Once the province of a nuts-and-bolts world, patents are now being applied to thoughts and ideas in cyberspace. It's a ridiculous phenomenon and a nightmare for e-commerce.
historians look back at the breakdown of the United States patent system, they will see a turning point in the case of Jeff Bezos
and Amazon.com and their special invention: "the patented 1-click feature," Bezos calls it.
Amazon applies to the government for a trademark on the name "1-Click" and a patent on the . . . well, on what, exactly? Not the idea, because pure abstractions may not be patented. Not the program code, because copyright law protects this. But Amazon received its patent in September and instantly sued Barnes and Noble over its similar "Express Lane." Amazon won an injunction in December forcing its competitor to insert a superfluous mouse click. ("Please be sure to click this button," Barnes and Noble begs plaintively. "If you don't, we won't get your order!")
The one-click injunction capped a burst of skirmishing in 1999 the start of what promises to become furious, wide-ranging courtroom warfare over who will control electronic commerce. As the year 2000 begins, few of America's e-commerce leaders are not targets of patent litigation. The battles to come will determine whether the essential tools and building blocks will continue to spread rapidly through the community of software designers and Internet pioneers, or whether they will be cordoned off as the private property of particular companies. Amazon just got a new patent for a system of letting Web sites refer customers in exchange for commissions its "affiliate" program. Sure enough, Barnes and Noble has a nearly identical affiliate program. So do thousands of other online merchants, now feverishly calling their lawyers yet again. Can Amazon really own this? For better or worse, the struggle will redefine our understanding of what an invention is, in our complex, technocratic age.
Patents long served as a fundamental cog in the American machine, cherished in our national soul. We are the land of Thomas Edison and the Wright Brothers and Alexander Graham Bell, where Congress is empowered by the Constitution to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries. Hence the patent office, charged with the enforcement of a Faustian bargain: inventors give up their secrets, publishing them for all to see and absorb, and in exchange they get 20-year government-sanctioned monopolies on their technologies. This arrangement fueled industrial progress in the early United States by encouraging investment in research and rewarding inventors who published their work rather than cloaking it in trade secrets.
Now, however, during the short span of the Internet revolution, the patent system has begun to disintegrate by growing out of control. The United States is issuing patents at a torrential pace, establishing new records each year, and it is expanding the universe of things that can be patented. Patents began in a world of machines and chemical processes a substantial, tangible, nuts-and-bolts world but now they have spread across a crucial boundary, into the realm of thought and abstraction. Software and algorithms used to be unpatentable. Recent court decisions and patent-office rule-making has made software the fastest growing patent category, and companies are rushing to patent the most basic methods of doing business. "This is a disaster," says Lawrence Lessig, a Harvard law professor and cyberspace expert. "This is a major change that occurred without anybody thinking through the consequences. In my view, it is the single greatest threat to innovation in cyberspace, and I'm extremely skeptical that anybody's going to get it in time."
The litigation is spreading fast. Multi-Tech Systems has just sued the three leading PC makers, Compaq, Dell and Gateway, over patents on transmitting data over a communications line. A St. Louis patent broker is suing Yahoo over a "method of effecting commerce in a networked computer environment in a computerized system" that is, shopping on line. Another Internet startup, Priceline.com, has patented its Internet version of an ancient auction technique, the name-your-price "reverse" auction, and is suing Microsoft's Expedia.com travel service. Microsoft, meanwhile, has infuriated much of the Internet community by patenting a well-known "style sheet" technology just as it was being adopted as standard by the World Wide Web consortium.
This is just the beginning. Patents marking off broad swaths of electronic commerce will soon be pouring from the patent office, unwelcome surprises to whole categories of new entrepreneurs. In the last few months, companies have gotten patents for keeping calendars on the World Wide Web, for downloading Web pages at regular intervals, for storing documents in databases, for "real-time shopping," for auctioning cars, for creating profiles of users; for search engines, for payment systems, and for variations of every other fundamental gear and lever in the theoretical machinery of on-line business. Just as insidiously, biotech companies are getting thousands of patents granting them rights to exploit particular pieces of the human genome the DNA common to all of us.
For that matter, the most trivial slices of off-line life are winning patent protection: for example, measuring breasts with a tape to determine bra size; and executing a tennis stroke while wearing a knee pad (U.S. 5,993,336: "The tennis racket is swung toward a tennis ball so as to hit the tennis ball with the racket . . .") Many of these patents are harmless. Most are narrower, when read carefully, than they sound at first. Others are multimillion-dollar lawsuits in embryo. Every week, hundreds of new data-processing patents are issued, and if you are an entrepreneur with an e-commerce business plan, you will soon be cross-checking it against these patents. Won't you be using a "metering mechanism for distribution of electronic information"? (Intel owns it.) "Tracking the purchase of a product and services over the Internet"? (InfoSpace.com.) A "method and system for constructing queries"? (Microsoft.) "Expanding web documents by merging with linked documents"? (IBM.)
Each of these patents is a tiny masterpiece of logic and disputation. Each represents, by definition, a restraint on trade, a layer of regulation, expensive overhead in the free-market economy. The exclusive rights conveyed by a patent automatically translate into higher prices for consumers somewhere along the chain. The Supreme Court saw the downside more than a hundred years ago. "It creates a class of speculative schemers who make it their business to watch the advancing wave of improvement, and gather its foam in the form of patented monopolies, which enable them to lay a heavy tax upon the industry of the country," the Court wrote. "It embarrasses the honest pursuit of business." Patent lawyers and officials argue that each patent represents a good idea and that good ideas deserve to be rewarded; but does every good idea deserve a twenty-year government-sponsored monopoly?
"We like to say right to exploit," the Commissioner of Patents and Trademarks, Q. Todd Dickinson, says cheerfully.
Part 2: Skewed politics at the Patent Office.