Federal courts and the U.S. Patent and Trademark Office have expanded the scope of patenting to include areas--such as genes, software and business methods--that were once thought to be of questionable validity. For instance, in 1998 the patent office granted an application for a method of charging more for a product for which demand fluctuates little in response to a price change.

The business-method patent in question triggers worries about the requisite qualifications of the patent examiners involved. If the evaluators had consulted the chapters on imperfect competition in any number of economics textbooks, they might have thrown out the application as violating the standards that a patent should be both new and nonobvious (inventive). Poor decision making during the examination process leaves patents open to being overturned by the courts--at a cost that can range into the millions of dollars for a legal proceeding. Because of the widening breadth of what can be patented, and the seeming inability of examiners to stay up to date, some analysts have proposed providing a means to invalidate a patent short of a lawsuit.

This article was originally published with the title In Search of Better Patents.

Comments