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Against Monopoly

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Software Patents

Monopoly corrupts. Absolute monopoly corrupts absolutely.





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Making patent law in D C

Edward Wyatt writes in the NYTimes about an example of a costly business-method patent link here. His story emphasizes that Senator Schumer is doing the banking industry's business, has got the bill passed in the Senate as part of the broader "reform" patent bill, and has sent it on to the House. It may or may not pass there, but given the banks' clout with Republicans, I expect the provision will be approved if the overall bill passes. Wyatt doesn't speculate on whether the President will sign, but he is out passing the hat for campaign funds among the banks.

The banks concern is the cost of their patent license, said to be hundreds of millions over the years. The patent is for a method to process digital copies of checks, which to me sounds like a software patent. The patent owner, DataTreasury Corporation from Plano TX, has won a series of suits challenging the validity of the patent at the Patent Office and won consistently in the courts. DataTreasury now has license agreements with "more than three dozen banks," so it would seem to be the industry standard.

Wyatt adds one more jab at DataTreasury which he reports once had more than 100 employees but is now a mere holding company with only a few employees, reportedly because the banks stole its patented technology.

Wyatt finally takes on the Patent Office which is said to have drafted the provision and would be the biggest winner from the current draft bill, as it would get to keep all the fees it charges, "removing it from the politics of the Congressional appropriations process."

Our concern as consumers should be that this is a highly questionable patent (like most business method patents) that adds to the costs of society as a whole without improving welfare. Watching how the legislative sausage is being made does not make it smell less or taste better.


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