Law in the Internet Society

How did we end up here and where are we going?


The United States Trademark and Patent Office have granted software related patents since the early 1970s. The first software patent case decided by the Supreme Court was Gottschalk v. Benson in 1971, in which the Supreme Court held that even though algorithm as a procedure for solving given mathematical problem is like a law of nature and as such can not be patented, that in general does not preclude patent protection for programs servicing computers. In Parker v. Flook in 1978 the Supreme Court held that new and useful mathematical formula can not be patented, but a process is not unpatentable simply because it contains a law of nature or a mathematical algorithm. Further, the Supreme Court’s holding in Diamond v. Chakrabarty in 1980 under which “anything under the sun that is made by man, may be patented”, had an immense effect on the patentability of software programs. Namely, during the following year the Supreme Court ruled in Diamond v. Diehr that a claim drawn to subject matter otherwise statutory does not become unstatutory only because it uses computer program. Finally, in State Street Bank & Trust v. Signature Financal Group in 1998, the Supreme Court accepted within statutory subject matter software claims drafted as machine claims and producing a useful, concrete and tangible result.

PTO granted some patents on algorithms in 1970’s and 1980’s, but before 1991 nobody really thought that it would be possible to obtain real software patents. For example, in the final report released in 1978 by the National Commission on New Technological Uses of Copyrighted Works, copyright was considered the most suitable protection regime for computer programs. Protection based on patents, trade secrecy as well as unfair competition regulation was considered to restrict competition too much. Despite the foregoing, computer programs have long been within the patentable subject matter set forth in 35 U.S.C. 101.



Traditionally copyrights, patents and all the other intellectual property rights were meant to protect the fruits of innovation, discovery, expression and creation by rewarding the creator with exclusive rights. The justification was to enhance the amount of creative activity in the society. The developing society urgently needed great innovations to introduce new technology into the society to ease people’s daily life. Subsequently, the grounds for the intellectual property regime have changed. A valid question in today’s society is, do we actually need such exclusive rights to enhance innovation? Or have said rules become obsolete and do they rather discourage or even prevent creation? Namely, all the creators, inventors and authors build upon the knowledge and inventions of their predecessors. In legalese, the modern intellectual property regime makes today’s creators subject to the exclusive rights of their pioneers. Such pioneers have the power to impede or to completely block creation and use of new knowledge and inventions for a long period of time – and even after their death - if the later work refers to the pioneer’s work even in some remote way. In this model, intellectual property rights do not enhance, but rather deprive the freedom to invent and create, whether the scope of the invention was a machine, literal ex-pression, composition, drawing – or a software program.


Since the 1970’s the society has changed a lot, in deed. It is not only the technological advance that has been immense. Namely, in addition to the technological advance, i.e. the scope of potential ownership, also the rules of ownership have changed tremendously. As I have understood the evolution of ownership, previously only some specified things could be the object of ownership. Either the object was something tangible property, like a computer, or then it was something less tangible property like a new, working solution to a technical problem. The scope of ownership was, however, something that fulfilled some predetermined conditions to be protected as property. Notwithstanding that, we have learned this fall that one could get an ownership right even to a method for teaching cleaners, i.e. immigrants, how to clean office buildings. That obviously means that nowadays anything can be owned merely because anything can be patented. Does that phenomenon change the scope of ownership from something tangible to something completely intangible and something that can not be even defined before grant of an exclusive right?


This fall we have also learned that products may be categorized into those that can be evaluated by their quality – i.e. functional products like software programs or, alternatively into non-functional goods that can not be ranked by their quality, as consummation of said products is based on individual preferences not capable of objective ranking. Such products include for example music and why not maybe also other creative expressions, like movies, novels etc. as to which there is no direct competition in the quality of the production. However, it is argued that anarchism may be used as a common nominator for both the functional and non-functional goods. Namely, inventing, developing and improving functional products in anarchism, i.e. among vast community of independent creators without any legal restrictions for said inventive activity, by definition results in inherently better products compared to in-house development for the purpose of selling high-priced poor quality products to ensure further sales. Similarly, the distribution of non-functional products within the social community of internet and cyberspace where anybody may be connected to anybody in anarchism, i.e. without any legal restrictions, by definition results in superior distribution compared to that of proprietary distribution.


Considering that products are created, improved and distributed at zero marginal cost, giving to another a piece of intangible property does not make the donator any poorer. He still can retain his own copy or as many copies as he wishes of the property, e.g. a software package or a song. As we have learned, this practically means non-scarcity of the property, and knowledge, culture, and wisdom in general. The paradoxical question that has been presented to us is that if all that property can be given to anyone at the same cost as given to one person what is the motivation to exclude others? To me it seems that the motivation may be the incentive, the compensation for the original creator to create in the first place. But then again, creative activity, as it has been claimed, is part of human nature. Whether there is compensation or not, people would write code and songs. And those who want to feed and clothe their families by writing were still able to do it by developing alternative business models not dependent on the right to exclude others. In software business, they could sell products (provided they still gave its source code for free) and also functional war-ranties. And in case there were still some kind of an intellectual property regime left, those brave enough could also sell warranties of non-infringement for the products. And artists still could make money out of music sales (there always would be those supporters, who would want to buy the music) and out of ticket sales by giving concerts, not to mention the sales of all the accessories. But what I am not for sure is, in the absence of patent protection, the incentive available for development of pharmaceuticals. Would my friend having PhD? in chemistry hook up with her class mates – just for fun or for fame – in order to discover an alternative pharmaceutical compound for Pfizer’s Lipitor? Or would it be possible to arrange the research by the government and state in the first place? Or would the pharma companies still invest in research though they were not granted right to exclude others form the results of their research? And could the writer of fictional books afford concentrating only on writing in the absence of copyright? Or do we even want him to? And how is to be assessed justification of intellectual property regime in terms of non-functional goods, let’s say sculptures or statues, for which there is not available superior anarchist method of distribution? Or does it matter, in the first place?


The Federal Court has just given its ruling In re Bilski, where it established that the determinative test for patentability of process claims is the machine and transformation test. Under said test the claims must be either tight to a machine, or an article must be transformed to a different thing or state. As it is questionable, whether a general purpose computer or network consisting of those computers could meet the requirement of a machine, or whether any transformation is involved in connection with the use of the program, establishment of the test may affect both the evaluation of the validity of already granted patents as well as new software patent applications. Only time will show whether the test survives, what is its practical importance or whether the society will finally accept new way of thinking of software, the way where free software will win.


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r2 - 26 Dec 2008 - 15:40:26 - AnnaHaapanen
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