Information Process Patents in the U.S. And Europe: Policy Avoidance and Policy Divergence

Abstract

Patents on software and business methods appear to have a pivotal position in today's economy, yet they have remained a policy backwater in which scope of patentable subject matter has expanded without legislative input. This is changing as Europe struggles with patent reform. A push by the European Commission to validate and promote software patents has been opposed by many companies and professionals, and especially the open source community. In this process, it has become clear that Europe opposes the broad non-technical patents on business methods that are now available in the U.S., signaling a major rift in international standards of patentability. Recent hearings held by competition agencies in the U.S. show severe problems of overpatenting that extend beyond software to much of the ICT sector. These problems have been ignored by the Commission, which despite a pro forma effort to address economic issues, clearly feels more comfortable framing the issue in legal terms. In outlining what a properly developed policy framework would look like, the paper stresses the need to understand why software is different from other technologies, why the disclosure function of the patent system is failing, the build-up of risk and uncertainty and its effect on industry structure, and the international political economy of information process patents.