Of course, if there were no copyright over software at all, software engineers would have other freedoms—even if not legally guaranteed open access to source code. Still, it was hard to deny that the extension of the property regime had—bizarrely, at first sight—actually enabled the creation of a continuing open commons. The tempting real estate analogy would be environmentalists using strong property rights over land to guarantee conservation and open access to a green space, where, without property rights, the space could be despoiled by all. But as I have pointed out earlier, while such analogies may help us, the differences between land and intellectual property demand that they be scrutinized very carefully. It is hard to overgraze an idea. 26
So much for copyright. What about patents? U.S. patent law had drawn a firm line between patentable invention and unpatentable idea, formula, or algorithm. The mousetrap could be patented, but not the formula used to calculate the speed at which it would snap shut. Ideas, algorithms, and formulae were in the public domain—as were "business methods." Or so we thought. 27
The line between idea or algorithm on the one hand and patentable machine on the other looks nice and easy. But put that algorithm—that series of steps capable of being specified in the way described by the Turing machine—onto a computer, and things begin to look more complex. Say, for example, that algorithm was the process for converting miles into kilometers and vice versa. "Take the first number. If it is followed by the word miles, then multiply by 8/5. If it is followed by the word kilometers, multiply by 5/8 . . ." and so on. In the abstract, this is classic public domain stuff—no more patentable than E=mc2 or F=ma. What about when those steps are put onto the tape of the Turing machine, onto a program running on the hard drive of a computer? 28
The Court of Appeals for the Federal Circuit (the United States's leading patent court) seems to believe that computers can turn unpatentable ideas into patentable machines. In fact, in this conception, the computer sitting on your desk becomes multiple patentable machines—a word processing machine, an e- mail machine, a machine running the program to calculate the tensile strength of steel. I want to stress that the other bars to patentability remain. My example of mile-to-kilometer conversion would be patentable subject matter but, we hope, no patent would be granted because the algorithm is not novel and is obvious. (Sadly, the Patent and Trademark Office seems determined to undermine this hope by granting patents on the most mundane and obvious applications.) But the concern here is not limited to the idea that without a subject matter bar, too many obvious patents will be granted by an overworked and badly incentivized patent office. It is that the patent was supposed to be granted at the very end of a process of investigation and scientific and engineering innovation. The formulae, algorithms, and scientific discoveries on which the patented invention was based remained in the public domain for all to use. It was only when we got to the very end of the process, with a concrete innovation ready to go to market, that the patent was to be given. Yet the ability to couple the abstract algorithm with the concept of a Turing machine undermines this conception. Suddenly the patents are available at the very beginning of the process, even to people who are merely specifying—in the abstract—the idea of a computer running a particular series of algorithmic activities. 29
The words "by means of a computer" are—in the eyes of the Federal Circuit—an incantation of magical power, able to transubstantiate the ideas and formulae of the public domain into private property. And, like the breaking of a minor taboo that presages a Victorian literary character's slide into debauchery, once that first wall protecting the public domain was breached, the court found it easier and easier to breach still others. If one could turn an algorithm into a patentable machine simply by adding "by means of a computer," then one could turn a business method into something patentable by specifying the organizational or information technology structure through which the business method is to be implemented. 30
If you still remember the first chapters of this book, you might wonder why we would want to patent business methods. Intellectual property rights are supposed to be handed out only when necessary to produce incentives to supply some public good, incentives that otherwise would be lacking. Yet there are already plenty of incentives to come up with new business methods. (Greed and fear are the most obvious.) There is no evidence to suggest that we need a state-backed monopoly to encourage the development of new business methods. In fact, we want people to copy the businesses of others, lowering prices as a result. The process of copying business methods is called "competition" and it is the basis of a free-market economy. Yet patent law would prohibit it for twenty years. So why introduce patents? Brushing aside such minor objections with ease, the Court of Appeals for the Federal Circuit declared business methods to be patentable. Was this what Jefferson had in mind when he said "I know well the difficulty of drawing a line between the things which are worth to the public the embarrassment of an exclusive patent, and those which are not"? I doubt it. 31
It is commonplace for courts to look at the purpose of the law they are enforcing when seeking to understand what it means. In areas of regulation which are obviously instrumental—aimed at producing some particular result in the world—that approach is ubiquitous. In applying the antitrust laws, for example, courts have given meaning to the relatively vague words of the law by turning to economic analysis of the likely effects of different rules on different market structures. 32
Patent law is as instrumental a structure as one could imagine. In the United States, for example, the constitutional authorization to Congress to pass patent and copyright legislation is very explicit that these rights are to be made with a purpose in view. Congress has the power "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." One might imagine that courts would try to interpret the patent and copyright laws with that purpose, and the Jefferson Warning about its constraints, firmly in mind. Yet utilitarian caution about extending monopolies is seldom to be found in the reasoning of our chief patent court. 33
The difference is striking. Jefferson said that the job of those who administered the patent system was to see if a patent was "worth the embarrassment to the public" before granting it. The Constitution tells Congress to make only those patent laws that "promote the progress of science and useful arts." One might imagine that this constitutional goal would guide courts in construing those same laws. Yet neither Jeffersonian ideals nor the constitutional text seem relevant to our chief patent court when interpreting statutory subject matter. Anything under the sun made by man is patentable subject matter, and there's an end to it. The case that announced the rule on business methods involved a patent on the process of keeping accounts in a "hub- and-spoke" mutual fund—which included multiplying all of the stock holdings of each fund in a family of funds by the respective current share price to get total fund value and then dividing by the number of mutual fund shares that each customer actually holds to find the balance in their accounts. As my son observed, "I couldn't do that until nearly the end of third grade!"6 34
In theory of course, if the patent is not novel or is obvious, it will still be refused. The Supreme Court recently held that the Court of Appeals for the Federal Circuit has made "nonobvious" too easy a standard to meet.7 It is unclear, however, whether that judgment will produce concrete effects on actual practices of patent grants and litigation. The Patent and Trademark Office puts pressure on examiners to issue patents, and it is very expensive to challenge those that are granted. Better, where possible, to rule out certain subject matter in the first place. Tempted in part by its flirtation with the "idea made machine" in the context of a computer, the Court of Appeals for the Federal Circuit could not bring itself to do so. Where copyright law evolved to wall off and minimize the dangers of extending protection over software, patent law actually extended the idea behind software patents to make patentable any thought process that might produce a useful result. Once breached, the walls protecting the public domain in patent law show a disturbing tendency to erode at an increasing rate. 35