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June 21, 2011

Hero of the Workin' Man: Charles Schumer Inserts Special Provision In Patent Reform Bill, To Push A Special Re-Examination of an Inventor's Patent, So That His Big-Donor Patron Banks Can Pay Less To Settle Infringement Suits

That Ah. Charles Schumer. Hero of the Workin' Man, as he preens, and as the media represents him.

Why, he's out there fighting for you.

Except, oddly enough, you aren't keeping his campaign coffers fat with large green. No, that would be the mega-banks he fronts for.

There are many things I despise, but high on the list is the hypocrisy of Democrats and the media (but I repeat myself) claiming that guys who sit in committee doing favors all day long for super-luxe corporations are somehow blue-collar crusaders.

Charles Schumer is well-paid by the banks to be, effectively, their Vice President in Charge of Senatorial Outreach.

Fine. I'm sure he just loves bankers and banking and banks. That's a common enough aspiration.

But since he's the Senior Senator from CitiBank, can we drop the Blue Collar Crusader pose?

Or does he get to accuse Republicans of being in the pocket of Big Banking while Big Banking won't get its hands out of his pockets, to deposit money therein?

So, a guy has a patent. It's a good patent. It's a smart, useful technology. He created the process by which copies of digital checks are processed.

And the big banks are using this tech, often without securing a license, at which point this guy sues for infringement, and often wins.

Enter the Hero of the Workin' Man.

After years of fighting Mr. Ballard at the federal Patent Office, in court and across a negotiating table, the banks went to see one of their best friends in Congress, Senator Charles E. Schumer of New York, who inserted into a patent overhaul bill a provision that appears largely aimed at helping banks rid themselves of the Ballard problem. The Senate passed the bill easily in March.

The proposal would allow banks to get a federal re-examination of certain patents that they have been accused of infringing, specifically limited to “a financial product or service.” The language is now included in a bill that may come to a vote in the House of Representatives as early as Wednesday. While at least two House members have moved to strip the provision from the bill, bank lobbyists have worked hard to defeat previous attempts to remove it.

Mr. Schumer and the Financial Services Roundtable, a business group that pushed the measure, say the provision is not focused on any one company but more broadly at “meritless litigation over patents of dubious quality,” as Steve Bartlett, the president of the Roundtable, said at a House hearing.

Now here's the thing: Flynn of the Big Blogs tipped me to this last night. Without having the background, I could guess what this was about: A process or method patent.

I will confess one thing: It has bothered me, and continues to bother me, that process or methods are given patents. I don't think the patent law is intended to cover algorithms and syllogisms. I think it is intended to cover things. Not processes.

And the patent office is inconsistent about this. Because the patent office seems of two minds on the issue, sometimes it grants patents for processes, and usually it doesn't. It has been a long time since I read patent law but at the time this stuff was staring they didn't have a good logical framework for deciding which processes should be treated like things and which processes shouldn't.

Now, that's the backstory, and that's how Charles Schumer justifies his emergency intervention on behalf of the banks.

The whole point of Schumer's amendment is to put the patent protection of this particular process in doubt, which then means that all settlements over infringement will be reduced in favor of the banks. That is, the stronger your claim, the higher the cash settlement will be, as a cash settlement is made to avoid trial, and if you think you've got a great chance of winning, you only settle to spare yourself time and energy.

On the other hand, if new facts emerge which make your claim less likely to prevail in court, you settle for less. The banks pay up less.

That's all this is about: Improving the banks' negotiating position at the conference table as the various lawyers negotiate a price.

Now, if the Hero of the Common Man really has a problem with process or method patents -- and I think this is an area of the law which could use a Big Rethink -- then he should just propose a law, or at least propose a commission, to examine the question, and extend those findings generally.

Either Patent Law covers processes, or it does under very limited and well-defined circumstances, or it doesn't at all. Let's pick a stance and go with it.

Perhaps we need a new area of the law, separate from but similar to patent law, to cover process or method innovations in special cases and for a short give-them-a-few-years-of-market-edge duration of protection.

But that is a general question, which should be resolved generally.

It should not be "taken care of" by Mr. Totally Wants To Be A Banker in one particular case, as a favor to his patrons' lawyers.

And, by the way: Some Republicans are pushing this, too. The reason? Um... let's just say I don't think they're particularly deep thinkers on the limits of patentability and maybe have a more tangible interest here.

Clean up your acts, assholes. We pay you a salary too, in case you hadn't noticed.

An Interesting Conceptual Question: This is actually a live and somewhat interesting question, at least for geeks.

Historically you could not get patents for "techniques." This is why a cook can't get protection for a recipe, nor a dress-maker for his patterns.

On the other hand, patents were designed to protect physical-object type inventions.

In the digital age, a new in-between category arose: Stuff you could arguably say was more like a recipe or pattern, but you could also argue that in the digital age, digital "inventions" were even more important than physical-object innovations, and therefore just as (if not more) deserving of patent protection.

Why should my invention not get patent protection simply because it's virtual rather than physical?, the rhetorical question goes.

The Patent Office, I think (it's been years), really isn't sure how to deal with this dispute. It's muddling through, haphazardly, developing a case law and series of precedents, but erratically and disjointedly. Because they're still not entirely sure what they're supposed to be doing with these claims.

As opposed to its methodology for dealing with physical-object patents, which is fairly well-settled, at least in broad conceptual strokes, because that area of the law is as old as the hills. Well, not as old as the hills, but as old as the oldest trees on the hills.

What they need is firm guidance here. Congress needs to clarify this area of the law.

But Congress should do so generally, not on a special favor for special people basis.

As Richard Epstein (I think) noted in that interview in Reason: Our country is becoming more feudal, more dependent on special relationships and personal favor-banks and so on, when the whole thrust of the Enlightenment, and our Enlightenment-based democratic Republic, should be in precisely the opposite direction, with more firm, impersonal rules, and less reliance on personal favors and special access to legislators.

This gambit strikes me as pure feudalism.

If you've got a problem with the exploding number of method patents being granted, if you think the Patent Office has strayed off the reservation, then lay down rules as clear as transparent as possible, and I know perfect clarity and transparency of operation is not possible here (as it's not possible anywhere), but enough with the feudalism of special favors.

It's this repeal of the Enlightment, and slow walk-back to the darkness of feudalism, that bothers me.

The law should be the law for all parties. If the law is bad for one party, it is bad for all parties, and should be reformed.

There are no dukes, or there are supposed to be no dukes, and we should not have a special series of laws to protect ducal privileges.

Clean Up: People correct me to note that method patents are not a new invention.

I take that as true, because I don't know what I'm talking about.

However, where the method patent used to be a rather odd bird, it's becoming more and more protected.

Instead of recapitulating the corrections/arguments, I'll recommend you read the commenters, as Andrew Breitbart does.

The claim made (which may be perfectly true, I don't know!) is that process patents have been granted for physical production of a good (such as extraction of amonnia from some other chemical), but generally not "business methods."

And now, as I always say when I don't know what I'm talking about, and please, you know the words, so say it along with me: My General Point still stands.

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posted by Ace at 01:57 PM

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