One of the purposes of patents is to allow the patent owner to restrict access to the market by competitors. This allows the patent owner to protect their initial investment in the product, which would include research and development costs. However, I can’t help but wonder whether the advantages conferred by patents are beginning to lean in favor of producers at the expense of consumers (much like copyrights in my opinion). 

A good example of this imbalance is the spat between the iPhone and the Palm Pre. By the time the iPhone was released, Apple had developed an army of over 200 patents to protect its development. Two years later, and after millions of iPhones had been sold, Palm develops the Pre and receives amazing hype around the product. Critics praised it and dubbed it the new iPhone killer while investors agreed and sent Palm shares up 100% in the next two days. 

Apple of course didn’t, and mentioned the possibility of pursuing legal action against anyone that invaded on their IP. When asked about competitors such as the Palm Pre and Google Android phones, Apple’s COO responded with:

“We are watching the landscape. We like competition, as long as they don’t rip off our IP, and if they do, we’re going to go after anybody that does … I don’t want to talk about any specific company. I’m just making a general statement that we think competition is good; it makes it us all better. And we’re ready to suit up and go against anyone. However, we will not stand for having our IP ripped off and we’ll use whatever weapons we have at our disposal [to make sure that doesn't happen]. I don’t know that I can be more clear than that.”

While I don’t know the details of Apple’s patents and any of Palm’s potential infringements upon them, I do think that this sounds a bit fishy. There must be something wrong if a company issues 200 patents to protect their product. It sounds a bit like spamming the patent office with applications to have a monopoly on as broad an area as possible. There is also something fishy if a product that is potentially better (better network, better camera, better web integration, copy/paste) can be sued and prevented from being released because it infringes on one of those 200 patents. To be fair, it has been claimed by some critics that the Palm Pre is nothing more than an iPhone copycat, and after looking at some pictures of the Pre, it’s hard to argue with that claim. At the same time, it also appears that Apple has simply exploited patents better than Palm by applying for tons of patents to prevent any form of competition. This isn’t a patent on a business method, but it’s a business method of patenting anything and everything before others beat you to it. As TechDirt argues, it is debatable whether the iPhone even needs patents, since the incentives to produce a product like the iPhone are the profits and marketshare gains that Apple receives from it. Even if Palm could copy the iPhone, they’d be two years behind Apple.

In a similar vein, opening up patents to business methods and software continues the trend of increasing imbalance between patent owners and consumers, and in the spamming practices that many businesses currently engage in. As noted by Mayer in his dissent, business method patents have no legal precedent and no economic justification. Business owners do not need stronger incentive to innovate in business methods, as the incentive to profit from it is large enough.

As a result of the imbalance, we see similar races to patent anything and everything in business methods. The one-click article mentions the advantages that Amazon gained by patenting one-click online shopping. Mayer also notes some equally troubling business method patents currently in place, from absurd patents such as Patent 6,368,227, a method for swinging on a swing suspended from a tree branch, to patents with more serious consequences, such as Patent 6,119,099, a method for inducing fast food customers to order more food.

It’s very easy to see why current patent law needs a nerf. Although this now seems a bit of a moot point, ask yourself 40 years ago: Would the U.S. be the same if Ford had patented the method of specialization in automobile production?