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Source link: http://archive.mises.org/9335/the-post-to-launch-a-thousand-comments/

The Post to Launch a Thousand Comments

January 29, 2009 by

The debate over patents and intellectual property doesn’t excite me the way it does many other participants here, so please consider this post a mere relaying of information on my part. Yesterday the U.S. Supreme Court received a petition to reconsider a Federal Circuit Court of Appeals decision limiting the scope of what subject matter may receive federal patents. The petitioners, who lost in the Federal Circuit, claimed a patent for “a method of hedging the consumption risk associated with a commodity sold at a fixed price for a given period.” (Stephan Kinsella discussed the earlier Federal Circuit case in this post.)

Below is the introduction from the Supreme Court petition in the case, captioned Bilski v. Doll:

This case raises the most fundamental question in patent law: what can be patented? Are patents only for manufacturing processes that are tied to a particular machine or produce some physical transformation? Or do patents also embrace modern business processes that do not depend on a particular machine or device?

A primary strength of the Patent Act is that it does not limit what can be patented by subject matter, thereby adapting to and encouraging innovation at the forefront of technology. 35 U.S.C. § 101 provides that “any” new and useful process, machine, manufacture, or composition of matter may be patented, so long as the other requirements for patentability are met. There is no exclusion for business methods or any other field of invention. The only limit this Court has imposed on the broad statutory grant is that patents may not be obtained for “laws of nature, natural phenomena, and abstract ideas.” Indeed, natural laws and phenomena can never qualify for patent protection because they cannot be invented at all. And abstract ideas are not eligible because they are not “useful” and thus must be applied to a practical use before they can be patented.

Beyond that, however, this Court has not placed restrictions on the types of inventions that can be patented, consistent with the broad statutory grant of patent eligibility in § 101. The Court has twice expressly declined to hold that a process must be tied to a particular machine or produce some physical transformation to be eligible for patenting. And the Court of Appeals for the Federal Circuit seemed to agree. While refusing patents for abstract ideas and laws of nature, the court allowed patenting of inventions that produced a “useful, concrete and tangible result.” By adhering to the statute, which was designed to accommodate and encourage innovation, the Federal Circuit made patent protection available to such diverse fields as internet commerce, information technology, and business methods.

Tens of thousands of process patents have now issued in reliance on the Patent Act’s lack of subject matter restrictions and the decisions of both this Court and the Federal Circuit refusing to restrict patent eligibility except to exclude abstract ideas and laws of nature. The Federal Circuit has abruptly changed course, however, and held that the “machine-or-transformation” test, which this Court has never said is required for patent eligibility, is in fact not optional or merely advisory but rather “the only applicable test” for patent-eligible processes. In doing so, the Federal Circuit has essentially confined all
process patents to manufacturing methods, using a test that may have been appropriate during the Industrial Age but no longer fits our modern information-based economy. Not only is the test backward-looking, but it is also inconsistent with the patent statute’s recognition that business methods are eligible for patenting. And while directed to a business method, the Federal Circuit’s decision threatens other industries as well, such as software and biotechnology, which are important to the nation’s economy. The decision has disrupted the settled expectations of patent owners and cast doubt on tens of thousands of issued patents.

This Court has not considered what is patentable subject matter since 1981, when computers were just becoming part of daily life. It is now time to do so again to prevent the Federal Circuit’s outmoded “machine-or-transformation” test, while ostensibly rooted
in this Court’s decisions, from stifling innovation in our most vital industries and frustrating Congress’ intent as expressed in the Patent Act. The Court should grant the petition so that it can instruct the Federal Circuit to return to first principles and restore the law of patent eligibility for processes under § 101.

For more about this case, see Patently-O and SCOTUSblog.


I Hate Taxes January 29, 2009 at 2:50 pm

Enough with IP rights already, I am more than fed up with this subject. My stand is that you should only have physical property rights and that you can’t prevent others from using information they receive.

Now please change the subject, it’s extremely boring. Or else I will copyright your articles and gag order you to shut up. LOL !

ktibuk January 29, 2009 at 3:11 pm

“This case raises the most fundamental question in patent law: what can be patented?”


But not because ideas can not be property. On the contrary. Ideas can be homesteaded and become property.

Nothing should be patented because there is always a chance for independent discovery and the burden of proof that someone was aggressed against, in this case the act of copying without consent, falls on the accuser.

Also governments don’t create property rights by registration or giving out pieces of paper. Property rights are natural rights that don’t depend on the existence of the state

Charles Hueter January 29, 2009 at 3:20 pm

A link to a review of some major patent battles in which Apple engaged: http://i.gizmodo.com/5141575/apples-bloodiest-patent-and-copyright-clashes

Personally, I’m a “physical property rights only” guy who thinks a great deal of the tangling over IP – at least the art/music/literature variety – could be avoided with very clear and very specific sales agreements outlining what, by voluntary consent, the buyer can and cannot do with the things he or she buys.

RTR January 29, 2009 at 4:09 pm

Did Rothbard support IP or not? and why or why not?

Alexander Baker October 12, 2011 at 11:55 am

Rothbard supported copyright, but not patent, drawing a distinction between the two.

Yetanotherlibertarian October 12, 2011 at 12:07 pm

Nah, Rothbard wasn’t exactly clear about that issue. He supported rights via contracts.

Were did Rothbard mention that a state enforced ip monopoly was legitimate?

Henry Miller January 29, 2009 at 7:05 pm

I understand why many are tired of these IP posts. However those of us in computers deal with this everyday. In many ways IP harms us more than anything else. Taxes are too high, but we are well paid so while we would all like more, taxes are not a big deal. By contrast many things that are obvious to us are getting patents, and thus prevent us from doing things we want.

So really IP reform is my highest priority, and will remain so until thing change. Now if obvious patents were not issueable, and copyright was 20 years, something else would start to hurt me more and I would spend my energy fighting that. (I’m not saying the above is what I want, only that I can live with that compromise)

Henry January 29, 2009 at 9:02 pm

Patent power provides the gov’t with exclusive rights to grant monopolies. They can’t be viewed the same way as tangible property. Patents don’t exclude “reverse engineering”; therefore, they don’t actually protect processes and products. The costs of entry into a market actually limit process/product proliferation.

I Hate Taxes January 30, 2009 at 7:42 am


Please don’t mix nature and rights. Rights don’t exist in nature, only MIGHT exists.

In nature, if you want “rights” you will first need MIGHT.

I don’t see how rights can be natural since you will always find somebody naturally more brutal than you who could take away your property by force.

Rights are only possible in a libertarian society, a society which have agreed to respect private property and which does not initiate violence.

Aside of that, we live in a jungle where only the strong survive.

I Hate Taxes January 30, 2009 at 7:47 am

Henry Miller,

“Taxes are too high, but we are well paid so while we would all like more, taxes are not a big deal.”

Speak for yourself Henry Miller. If you like to be robbed and you don’t think it’s such a big deal, then kindly give me your address and I will come to rob you money, LOL !

After all, it’s not a big deal right ?

What I hate about your comment is that it supposes that if it’s not a big deal for you, it should not be a big deal for others as well.

Therefore, not only are you cooperating with the taxing enemy, you are also betraying fellow workers who think taxes are evil.

Yes, taxes are a BIG EVIL DEAL.

If you would not tolerate leeches on your body sucking your blood, you should not tolerate the government on your wallet sucking your money.

I Hate Taxes January 30, 2009 at 7:53 am

Henry Miller,

Since the source code is compiled and encrypted, how can IP rights even apply.

After all, it’s against IP rights to reverse engineer a source code to begin with. But reverse engineering would be necessary to examine a code to see if it infringes the code of someone else.

So, you would have to decompile to see if that code is infringing your code.

I understand that processes such as Amazon’s one-click buying has been patented.

Therefore any programmer who would want to activate a one-click buying would be infringing Amazon’s patent.

This is a gross misuse of patents.

But there would be other ways around, like 2 clicks buying, one touch buying etc.

It’s really stupid that Amazon has patented their one click buy.

If I want to start my own commercial website, I would now need to pay royalties to Amazon.com if I were to implement a one-click buying system.

This is completely stupid.

Ned Netterville October 12, 2011 at 12:55 pm

Hey, man, I like your name. When I was a just libertarian before I wised up and became a Voluntaryist as well, I once whimsically ran for congress on the Libertarian ticket using the slogan, “Ned Netterville hates taxes.” My van had painted on its back doors, “Honk if you hate taxes,” and many were the toots I got for that.

Nathan January 31, 2009 at 3:09 pm


One of Mises’ main complaint about government intervention in our money was the problem of “mal-investment”. The investing of resources in industries that were not profitable or possible without credit at lower than the natural rate. This investment prevented consumption and further expansion in more profitable industries and the government is inevitably forced to commandeer wealth to support this system.

The same idea can be applied very naturally to IP. IP encourages investment into ideas and patents that may be beneficial to mankind at some point, but that benefit does not outweigh the benefit into producing current inventions that improve our lives today. IP forces a company that wants to be successful sometime down the line to over-invest in patents that are not useful or feasible currently, but may provide value 10, 20, 30, or any number of years in the future.

It may be true that IP encourages innovation, but at a much larger cost to our current lives and standards of living.

Add this into the other arguments on the fact that patents rarely increase innovation, and that they also limit real property rights by preventing people from using their property how they see fit seems to put a nail on the coffin for the case of IP. There are absolutely no circumstances where IP makes sense.

newson February 1, 2009 at 4:35 am

i’d like to see “I HATE TAXES!” become part of the mises t-shirt collection.

a message that resonates with anyone worth talking to – a sort of south park version of “tu ne cede malis!”.

Ned Netterville October 12, 2011 at 12:59 pm

I heartily endorse your suggestion. (See my reply to I hate taxes, above.) Maybe South Park would allow Mises to depict Cartman on the shirt–gratis or nominal royalty. I’d buy a dozen, for sure.

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