Patent sanity breaks out......

This is uncanny - no sooner do we see rational behaviour break out with respect to copyright, but now we see it in patents - the Court of Appeals for the Federal Circuit (CAFC) (aka the patent court) has changed a ruling it made in 1998 about business process patents. Says Reuters:

Business methods were widely considered unpatentable until a 1998 ruling by the same appeals court. The U.S. Patent and Trademark Office issued 1,330 such patents last year, up from 120 in 1997, according to figures on its website.

One of the best known examples of a business method patent is Amazon's (AMZN.O: Quote, Profile, Research, Stock Buzz) one-click process to buy goods on the Internet.

Bernard Bilski and Rand Warsaw had challenged the U.S. Patent and Trademark Office's rejection of their request to patent their method for managing the risk of sudden movements in energy costs.

Bilski and Warsaw founded the company WeatherWise to sell services based on the method used by some utilities. The U.S. patent office rejected their patent application in 2000 and the patent board upheld the rejection in 2006.

Erika Arner, a patent attorney with law firm Finnegan LLP, said that many business method patents would now be vulnerable to attack as invalid.

As I noted in an earlier post, I disagree with the Techdirt team on "FreeConomics", but in this area I agree 100% when they comment:

This ruling will, however, send serious shockwaves through pretty much every industry -- because software and business method patents are found just about everywhere. Companies that rely on such patents (such as patent hoarding companies) may have just found out their current business model is about to go away. An awful lot of patents are now about to be invalidated, and a lot of patent lawsuits may get thrown out as the patents do not meet the criteria set forth in this decision.

You can bet, however, that the supporters of widespread software and business method patents will not go down without quite a fight. Beyond appealing the decision, it's likely there will be a push for a different type of patent reform in Congress that will expand the patent system to allow software and business method patents. There will be ridiculous announcements from companies that have chosen to litigate rather than innovate, claiming that they cannot innovate (even though they weren't) without much broader patents that they were actually using to hinder innovation.

Indeed - let the games begin - but the pendulum, methinks, is still swinging back to rationality, as we suggested a few months ago.