional hearings on the issue later this year. The Senate Judiciary Committee, chaired by Sen. Orrin Hatch (R-Utah), will address high-tech business methods patents at a May 15 hearing.
While Coble focuses on PTO funding, others-like Rep. Howard Berman (D-Calif.) and Rick Boucher (D-Va.)-are pushing legislation to curb high-tech business method patents.
“Should patent protection be granted to processes for achieving a business objective when such processes involve no physical transformation, physical element, technological innovation, or industrial application?” asked Berman at the April 4 hearing. “Opponents to business methods patents believe that their effect on innovation and competition will be particularly severe with regard to Internet businesses. Because new Internet business models are created every day, the first to patent a new business model may be able to preclude any competition in a new business.”
Andrew Steinberg, executive vice president and general counsel of Travelocity.com, agreed. “Taking a commercial process or business method that has existed in the brick-and-mortar world and allowing it to be patented because it can now be accomplished or even improved online does not serve the purpose of patent laws.”
Travelocity offers online discount airline tickets, hotel reservations and car rentals via desktop computers, mobile phones and personal digital assistants.
Ronald Myrick, president of the Intellectual Property Owners Association, urged lawmakers not to legislate on business methods patents so long as courts are addressing the issue. Instead the trade group, which includes AT&T Corp., BellSouth Corp., Microsoft Corp., Sun Microsystems Inc. and others, supports efforts to increase spending for the Patent and Trademark Office. “PTO funding should be the single highest priority for patent system improvement,” stated Myrick in written testimony.
Despite pledging to stand firmly for the protection of intellectual property and to increase funding for the Patent and Trademark Office, President Bush has proposed only a slight budget increase for PTO for fiscal 2002. In addition, the administration has yet to appoint a new agency director. PTO resides in the Commerce Department.
Nicholas Godici, acting director of the Patent and Trademark Office, said the agency has launched a series of initiatives to respond to growing concerns about high-tech patents. Last March, the Patent and Trademark Office unveiled a new Business Methods Patent Initiative, which attempts to bring industry together with patent examiners to sort out various patent issues.
“Let me assure members of the subcommittee that we are committed to ensuring that our practices and politics promote the innovation and dissemination of new technologies,” stated Godici. “We are confident that the patenting of business method inventions is consistent with our law and with our practice, and we believe that any arbitrary restriction of patentability in this or other technologies may cause deserving innovations to go unprotected and deserving investments to go unrewarded.”
