While we’re on the topic of patents today, I thought this would be a perfect opportunity to share my dissertation that I wrote at Cambridge for my graduate degree in policy. During my time there, I became deeply interested in the topic of innovation policy, so I chose to write my dissertation on Business Method Patents, which were very contentious at the time (and still are). Going in to this investigation, I was neutral towards these instruments. But after my research, I came out against them because I deemed them to be an unnecessary encumbrance to innovation. Here is the abstract:
This dissertation asks the question, “If business method patents were forbidden, would there be less innovation in developing new business processes?” We ask this question because if business method patents can’t pass this utilitarian test, then there is no reasonable justification for this patent regime. To understand the original rationale behind business method patents, we start our investigation by summarizing their legal history. Then, using economic theory, we try to predict which firms would be most harmed if business method patents didn’t exist. Finally, we bring this theory into the realm of reality by conducting a case study on the competitive landscape of firms in the online auction industry. Based on this evidence, we discover that the only firms that clearly benefit from business method patents are ‘patent factories’—firms that patent business processes for the sole purpose of licensing them to other companies. Most other types of firms see business method patents as an encumbrance. Given this skewed balance, it appears that these patents fail the utilitarian test. Without them, there might actually be greater innovation in the competitive arts.
A lot has happened in the world of business method patents since I wrote my dissertation. At the time, they were permissible under US Law. But then in 2008 the Federal Circuit, in the famous Bilski decision, struck down the patenting of business methods that cannot be instantiated as a machine. Currently, the Supreme Court is grappling with the issue and has yet to make a ruling. Hopefully by making my dissertation public, I can do my little part to help in this debate.
If you are interested in this topic, please read the dissertation in its entirety: Business Method Patents: A Faustian Bargain With Fosbury Flops. I am making it available under the following Creative Commons license. Let me know what you think!
On a side note, I realize that I have a ton of old papers that others may find interesting but that I was too busy to publish. I will try to periodically release them via this blog so that they may be of some good to somebody.
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