Important watershed in patent law

May 4 2007

The Supreme Court's decision April 30 to raise the bar for patents on products combining elements of pre-existing inventions is a landmark in the battle against so-called "nuisance patents" and just one more sign that the tide is turning against overly restrictive and costly intellectual property right protections, suggests a pair of economists from Washington University in St. Louis.

"This may be an important watershed in patent law," contends David K. Levine, an economist who studies the hidden costs of intellectual property rights protections.

Levine and research colleague Michele Boldrin, both Ph.D. professors of economics in Arts & Sciences at Washington University in St. Louis, are co-authors of a number of academic articles and a forthcoming book arguing that intellectual monopoly — patents, copyrights and restrictive licensing agreements — should be swept away.

"Many economists and lawyers, ourselves included, have pointed out for some time that the patent system as it exists today in the U.S. is broken," Levine continues. "The system has become overwhelmed by nuisance patents that are not contributions to innovation, but serve merely to claim profits from the innovations of other."

The Supreme Court seemed to concur with that stance on Monday when it issued a unanimous opinion making it more difficult to obtain patents on new products that combine elements of previously used technologies. The decision, issued in a patent infringement case involving an adjustable gas pedal for cars and trucks, stated that products that result from nothing more than "ordinary innovation" and do "no more than yield predictable results" are not entitled to the exclusive patent rights.

Levine and Boldrin suggest that the Supreme Court decision addresses a longstanding problem with how patent cases have been handled in the legal system, specifically clarifying how the courts determine whether an idea is really new.

"One of the primary reasons for this is that the Circuit Court — charged with upholding patent law — is notoriously lax in the standards it uses for determining whether an idea is obvious," Levine explains. "So straightforward combinations of existing ideas, or 'ideas' such as mimicking on the computer screen that which is already done on paper, are regarded by the Circuit Court as non-obvious. Fortunately for the state of both the economy and the law, the U.S. Supreme Court has disagreed in an important ruling."

Levine and Boldrin have been arguing for some time for the eventual abolition of most intellectual property right protections, including copyright protections on music, video and other forms of digital entertainment — a concept that has drawn fire from many in the intellectual property industry.

The Supreme Court patent decision, Levine and Boldrin contend, is just one more sign that others are beginning to understand that intellectual property protections can place a costly drag on economic and technological progress.

As Justice Anthony Kennedy wrote in the opinion on this case: "Granting patent protection to advances that would occur in the ordinary course without real innovation retards progress."