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Encouraging innovation and economic growth

Encouraging Innovation and Economic Growth

This article originally appeared in the Washington Times

Last month, in a speech to the Intellectual Property Owners Association, the director of the Patent and Trademark Office, Andrei Iancu, challenged a fundamental feature of U.S. patent law, the U.S. Supreme Court’s 2014 ruling in Alice Corp. v. CLS International on Section 101 of the U.S. Patent Act. His criticism was mistaken.

Section 101 defines what can be patented and, by implication, what cannot. In Alice, the court clarified what is not patentable. It held that using generic computer technology to computerize abstract ideas like business methods does not make the idea itself eligible for patenting. But if Mr. Iancu’s sentiments are translated into legislation, this line ensuring the quality of American patents will be blurred. American innovation will be stifled.

For more than 150 years, U.S. patent law has recognized that allowing patents on laws of nature and abstract ideas would turn off the tap of innovation. Rather than unleashing a creative flow, it would wall away the building blocks necessary to develop new technologies. A unanimous Supreme Court ruled in Alice that, as Justice Clarence Thomas wrote for the court, “merely requiring generic computer implementation fails to transform that abstract idea into a patent-eligible invention.”

For example, a long-standing concept in the world of finance is the escrow account. An IT system for creating escrow accounts would not make the concept itself less abstract and worthy of a patent. It would not give the code writers claim to all the escrow account systems in the world.

The example is not theoretical. Just such lawsuits brought by patent trolls have long beleaguered the America’s high technology industries. Patent trolls are companies and people that acquire unexploited patents and, rather than turning them into products and services, use them to ambush active innovators with claims of infringement. Before Alice, trolls regularly exploited extremely broad and general, low-quality patents to claim ownership of traditional business processes that had been transferred to computers.

Their patents covered not the specific code but the very concept of the very ordinary procedures themselves. Examples included upselling customers in an online store, buying an airplane ticket online and sending emails with package tracking information. Rather than advancing technologies that benefitted the public, these patents became weapons for surprising and holding up real innovators.

John Thorne is a partner at Kellogg Hansen and general counsel of the High Tech Inventors Alliance, an association of Adobe, Amazon, Cisco, Dell, Google, Intel, Oracle and Salesforce.

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