19 IPL Newsl. 1 (2000-2001)

handle is hein.journals/iprolane19 and id is 1 raw text is: 



FALL 2000

      Business Method Patents
                    and the Internet
The debate for exclusivity on the Internet
                               BY SHANE M. POPP

                     For more than a decade the
                   internet has sput a worldwide web
                   that has crossed international xorders
                   and changed the way people
                   exchange ideas. As a resul of this
                   digital highway the Internet has
                   changed the face of business. For
   Shane H, Popp   1998 the Intemet is credited with gen-
erating more than $3(X) billion in revenue and creating vT'r 1
million jobs' Within the next ten years this number is
expected to increase exponentialtly. To Put this in perspec-
tive, the speed of penetration of the Internet has fat' out-
stripped other tomis [of media] techiologie . It nitly to*k
five yeas for the World Wide Web to acquire 50 million
users. Tclevision required 13 years and radio required 38
ycars to reach the same level. -
   With those numbers, it is no wonder there has beet an
explosive debate regarding the protecliin of buiinCss
methods on the Internet. Specifically, the debate stems
from this fundamental thesis. Should applications be
granted for business method patent. relating to com-
merce over the Internet?
   Proponeats for and against this argument articulate
compelling reasons why or why not such protection
under the patent laws would help or hinder the economic
implications of commerce over the Internet. To under-
stand these arguments, a person must first understand the
fundamental goal of a patent systen ant then apply that
goal to creale t balance between the exploitation of an
economic market and tihe pirating of an idea.

Underlying Principles of a Patent System
   The four best-known positioRs on which advocates of
 patent protection For inventors have rusted their case
 may be characterized as tlhe nattral-law hesis. the

   Shane A4. ilopp i; ,7 third 'cac jarfl JD/LLM, strdeni'specializ.
 ilg ini 8ltellecu rt proier'ry larw at lltr John Mars udI tLin Schiol
 ift Chicago.

'reward-by-monopoly thesis, the 'iionopoly-profil-
incentive thesis, nd the exchange-ftor-%cercts thesis.'
   Two major theses have resurged over the last several
decades. The first is the reward-by-monopoly thesiq,
which assumes thai justice requires thut I Tan receive
reward for his services in proporon to their usefulness
to society. and that, where needed, society must inter-
vene. to secure him such a reward' The reward, as this
thesis suggests. is a monopoly in the form of a patent
that will grant the inventor the ri~ot to cxclude others
ron inakint, selling, and using the invention for the life
of the patent. Once the patent expires the invention is
dedicateu to the public for everyone to use,
   The second, the monopoly-profit-incontive thesis,
 assumes that industrial progress is desirable, that inven-
 tions and their industial exploitation are necessary for
 such progress, hut chat inventions and their exploitation
 will not be obtained in sufficient measute if inventmrs
 and icapiialists can hope only tbr such profits as the com-
 petitive cxploitation of all technical knowledge will per-
 iit-5 The fountainhead of this thesis is that the venture,
 if successful, must be worth the risk. The simplest,
 cheapest, and most effective way for society to hold
 these incentives is to grant temporary monopolies in the
 form of exclusive patent rights in inventions.t
   Even historically, these principles have been

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