A June 2000 press release from TeleDynamics Group a small company in Clearwater, Florida announced that their "latest patent could very well create a major explosion in demand for our service." TeleDynamics is one in a growing chain of companies to queue up for governmental privileges in the form of an absurdly broad patent protection. In the case of TeleDynamics, the new patent may well give the company an ownership claim in one of the most common Internet business practices. According to Monte Sims, the company's CEO, the patent "applies to virtually any activity" during which data is collected about an individual and automatically provided to a third party. Such data collection which is a source of dismay to privacy advocates has been used by mom-and-pop websites as well as Fortune 500 businesses since the mid-90's. In short, anyone who gathers user information over the Internet or by means of a toll-free telephone number could be in violation of patent law. Wired News reports that TeleDynamics, who intends to vigorously enforce its legal monopoly, "envisions a lucrative future loaded with licensing deals based on the new patent award." The "lucrative future" comes with government guarantees.
This news comes fast on the heels of a letter, which British Telecom (BT) dispatched in June to the top ISPs in the United States. The letter informed the ISPs that they needed to license the technology of hyperlinks the colored Internet text that connects a user from one webpage to other sites with the click of a mouse. Hypertext has been aptly called "the connective strands that hold together the World Wide Web." BT is claiming a patent right in the very structure of the WWW.
Although it is heartening to see the U.S. Patent and Trademark Office being vigorously attacked for granting overly broad patents, TeleDynamics' grab at government privilege has caused nothing near the uproar occasioned by a similar bid on the part of Amazon last year. In September 1999, Amazon successfully patented its "1-Click" service through which customers can shop without having to enter shipping and billing information with each new purchase. Amazon lost no time in bringing a patent-infringement suit against its major competitor Barnes & Noble.com Inc. In response, a widespread and spontaneous customer boycott of Amazon was promoted across the Internet. Although it is not possible to assess the "invisible hand" impact of the informal boycott, perhaps it is reflected in Amazon's recent decline in sales.
The enforceability of sweeping patents such as those accorded to TeleDynamics and BT is still in question. The prospect of their freezing effect on Internet business and technological development, however, raises a more fundamental issue. Are patents a valid form of intellectual property or merely a governmental grant of monopoly?
A patent involves identifying and using a law of nature or a fact of reality, neither of which have been created by the discoverer. For example, no one created the principles of electricity although many have patented specific applications of those principles. Often, the patent occurs because a field of endeavor has reached a stage that makes certain inventions or other breakthroughs almost inevitable. It is not uncommon for two people to independently develop extremely similar applications. The most famous example of simultaneous discovery may well be calculus, which was independently developed by both Newton and Liebnitz. The 19th century libertarian Benjamin Tucker captured the objection to one man being granted a patent on the development of principles that should be open to all when he wrote: "The central injustice of… patent laws is that it compels the race to pay an individual through a long term of years a monopoly price for knowledge that he has discovered today although some other man… in many cases very probably would have discovered it tomorrow."
Intellectual property attorney, N. Stephan Kinsella, has described some of the standards applied to patents. He writes, "The Supreme Court has identified three categories of subject matter that are unpatentable, namely u2018laws of nature, natural phenomena, and abstract ideas.' [Diamond v. Diehr, 1981] Reducing abstract ideas to some type of u2018practical application'…is patentable, however." To be patentable, inventions are required to be novel, to have utility, and be non-obvious. Novelty means that the invention has not been anticipated by a prior application or existing knowledge. Non-obviousness means that the application should be inventive over and above what is obvious to anyone skilled in the patent's area at that time.
Do the current patents being claimed over Internet methods and procedures fulfil such requirements for example, the requirement of inventiveness? Consider BTU's monopoly ownership claim over hypertext. BT patented the technology of hypertext in 1989 although it permitted other companies to use it royalty-free for a decade. But the technology of hypertext and its specifics had been discussed in other sources for some fifteen years before BT snatched at the monopoly. In 1974, computer visionary Theodor H. Nelson published the now-classic "Dream Machines" in which he used the term u2018hypertext' to describe "forms of writing which branch or perform on request; they are best presented on computer display screens." Nelson even provided diagrams that could be used in textbooks today. BT is merely riding the crest of popular wave: companies who claim ownership in applications they did not invent.
Whether or not you agree with the propriety of intellectual property, the current patents being approved by the U.S. Patent and Trademark Office are absurd and destructive. In its model of patents, 18th century America broke with tradition. Historically, patents were grants of privilege awarded by a ruler to an elite who were either u2018favorites' or who were willing to pay the requisite bribes. By contrast, the purpose of the American patent was to extend protection to every single person, without privilege, so individuals could rise through merit and inventiveness. By granting patents to those who have not invented applications or whose applications were anticipated by technology's state-of-the-art, the U.S. Patent and Trademark Office violates the purpose of American patents and returns to the days of royal privilege.
July 20, 2000