Author(s): Robert P. Merges
Abstract: In this paper I describe the emergence of patents for business “methods” or concepts, such as the Priceline.com airplane ticket Internet purchase system. I am essentially agnostic about whether these patents are worthwhile. Nevertheless, I argue that the increased volume of patent applications stemming from this newly patentable subject matter has pushed the patent system into crisis. In particular, I focus 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, I call for new appreciation of the relationship between the patent office and private parties. I argue 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 the parties that suffer most if a firm receives an invalid patent ? i.e., the firm?s competitors. These also tend to be the parties with the best information about patent validity. It is therefore logical, it seems to me, to get those 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 poor-quality patents. And only then will we be able to decide whether patents for business concepts make sense or not.
Keywords: patent, property right