As Many as Six Impossible Patent before Breakfast: Property Rights for Business Concepts and Patent System Reform

Abstract

In this paper, Professor Merges describes the emergence of patents for business methods or concepts, such as Internet airplane ticket purchase systems. Professor Merges is agnostic about whether these patents are worthwhile. Nevertheless, he argues that the increased volume of patent applications stemming from this newly patentable subject matter has pushed the patent system into crisis. In particular, he focuses attention on determining an acceptable error rate for issued patents, with an eye toward reducing the number of invalid business concept patents that are actually issued. In the process, he calls for new appreciation of the relationship between the patent office and private parties. He argues for policies that will efficiently coordinate the efforts of both groups to achieve the socially desirable end, which is an appropriate expenditure to determine patent validity. Some of these reforms involve restructuring jobs and incentives in the Patent Office. Others involve obtaining the input of those parties that suffer most if a firm receives an invalid patenti.e., the firm's competitors. These also tend to be the parties with the best information about patent validity. It is therefore logical, according to Professor Merges, to get these competitors into the patent process as early and as thoroughly as possible. This leads to a proposal to adopt a patent opposition system in the U.S., much like the one currently in place in Europe. Only reforms such as these will lower the incidence of poorquality patents. And only then, Merges argues, will we be able to decide whether patents for business concepts make sense or not.