[*]Associate Professor, Willamette University College of Law, B.S.E.E., Massachusetts Institute of Technology, 1973; J.D., University of Michigan, 1977. My thanks to Professor Glynn Lunney, Professor Toshiko Takenaka, Professor Rochelle Cooper Dreyfuss, John Whitaker of Merchant & Gould and the participants in Professors Dreyfuss's and Takenaka's seminar at the University of Washington for a number of very helpful comments and to Nicole Owren-Wiest for her most able research assistance. I gratefully acknowledge Oracle Corporation, Lyon & Lyon and Willamette University College of Law research grants made in connection with the preparation of this article.

[1] For purposes of this article "Internet patents" include patents protecting methods of doing business on the Internet, standing alone or as computing implementations. Patents covering the basic equipment and telecommunications routing, switching and other related technologies vital to the operation of the Internet's infrastructure are excluded.

[2] See, e.g., John T. Aquino, Patently Permissive, A.B.A. J., May 1999, at 30; Saul Hansell, As Patents Multiply, Web Sites find Lawsuits are a Click Away, N.Y. Times, Dec. 11, 1999, at A1; Josh Lerner, Where Does State Street Lead? A First Look at Finance Patents, 1971-2000 1 (Sept. 2000) (unpublished manuscript, on file with the National Bureau of Economic Research), available at http://www.nber.org/papers/w7918; Richard Maulsby, Under Secretary Dickinson Initiates Action Plan for Business Method Patents, USPTO Today, Spring 2000, at 8 (noting e-commerce related patent applications have doubled between 1998 and 1999); John R. Thomas, The Post-Industrial Patent System, 10 Fordham Intell. Prop. Media & Ent. L.J. 3, 4 (1999)(citing numerous sources).

[3] See, e.g., Fantasy Sports Props., Inc. v. CBS Sportsline, et al., 103 F. Supp. 2d 886 (E.D. Va. 2000); Amazon.com, Inc. v. Barnesandnoble.com, Inc., 73 F. Supp. 2d 1228 (W.D. Wash. 1999), vacated by 239 F.3d 1343 (Fed. Cir. 2001); DoubleClick, Inc. v. L90 Inc., No. 2:99-1914 (E.D. Va. filed Nov. 12 1999); Priceline.com, Inc. v. Microsoft, No. 3:99 CV 1991 (D. Conn. filed Oct. 13, 1999); Hansell, supra note 2.

[4] See, e.g., Victoria Slind-Flor, Gold Diggers, Corporate Counsel (Dec. 20, 1999) available at http://www.lawnewsnetwork.com/stories/A11873-1999Dec17.html (on file with Michigan Telecommunications and Technology Law Review ("MTTLR")); Letter to the Editor: Re: "Gold Diggers" (Dec. 29, 1999) at http://www.lawnewsnetwork.com/stories/A12441-1999Dec29.html (on file with MTTLR); Dugie Standeford, Book Publisher Launches Cybercampaign Against Amazon.com, E-Commerce Law Weekly (Mar. 8, 2000) available at http://www.lawnewsnetwork.com/stories/A18094-2000Mar7.html (on file with MTTLR).

[5] See, e.g., Rochelle Cooper Dreyfuss, Are Business Method Patents Bad for Business?, 16 Santa Clara Computer & High Tech. L. J. 263 (2000); Robert P. Merges, As Many as Six Impossible Patents Before Breakfast: Property Rights for Business Concepts and Patent System Reform, 14 Berkeley Tech. L. J. 577 (1999); Leo J. Raskind, The State Street Bank Decision: the Bad Business Of Unlimited Patent Protection for Methods of Doing Business, 10 Fordham Intell. Prop. Media & Ent. L. J. 61 (1999); Richard H. Stern, Scope-of-Protection Problems with Patents and Copyrights on Methods of Doing Business, 10 Fordham Intell. Prop. Media & Ent. L. J. 105; Thomas, supra note 2.

[6] See, e.g., James Gleick, Patently Absurd, New York Times Magazine, March 12, 2000, at 44; Hansell, supra note 2.

[7] 149 F.3d 1368 (Fed. Cir. 1998).

[8] In particular, that such inventions fit within the statutory classes of patentable subject matter under 35 U.S.C. § 101 (1994). See id. at 1375. The CAFC, which possesses exclusive jurisdiction over appeals in patent application and infringement cases, had been gradually moving toward this position. See Vincent Chiappetta, Patentability of Computer Software Instruction as an "Article of Manufacture:" Software as Such as the Right Stuff, 17 J. Marshall J. Computer & Info. L. 89, 106-113 (1998) [hereinafter Chiappetta, Article of Manufacture]. To obtain a patent the additional requirements of usefulness, novelty, non-obviousness and description/enablement must be satisfied. Id. at 99-106. The CAFC expressly acknowledged the point in both State Street Bank, 149 F.3d at 1375, and in AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352, 1361 (Fed. Cir. 1999), cert. denied, 528 U.S. 946 (1999) (following State Street Bank regarding § 101 statutory subject matter issue).

[9] Not surprisingly, as that is precisely what the court said it was doing. See State Street Bank, 149 F.3d at 1375. But see Thomas, supra note 2, at 27 (arguing, convincingly, that the purported holding is actually primarily dicta on the facts before the court); see also Chiappetta, Article of Manufacture, supra note 8, at 133 n.229, 161 n.297. The USPTO certainly is standing by its Guidelines and continues to issue patents on methods of doing business. See Examination Guidelines for Computer-Related Inventions, 61 Fed. Reg. 7478, 7479 (Feb. 28, 1996)(instructing examiners not to categorize claims as methods of doing business, cited with approval in State Street Bank, 149 F.3d at 1377); Thomas, supra note 2, at 30-31.

[10] See Rinaldo Del Gallo, III, Are "Methods of Doing Business" Finally Out of Business as a Statutory Rejection?, 38 IDEA: J. L. & Tech. 403, 411-12 (arguing against the exception, noting prior commentators had found it "ghostlike" in nature and referencing Judge Newman's well-known dissent from In re Schrader, 22 F.3d 290, 296-99 (Fed. Cir. 1994)).

[11] See generally Chiappetta, Article of Manufacture, supra note 8; infra notes 21-30 and accompanying text. Or at least no more so than any other advance which lies within the appropriate reach of the patent incentive. The analysis in this Article proceeds on the assumption that the patent system works properly and the only question is whether Internet innovations properly fit within its ambit. Cf. Vincent Chiappetta, Myth, Chameleon or Intellectual Property Olympian? A Normative Framework Supporting Trade Secret Law, 8 Geo. Mason L. Rev. 69, 90 n. 133 (1999) [hereinafter Chiappetta, Myth]. It is hardly a forgone conclusion that this assumption is correct. Mark A. Lemley, Reconceiving Patents in the Age of Venture Capital, 4 J. Small & Emerging Bus. L. 137, 139 (2000) (noting Fritz Machlup's conclusion in a 1958 study that "if we didn't have a patent system if would irresponsible to create one"); infra note 112. Although this issue does not raise any particularly unique concerns for software patenting, it does influence the competitive arts analysis by making an already strong case against traditional patenting that much more convincing. See infra notes 150-74 and accompanying text.

[12] There are a wide variety of innovations that might fall under the general heading of "methods of doing business." See infra notes 31-38 and accompanying text. This Article only deals with the subclass involving the way businesses compete and not those processes for creating the services (or products) actually sold.

[13] See infra notes 41-174 and accompanying text.

[14] See infra Part II (discussing the justifications for protection). As the discussion notes, this lead-time problem derives from and shares much in common with the quick and cheap copying problem first recognized in the computer software debate. See, e.g., Dennis S. Karjala, A Coherent Theory for the Copyright Protection of Computer Software and Recent Judicial Interpretations, 66 U. Cin. L. Rev. 53, 53-55 (1997) [hereinafter Karjala, A Coherent Theory]; Jerome H. Reichman, Charting the Collapse of the Patent-Copyright Dichotomy: Premises for a Restructured International Intellectual Property System, 13 Cardozo Arts & Ent. L. J. 475, 517-20 (1995) [hereinafter Reichman, Charting]; Jerome H. Reichman, Legal Hybrids Between the Patent and Copyright Paradigms, 94 Colum. L. Rev. 2432, 2504-19 (1994) [hereinafter Reichman, Legal Hybrids]; Pamela Samuelson, Randall Davis, Mitchell D. Kapor & Jerome H. Reichman, A Manifesto Concerning the Legal Protection of Computer Programs, 94 Colum. L. Rev. 2308 (1994) [hereinafter Manifesto].

[15] See infra Part III (describing the new regime).

[16] 17 U.S.C. § 115 (1994). Although the "cover" concept provides the basis for an appropriate remedy in the new regime, the actual remedy differs in a number of important respects. See infra Part III.

[17] See infra Part IV (discussing the appropriate adjustments).

[18] Including those suggestions discussed by Professor Merges. See Merges, supra note 5, at 607-09; infra notes 223-40 and accompanying text.

[19] See infra notes 195-96 and accompanying text (discussing Professor Dennis Karjala's approach to the similar issue raised in the software context).

[20] Patents are defined by their claims, which form an important part of the specification required under § 112. See 35 U.S.C. § 112; Chiappetta, Article of Manufacture, supra note 8, at 104. It is not always apparent what the claims cover, but for purposes of this discussion, it is enough to draw the broad division between computing technologies and the underlying processes indicated in the text. See Chiappetta, Article of Manufacture, supra note 8, at 141-43, 155-59, 176 n.340.

[21] The key lies in separating true software claims from claims, which although couched in software terms actually cover the underlying non-computing process. Chiappetta, Article of Manufacture, supra note 8. The former are machines (components) and per se patentable subject matter. They must, however, also find their novelty and non-obviousness in the computing arts. Id. at 168-76. The latter must satisfy the patentability requirements, including subject matter, independently of the software articulation. Id.

[22] See State Street Bank & Trust Co. v. Signature Fin. Group, Inc., 149 F.3d 1368, 1371-72 (Fed. Cir. 1998) (reconstructing the means for claims from the specification to demonstrate the existence of a machine); see also Chiappetta, Article of Manufacture, supra note 8, at 133 n.229 (discussing the machine aspects of the holding).

[23] See Chiappetta, Article of Manufacture, supra note 8, at 133 n.229 (discussing the utility aspects of the holding); cf. Thomas, supra note 2, at 26-27 (noting the unjustified combination of the statutory subject matter and utility tests).

[24] See Chiappetta, Article of Manufacture, supra note 8, at 154-59 (arguing we should go further and permit direct claiming of software inventions). Others have noted more pragmatically, that despite these shortcomings, the CAFC and USPTO seem to have settled into a comfort zone concerning software patentability and, given Congresses' apparent lack of interest, it is time to move on to the important questions regarding implementation. See, e.g., Julie E. Cohen & Mark A. Lemley, Patent Scope and Innovation in the Software Industry, 89 Cal. L. Rev. 1 (2001) (noting patentable subject matter questions "are for the history books"). Certainly, the CAFC decision in AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352 (Fed. Cir. 1999), and the USPTO continued issuance of a wide-range of software patents, confirm this view.

[25] See Chiappetta, Article of Manufacture, supra note 8, at 101. These practical issues apply with even more force to the issue of business method patentability. The same approach to resolving them in that context are equally workable in the software context. See infra notes 223-26 and accompanying text (discussing the necessary actions).

[26] See Cohen & Lemley, supra note 24 (discussing the need for a reverse engineering exception and an appropriately narrow application of the doctrine of equivalents).

[27] See supra notes 23-24 (noting the available solutions).

[28] See generally Chiappetta, Article of Manufacture, supra note 8.

[29] See Chiappetta, Article of Manufacture, supra note 8, at 154-59, 168-76.

[30] The concern that this would result in over-protection of the underlying process was, appropriately, extremely prevalent in the earlier days of the software patentability debate. See, e.g., Pamela Samuelson, Benson Revisited: The Case Against Patent Protection for Algorithms and Other Computer Program-Related Inventions, 39 Emory L. J. 1025, 1126-27 (1990) (a good example of the kind of concern routinely raised concerning the algorithm analysis of software inventions). The concern affects the Internet patent debate because of the frequent computer implementation of business methods, particularly in the Internet environment. See, e.g., Merges, supra note 5, at 586 (embedding business concepts in software permits characterization as novel computer programs); Stern, supra note 5, at 129 (noting that computer implementation makes the business method part of the technological arts). Distinguishing between software as machine component and software as language eliminates this concern. See Chiappetta, Article of Manufacture, supra note 8, at 154-59. Additionally, it is important not to confuse the field of application with the nature of the innovation. Merely because a computing innovation implements a method of doing business does not make the invention a business method patent. Id. at 131, 160. Although exclusive patent rights to the novel and non-obvious computing implementation may afford practical control over the underlying methodology, that is the point of the patent laws. The inventor is rewarded for the technological advance and others are left to attempt to develop alternative competitive implementations. Id. at 163. Except for the explicit reference in State Street Bank to the "method of doing business doctrine," this distinction between where the invention is used (business) and the invention itself (computing) would have been a nice way to finesse the reach of that case on its facts. In other words, the fact that it was used to implement a mutual fund system did not make the computing invention unpatentable subject matter. See infra note 56.

[31] There is a third category in which the applicant acknowledges that neither the computing implementation nor the underlying methodology is novel (or more likely non-obvious), but the mere fact of using the existing Internet computing tools to implement the known method is innovative. As with any automation as innovation claim, the relevant non-obviousness inquiry is whether a person of ordinary skill in Internet computing would find the mere fact of moving an already "known" business methodology to the Internet obvious. Consequently, it is highly unlikely such "inventions" can survive a proper § 103 review. See Chiappetta, Article of Manufacture, supra note 8, at 170 n.324; infra note 301 (discussing the relationship between nonobviousness in computing techniques and novelty in the competitive arts).

[32] A number of commentators have pointed out that the State Street Bank system did not merely automate profit and loss allocations, but also necessary compliance with the Treasury regulations applicable to pooled fund partnership operations. See Dreyfuss, supra note 5, at 265; Raskind, supra note 5, at 86; Stern, supra note 5, at 131.

[33] See Paine, Webber, Jackson & Curtis v. Merrill Lynch, 564 F.Supp. 1358 (D. Del. 1983) (involving a cash management account).

[34] Such as the Amazon "one-click" checkout patent asserted against Barnesandnoble.com. See Amazon.com, Inc. v. Barnesandnoble.com, Inc., 73 F. Supp. 2d 1228, 1231 (W.D. Wash. 1999), vacated by, 239 F.3d 1343 (Fed. Cir. 2001).

[35] Such as the DoubleClick targeted banner advertisement patent or the Amazon affiliate referral patents.

[36] See In re Maucorps, 609 F.2d 481 (C.C.P.A. 1979).

[37] This area is driving the current wave of litigation and commentary. See supra note 3 and accompanying text.

[38] The following discussion, therefore, assumes that the product or service involved is equally available to all competitors and that relevant point of differentiation is the methods used to operate the business and, particularly, how the product or service is marketed, sold and delivered to the buyer. For example, it is assumed that the books or CDs available on an Internet site are undifferentiated and that innovations take place regarding the specifics of how the site is marketed and operates. The line, of course, is hardly crisp. For example, does the system at issue in State Street Bank, supra note 22, involve a computing implementation, a financial product (the participation in the aggregate fund), a service (the financial reporting) or a marketing tool (the rapid and efficient provision of the product or the service)? Only the latter would involve the competitive arts. Although insights gained from close scrutiny of this particular subclass can usefully inform decisions regarding other subclasses, a distinction nonetheless must be made. The conclusions reached only apply to competitive means. In particular, financial products and methods make even analogies suspect in light of the tricky definitional and analytical issues they raise. Are they things (the money they produce), services (managing or investing money to best advantage) or methods (ways of making money)? Are the appropriate analogs to tangible products, methods of competition or is entirely independent assessment required? Resolution of this extremely complex set of issues is well beyond the scope of this discussion and must await another day.

[39] As the Internet continues to evolve, however, escaping such limitations may become important to avoid technological "lock-out." See Chiappetta, Article of Manufacture, supra note 8, at 153-54 (noting the same evolution problem in the software context raised by the tangible medium restriction under the USPTO Examination Guidelines).

[40] The same argument applies to claims to software "as such" when the only novelty lies in the underlying activity. See Chiappetta, Article of Manufacture, supra note 8, at 171-73 (explaining this § 102 "point of novelty" analysis and the related example that discovery of a law of nature (F=ma, E=mc2) would not provide patentable novelty in a claim to the implementing software). See infra notes 300-02 and accompanying text (discussing the relationship between novelty in computing techniques and the competitive arts).

[41] See, e.g., Del Gallo, supra note 10, at 405-11 (outlining the history of the business method exception and related judicial decisions and tracing the origins back to Hotel Security Checking Co. v. Lorraine Co., 160 F. 467 (2nd Cir. 1908)).

[42] It is worth noting that the cases do not themselves differentiate between the various possible kinds of business methods. See supra note 3, 31-37 and accompanying text. For example, Hotel Security Checking Co. v. Lorraine Co., 160 F. 467 (2nd Cir. 1908) involves a method for reducing internal theft, a competitive arts internal business organization strategy. In contrast, the Loew's Drive-In Theatres Inc. v. Park-In theatres, Inc., 174 F.2d 547 (1st Cir. 1949) drive-in movie method seems more properly classified as a service. Calling both "methods of doing business" and creating a blanket exception, completely ignores the possibility that the two types of inventions may require substantially different analysis to determine whether they are appropriate subject matter. See supra note 38.

[43] See State Street Bank & Trust Co. v. Signature Fin. Group, Inc., 149 F.3d 1368, 1375-76 (Fed. Cir. 1998); Del Gallo, supra note 10, at 435-36.

[44] See State Street Bank, 149 F.3d at 1375-76; Del Gallo, supra note 10, at 435-36. But see, Stern, supra note 5, at 124-25; Thomas, supra note 2, at 26 (both noting that the CAFC all but ignores the statement in In re Alappat, 33 F.3d 1526, 1541 (Fed. Cir. 1994), that appears to confirm the business method exception). In re Alappat, 33 F.3d at 1541, notes with apparent approval that another case (In re Maucorps, 609 F.2d 481 (C.C.P.A. 1979)) had "dealt with a business methodology" which did not fall within § 101. The Maucorps panel had, however, actually decided the issue on mathematical algorithm grounds without reference to the business method exception. Maucorps, 609 F.2d at 486. Therefore, State Street Bank is correct that there is no actual holding supporting the business method exception. In all events, neither Maucorps nor Alappat offer any rationale for the exception's existence.

[45] Not without justification, however, as the policy analysis below demonstrates in reaching the same conclusion, at least regarding the competitive arts. See infra notes 88-174 and accompanying text.

[46] The concern, however, is not without some merit. Given the long history of commerce and the related methods, one does have to question whether anything truly new remains to be developed. Cf. Merges, supra note 5; Thomas, supra note 2, at 31-32 (both noting that most business methods have a long and venerable heritage). But the entirely correct observation that the vast majority of competitive arts ideas are unlikely to be new does not preclude the possibility of any innovation. In fact, in such circumstances, the creation of something new may be particularly valuable. The appropriate way to deal with the concern is, therefore, to ensure the novelty and non-obviousness gatekeepers properly function. See infra notes 127-40 and accompanying text (discussing the importance of this implementation).

[47] 149 F.3d 1368 (Fed. Cir. 1998).

[48] See Stern, supra note 5, at 123-26, 154; Thomas, supra note 2, at 26-27.

[49] 149 F.3d at 1375.

[50] Id. at 1375-77; see also supra notes 41, 44.

[51] See State Street Bank, 149 F.3d at 1373.

[52] 447 U.S. 303 (1980).

[53] 35 U.S.C. §§ 1-376 (1994).

[54] State Street Bank, 149 F.3d at 1373 (quoting Chakrabarty, 447 U.S. at 309 (quoting the language of the Senate Report 1979, S. Rep. No. 1979, at 5 (1952), accompanying the 1952 Patent Act)).

[55] 35 U.S.C. § 100 (1994).

[56] See State Street Bank, 149 F.3d at 1373 ("Thus, it is improper to read limitations into § 101 on the subject matter that may be patented where the legislative history indicates that Congress clearly did not intend such limitations." (citing to Chakrabarty, 447 U.S. at 308)). Another possibility is that the decision has been over-read regarding the business method exception. For example, the concluding line of State Street Bank states: "[w]hether the claims are directed to subject matter within § 101 should not turn on whether the claimed subject matter does 'business' instead of something else." 149 F.3d at 1377. A much narrower and less controversial reading therefore might be that State Street Bank merely reinforces the point made in In re Johnston that because the invention applies to business activity does not render an otherwise patentable invention non-statutory subject matter. See In re Johnston, 502 F.2d 765, 771, rev'd on other grounds, sub nom. Dann v. Johnston, 425 U.S. 219 (1976). The court, however, only cites to Johnston in State Street Bank to note the Court's refusal to address "the section 101 argument" (149 F.3d at 1375 n. 12) and such a reading would be consistent with the frontal assault on the doctrine found at the outset of the State Street opinion's discussion of the business method exception. See 149 F.3d at 1375 ("We take this opportunity to lay this ill-conceived exception to rest").

[57] There is, of course, arguably a difference between interpreting the words in the statute as they are found and overlaying Congressional intent in performing that exercise. But as the broadest reading is all that need concern us for this purpose, and it is consistent with both approaches, the debate over the appropriate method of judicial interpretation can be left for another day.

[58] See, e.g., Graham v. John Deere Co., 383 U.S. 1, 5 (1966); Chiappetta, Article of Manufacture, supra note 8, at 127-9; Robert A. Kreiss, Patent Protection for Computer Programs and Mathematical Algorithms: The Constitutional Limitations on Patentable Subject Matter, 29 N.M. L. Rev. 31, 58-59 (1999); Merges, supra note 5, at 587; Samuelson, supra note 30, at 1033 n.24; Thomas, supra note 2, at 33-34.

[59] U.S. Const. art I, § 8, cl. 8. The position that the preamble to the Intellectual Property Clause limits Congressional power is not, however, undisputed. See, e.g., Eldred v. Reno, 239 F.3d 372, 377-78 (D.C. Cir. 2001) (holding the preamble language does not limit Congressional power to enact the copyright laws). In all events, even if Congressional power is not so limited, it still merits policy inquiry to determine whether or not business methods should be covered by the patent laws. See infra notes 86-87 and accompanying text.

[60] See supra notes 51-54 and accompanying text; see also Chiappetta, Article of Manufacture, supra note 8, at 135-37.

[61] See Kreiss, supra note 58, at 56-57 (pointing out that the words of the Patent Statute must be read in their specific context as "terms of art").

[62] See supra note 58.

[63] Professor Merges captures the problem well noting that the clause "provides no built-in limits." Merges, supra note 5, at 584; see also Dreyfuss, supra note 5, at 276, Stern, supra note 5, at 128-29.

[64] See, e.g., Merges, supra note 5, at 587; Thomas, supra note 2, at 32-34 (providing a number of interesting examples of recent patents).

[65] Jefferson argued against any exclusivity, reflecting the English experience leading to the Statute of Monopolies. Madison eventually convinced him of the appropriateness of limited exclusive rights to promote desirable social progress. See Graham v. John Deere Co., 383 U.S. 1, 5-10 (1966); Chiappetta, Article of Manufacture, supra note 8, at 97-99; Merges, supra note 5, at 585-586; Robert P. Merges & Glenn Harlan Reynolds, The Proper Scope of the Copyright and Patent Power, 37 Harv. J. on Legis. 45, 46-48, 57-58 (2000); Thomas, supra note 2, at 33-34.

[66] The preamble to the Intellectual Property Clause reads "[t]o promote the Progress of Science and useful Arts." U.S. Const. art I, § 8, cl. 8. This language has been consistently read in the parallel 18th Century style to separately justify the copyright laws (science, authors and writings) and the patent laws (useful arts, inventors and discoveries). Unless this structure is meant to imply some relevant difference exists between the two targeted subject matters it would make much more sense to simply list all activities under a single inclusive label and let Congress decide if differences might exist. See Chiappetta, Article of Manufacture, supra note 8, at 129-30.

[67] 94 U.S. 780 (1876); Del Gallo, supra note 10, at 409 n.29.

[68] See Del Gallo, supra note 10, at 408-411; Thomas, supra note 2, at 12-14.

[69] Intangibility is very different from abstraction. The former simply means the invention cannot be touched (or at the extreme, physically perceived) by human beings. The latter, embodied in the abstract idea exception, addresses the level of generality at which the idea is expressed. It is important not to confuse the two as they have very different ramifications in patent law. Intangibility creates problems of objective verification. Is something really there? Abstraction raises concerns about premature and extensive exclusivity interfering with the very innovation the patent laws are designed to promote. See infra notes 127-40 (discussing the need for objective verification), 144-47 and accompanying text (discussing the abstract idea exception).

[70] See Merges, supra note 5, at 586; Thomas, supra note 2, at 13-15.

[71] See Chiappetta, Article of Manufacture, supra note 8, at 106-20 (reviewing the history of software patentability, including the Freeman-Walter-Abele "physicality" test).

[72] State Street Bank started the move by expressly rejecting application of the Freeman-Walter-Abele test to questions of statutory subject matter. State Street Bank & Trust Co. v. Signature Fin. Group, Inc., 149 F.3d 1368, 1373-74 (Fed. Cir. 1998). The decision in AT&T Corp. v. Excel Communications, 172 F.3d 1352 (Fed. Cir. 1999), finished the job, finding that physical transformation "is not an invariable requirement" and that "physical limitations analysis seems of little value" in light of the "useful, concrete and tangible result" test. Id. at 1358-60; see also Thomas, supra note 2, at 29 (noting the "abrupt end to the physical transformation standard").

[73] See Chiappetta, Article of Manufacture, supra note 8, at 129-30. Cf. Kreiss, supra note 58, at 62 and n.230 (citing other authorities but not expressly adopting the position).

[74] A variety of CAFC judges have expressly articulated the position. See Application of Musgrave, 431 F.2d 882, 893 (C.C.P.A. 1970); Application of Waldbaum, 457 F.2d 997, 1003-04 (C.C.P.A. 1972) (Rich, J., concurring); In re Alappat, 33 F.3d 1526, 1552-53 (Fed. Cir. 1994) (Archer, C.J., concurring in part and dissenting in part). Professor Chisum and others support the view. See Donald S. Chisum, 1 Chisum on Patents: A Treatise on the Law of Patentability § 1.01, Glossary at 23 (Supp. 2000); Chiappetta, Article of Manufacture, supra note 8, at 129-30; Samuelson, supra note 30, at 1033 n.24; Thomas, supra note 2, at 4, 32-37 (noting the definitional problem and going the further step of attempting to define the technological arts).

[75] See Stern, supra note 5, at 128.

[76] See Thomas, supra note 2, at 36-37.

[77] Id. at 7. This description, however, retains too much connection to the "physical" to be fully workable in the Information Age. See supra notes 67-73 and accompanying text; infra note 136.

[78] Thomas, supra note 2, at 7.

[79] Id. at 50-57. He notes, however, that such an approach may not solve all the problems. Id. at 57.

[80] See supra note 65.

[81] Id. Professor Merges wonderfully captures the spirit of that time: "Everyone knew that manufactures and machines were at the core of the patent system . . . . At the very least, for Jefferson, if you put technology in a bag and shook it, it would make some noise." Merges, supra note 5, at 585.

[82] See supra note 66; infra notes 100-07.

[83] The division reflects the line drawn by the Supreme Court in Baker v. Selden, 101 U.S. 99 (1879). This same line has been more precisely formulated by Professor Dennis Karjala in his writings concerning the appropriate division between patent and copyright protection of software. See infra notes 100-107 and accompanying text.

[84] See Thomas, supra note 2, at 50-54.

[85] Id. at 58.

[86] Which, absent a carrying medium, cannot even be put in a paper bag and shaken, much less make any noise. See supra note 81.

[87] Like ourselves, the Founders were products of their own environment and their decisions reflect the world they knew and the choices they were required to make. See Lawrence Lessig, Code and Other Laws of Cyberspace 149-50 (1999).

[88] As Godel pointed out, there really are no first principles in analysis, just first assumptions. As discussed in the text, United States patent law assumes a social organization that starts from a free-market economy baseline and adjusts from there. If that assumption fails, then we need to re-enter the discussion from the analytical starting point provided by the new social model. See Vincent Chiappetta, The Desirability of Agreeing to Disagree: The WTO, TRIPS, International IPR Exhaustion and a Few Other Things, 21 Mich. J. Int'l L. 333, 375-81 (2000) (discussing alternative views of the social compact and the effects on intellectual property rights) [hereinafter Chiappetta, Agreeing to Disagree].

[89] See Chiappetta, Myth, supra note 11, at 73.

[90] See, e.g., Raskind, supra note 5, at 71. For doubters that United States law starts from this point, the passage of the antitrust laws in 1890 and 1914 provide strong empirical evidence of the desire to let Adam Smith's invisible hand free to work its magic. See, e.g., Phillip Areeda & Louis Kaplow, Antitrust Analysis 8, 45-47 (Aspen 5th ed. 1997). This is not to say that we do not make incursions to interject other values through, for example, redistributional taxes, regulatory regimes and even government ownership. Cf. id. at 8-9, 25.

[91] Specifically, productive efficiency rewards the most innovative producers and allocative efficiency directs innovation toward consumer preferences. See Areeda, supra note 90, at 17. Adam Smith made this self-interest acceptable by arguing that such otherwise "greedy" instincts would be properly channeled by the invisible hand of the competitive marketplace to benefit society as a whole. See generally, Adam Smith, Wealth of Nations (Edwin Cannan ed., 6th ed., Methuem & Co. LTD, 1950).

[92] Richard A. Posner, Economic Analysis of Law 36-39 (5th ed. 1998).

[93] Thomas Jefferson's eloquent observation sums it up: "He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me." VI Writings of Thomas Jefferson 180-181 (H.A. Washington ed., 1814).

[94] For additional elaboration of the discussion following in the text, see Chiappetta, Myth, supra note 11, at 86-87; Chiappetta, Article of Manufacture, supra note 8, at 98.

[95] 35 U.S.C. § 271 (1994). United States patent law, unlike copyright law, provides virtually no exceptions to the patent holder's right to prevent use by others. See Stern, supra note 5, at 138; Thomas, supra note 2, at 5.

[96] Precisely as contemplated in the Intellectual Property Clause of the Constitution. See U.S. Const. art I, § 8, cl. 8. Although the Framers did not perform any cost-benefit analysis, Jefferson and Madison clearly understood the market incentive failure and the need for intervention. See Chiappetta, Myth, supra note 11, at 86 n.112. There is no convincing evidence that any deliberate determination has been made that the current 20 year patent term actually corresponds to the level of incentive necessary to produce maximally efficient levels of investment. See supra note 11; infra note 112 and accompanying text.

[97] Whether the economic market theory supporting the patent system actually works is another question. Even if it does, there is no guarantee that it works in the same fashion in every instance, a key point in this analysis. See supra note 11 (noting the conclusions reached regarding competitive arts patenting are actually reinforced by the uncertainty); infra Parts II, III. Cf. Merges, supra note 5, at 584-85 (noting early Congressional "blind technological optimism" and the resulting "one size fits all" patent law).

[98] The courts have consistently noted this important aspect of United States patent and copyright law. See, e.g., Mazer v. Stein, 347 U.S. 201 (1954) (making the point in the copyright law context).

[99] See, e.g., Graham v. John Deere Co., 383 U.S. 1 (1966) (noting Jefferson's rejection of natural rights theories); Donald S. Chisum, et al., Principles of Patent Law 46-47 (1998). Nothing prevents recognizing these arguments as a normative matter, in fact many nations do so. See Chiappetta, Agreeing to Disagree, supra note 88, at 376-81. To do so in this context, however, conflicts with the basic assumption that utility based patent law is a given and the question is whether coverage should be extended to the competitive arts, not whether to reassess our society's value structure. Although the latter objective merits serious consideration it is well beyond the scope of this much more modest inquiry.

[100] See Karjala, A Coherent Theory, supra note 14, at 56-57, 60-62; Dennis S. Karjala, The Relative Roles of Patent and Copyright in the Protection of Computer Programs, 17 J. Marshall J. Computer & Info. L. 41, 44-50 (1998) [hereinafter Karjala, The Relative Roles].

[101] See Karjala, The Relative Roles, supra note 100, at 44-50; see also Mark A. Lemley, The Economics of Improvement in Intellectual Property Law, 75 Tex. L. Rev. 989, 1000-13 (1997) (providing a detailed description of patent law's approach to improvements).

[102] See Karjala, The Relative Roles, supra note 100, at 44-50; see also Lemley, supra note 101, at 1013-29 (describing copyright law's approach to improvements, including the special role of fair use).

[103] See id. Professor Reichman notes that this historical separation (in his taxonomy between the "general product markets" protected by patent law and "cultural products" protected by copyright law) has been broken down by the technological changes of the Information Age. His conclusion that a new hybrid regime is required, however, remains consistent with the need for continued separation of patent and copyright law. See Reichman, Charting, supra note 14, at 480-485, 512-520.

[104] See 17 U.S.C. § 102(b) (1994) (precluding protection for processes and methods); 17 U.S.C. § 101 (1994) (precluding protection for useful articles); see also Stern, supra note 5, at 112-14 (discussing the idea-expression channeling approach taken in Baker v. Selden, 101 U.S. 99 (1879), as adopted by § 102(b) of the Copyright Act, 17 U.S.C. § 102(b) (1994)).

[105] See Karjala, The Relative Roles, supra note 100, at 45-47 (further defining the content of "functional" innovations).

[106] Id. at 46.

[107] See id. The division between functional and "expressive" (my word, not Professor Karjala's) works mirrors the division drawn by Professor Reichman between general products market goods and cultural goods. See Reichman, Charting, supra note 14, at 483-84, 489, 513. The latter approach, however, does not offer nearly as clear a distinction. Quite clearly copyright law envisions that cultural innovations will also be commercially exploited, otherwise the market incentive would have no value. Trying to draw a line between cultural "art" and commercial "art" is equally problematic. Better to look at the primary objective of the innovation: functionality or expression. It is worth noting that this dividing line may preclude patenting of certain commercial commodities (for example when their only purpose is to entertain) and permit patenting of methods used in the cultural arts (like a method of painting-by numbers for example) as the purpose is functional. The inability to objectively verify the educational, entertainment or edifying results of non-functional innovations further supports the "functional-expression" channeling approach. See infra notes 136, 140 and accompanying text.

[108] There is no requirement that every innovation be protected in some fashion. See Stern, supra note 5, at 153.

[109] See Raskind, supra note 5, at 77 (noting the need to demonstrate that the incentive is necessary).

[110] See id. at 73-74 (noting the problems of deadweight loss resulting from freeing a competitor from normal market forces). Cf. Merges, supra note 5, at 584 (noting the need to address the related costs).

[111] See Raskind, supra note 5, at 77-78 (also noting potential difficulties with "pure" utility theory itself); Thomas, supra note 2, at 35-36 (noting the paucity of data).

[112] The theory remains a powerful anecdotal force but there is at least growing suspicion regarding its operation in practice. In all events, after over 200 years of looking at the issue, no firm conclusions can be reached. See Comments of Josh Lerner, PTO Panel Discusses Incentives Driving E-Commerce and Business Method Patents, Computer & Internet LawCast available at http://www.lawcast.com) (Aug. 14, 2000); supra note 11. Professor Raskind discusses one interesting study, which appears to demonstrate that broad patent protection can substantially impede technological progress. See Raskind, supra note 5, at 73-77. This does not, however, indicate that all patenting has this effect, merely that a more refined approach than the current one size fits all regime is required. This Article comes to exactly that conclusion regarding the appropriate hypothesis regarding the competitive arts.

[113] See Thomas, supra note 2, at 35-36 and Raskind, supra note 5, at 78, noting the absence of empirical work regarding business patents; see also Lerner, supra note 2, at 34-36 (noting the increase in filings and grants but no evidence regarding the incentive effect itself).

[114] The working hypothesis generated by theoretical analysis is especially important when the empirical work either is a long time in coming or never occurs, as it provides the only basis for action. Cf. Thomas, supra note 2, at 35-36 (noting the apparent disinclination to research the topic). See infra Part IV ( setting out a number interim actions deemed appropriate even absent empirical verification to ensure patenting does not over-protect the competitive arts).

[115] See AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352, 1359-60 (Fed. Cir. 1999); State Street Bank & Trust Co. v. Signature Fin. Group Inc., 149 F.3d 1368, 1375 (Fed. Cir. 1998); In re Alappat, 33 F.3d 1526, 1544 (Fed. Cir. 1994)(en banc).

[116] See Thomas, supra note 2, at 22-27.

[117] Id. at 26-27.

[118] See id. at 33; Merges, supra note 5, at 588.

[119] See Thomas, supra note 2, at 33 ("almost any sort of communicable practice seems easily attainable.").

[120] Abstract ideas overlap to some extent with the problem of inadequate description/enablement under § 112. 35 U.S.C. § 112 (1994). See infra notes 144-47. In both cases, the fundamental problem is the same: giving too much exclusionary power to the patentee compared to the scope of the actual invention.

[121] See State Street Bank & Trust Co. v. Signature Fin. Group. Inc., 149 F.3d 1368, 1373 (Fed. Cir. 1998).

[122] These exceptions exist doctrinally because the Supreme Court has said so. See Chiappetta, Article of Manufacture, supra note 8, at 130-33 (discussing the exceptions). An appropriate definition of the useful arts should, however, explain why the exclusions are good policy. The "usefulness" as "specific benefit" test cannot do so. A law of nature is just as beneficial as any other process. For example, F=ma and E=mc2 not only do what they claim but the result of the computation is extremely useful to know. Natural phenomena and abstract ideas are similarly "useful" as there is clear benefit in knowing that things like hydrogen or magnetism exist and have certain properties or in being pointed in the proper direction by an idea such as placing an eraser on the end of a pencil. In each case, the actual concern is not lack of value (or usefulness), but too little value compared to the costs. See id.; infra notes 144-47 and accompanying text.

[123] See supra notes 67-73 and accompanying text.

[124] The court picks up, and is therefore constrained by, the phrasing of the test from the earlier Alappat en banc decision which it, quite properly, used as guiding precedent. State Street Bank, 149 F.3d at 1373.

[125] Id. at 1375. The State Street Bank court makes a similar explanatory effort when first introducing the test. See id. at 1373.

[126] The court's own unconvincing attempts to apply the test to the facts in State Street Bank and to its earlier decisions demonstrates the difficulty. See Chiappetta, Article of Manufacture, supra note 8, at 133 n.229. Cf. Thomas, supra note 2, at 26 (noting the conflation of useful arts with utility).

[127] See Thomas, supra note 2, at 54 (noting the issue in connection with innovations involving aesthetics and personal skill).

[128] AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352, 1361 (Fed. Cir. 1999); State Street Bank & Trust Co. v. Signature Fin. Group, Inc., 149 F.3d 1368, 1373 (Fed. Cir. 1998).

[129] The approach helps mitigate valid concerns expressed by other commentators that the patent system is simply not up to the task of applying the § 102 and § 103 requirements to new forms of innovation. See, e.g., Dreyfuss, supra note 5, at 268-69. Although objective verification helps, other actions must still be taken to ensure proper operation regarding the competitive arts. See id.; infra notes 223-56 and accompanying text.

[130] See Thomas, supra note 2, at 54 (discussing problems with patenting matters involving aesthetics or personal skill, stating that "We also appear to lack objective mechanisms for evaluating this subject matter in light of the requisites of patentability.").

[131] AT&T v. Excel, 172 F.3d at 1361.

[132] See Jefferson, supra note 93.

[133] See AT&T v. Excel, 172 F.3d at 1357; State Street Bank, 149 F.3d at 1373.

[134] The CAFC's "practical utility" test for patentable subject matter, therefore, does closely relate to traditional specific utility. However, they remain a distinct requirement. The practical utility requirement of objective verification permits the necessary testing for specific utility (most particularly in the sense the invention produces what it claims to). Together, not individually, these requirements make an invention "useful" in the sense meant by the patent laws. Cf. Karjala, The Relative Roles, supra note 100, at 45-46 (noting that patent law usefulness (functionality in his taxonomy) should not be confused with the general term "useful" because to do so would incorporate a wide range of extremely expressive works which more properly belong under the copyright regime); Stern, supra note 5, at 127 (noting such an equivalence leads to a search for a division between the useful and the "not useful" arts).

[135] The objective verification requirement ensures proper application of the description/enablement requirement. If a sufficient description/enablement required aesthetic or other subjective judgments or application of personal skill, there can be no assurance that the invention contributed any advance in market performance. For example, telling people to think like Albert Einstein, paint like Leonardo Da Vinci, or to play golf like Tiger Woods adds nothing to the market's performance. Although these claims certainly would be attacked as "abstract ideas," the subject matter problem (whether labeled "abstract idea" or something else) is that without any means to objectively verify, it is impossible to determine if the desired result was produced, and if so, whether it resulted from proper implementation of the invention or something else.

[136] The objective verification requirement, not surprisingly, aligns nicely with Professor Thomas' focus on the characteristics of technology. It is, after all, his observation concerning the importance of objective verification which supports the approach. However, his references to the physical aspects of technology should have a much more limited role in the subject matter inquiry. See Thomas, supra note 2, at 7, 53. Specifically, the CAFC's observation in AT&T v. Excel that "[physical transformation] is not an invariable requirement, but merely one example of how a mathematical algorithm may bring about a useful application" provides the appropriate guidance. AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352, 1358 (Fed. Cir. 1999). The "tangibility" requirement of the Alappat "useful, concrete and tangible" test should be similarly interpreted. Tangibility, including physical transformation, when it ensures objective verification is a sufficient condition, but that does not make it necessary. Although "concrete" can be more comfortably read as "objectively verifiable," potentially confusing semantic associations with physicality remain. Far better to abandon a forced reading of the conjunctive requirements of "useful, tangible and concrete" and to interpret them as terms of art and focus directly on objective verification. Thus interpreted, the patent laws can, and should, comfortably extend to a variety of activities which do not fit either our historical or intuitive sense of technology, things which in Professor Merges' apt description make noise if put in a bag and shaken. Merges, supra note 5, at 585. See supra notes 67-73 and accompanying text (discussing the need to abandon the physical transformation approach). The objective verification approach to statutory subject matter does, however, raise serious questions regarding whether "entertainment" outputs from traditional technological apparatus or composition of matter claims are sufficiently objectively verifiable to make them patentable subject matter. See, e.g., Levi Strauss & Co. v. Golden Trade, No. 92 Civ. 1667 (RPP), 1995 U.S. Dist. LEXIS 4899 (S.D.N.Y. 1995) (struggling with the issue of protecting a fashion statement under the patent laws). A similar issue arises regarding business method outputs. See infra notes 150-53 and accompanying text.

[137] As an alternative we could eliminate all constraints other than novelty and non-obviousness, leaving it to the market to determine whether the claimed invention produced valuable output. Eliminating the need to objectively demonstrate utility or provide workable description/enablement would take Professor Edmund Kitch's prospect theory to a land-rush extreme, permitting prospectors to stake out exclusive claims to all related future activities based merely on a showing of first to arrive in the territory. Cf. Edmund Kitch, The Nature and Function of the Patent System, 20 J.L. & Econ. 265 (1977). Just as we discovered when the examination requirement was eliminated, the resulting cloud of patents would have a significant adverse effect on the market. See Merges, supra note 5, at 594-96. More critically, rather than generate substantial additional innovation such a system would actually deter subsequent innovation. See, e.g., Brenner v. Manson, 383 U.S. 519 (1966) (discussing the problems if utility requirements are entirely abandoned). This problem is clearly visible in the current struggle over patenting of c-DNA sequences. Granting a patent to the first to find (create) the sequence substantially reduces the value of, and hence incentives to, additional investment in determining specific uses. See "Riding the DNA Railroad," Interview with Eric Lander, Tech. Rev. July-Aug. 2000, at 98.

[138] The software assessment, not to be confused with the underlying process being implemented, however, should not rest on tangibility. Although one is tempted to rely on physical manifestations (the impulses on a recording medium or in computer memory), for reasons I explain elsewhere, this approach is improperly limiting. See Chiappetta, Article of Manufacture, supra note 8, at 150-54. Because software "as such" can be objectively verified, both as to existence and the special purpose output it generates, it meets the patentable subject matter requirements.

[139] Cf. Thomas, supra note 2, at 54 (noting the similar subjectivity problem regarding aesthetics and personal skill).

[140] It is not coincidental that the clearest exclusions under current law (the "arts") involve outputs which require taking into account non-market-economic considerations. These situations raise special objective verification concerns. Like the aesthetic, informative, educational, entertainment or edifying value of paintings, plays, music or literature, proper social decisions and salvation are very difficult to evaluate in traditional market terms. Cf. Reichman, Charting, supra note 14, at 483-484, 489, 513 (discussing the "general products" versus "cultural" line of demarcation between patent and copyright law). Some other means must, therefore, be found to translate those considerations into not only measurable but comparable terms. Even if this might be accomplished using economic conceptions such as "utility," it is far from certain that agreement could (or should) be reached that economics represents a proper approach to resolving these "ultimate value" trade-offs. See, e.g., Chiappetta, Agreeing to Disagree, supra note 88, at 369 n.187, 385 n.272; Chiappetta, Myth, supra note 11, at 93 n.154. In such cases, the better approach (reflected in current law) is to channel those innovations toward copyright law, limiting protection to the expressive elements and leaving the ultimate value decisions to other than intellectual property law. The effect is to limit patent law's reach to addressing the incentive to innovation problem regarding goods and services sold in, and the means of operation of, the competitive, commercial products market. See supra note 107 (discussing the views of Professors Karjala and Reichman concerning the proper reach of patent law); supra notes 76-79, 136 (discussing the congruence with Professor Thomas' argument in favor of the industrial arts); infra note 141 (discussing the limitations on the appropriateness of its application).

[141] Although the objective verification test appropriately defines the "useful arts" given the objectives and related structure of current patent law, its legitimacy only rests on alignment with those existing goals. If those goals were to change then so, perhaps, should the definition of the useful arts. See supra note 88. Additionally, the test may not fully comport with current Constitutional interpretation of the "useful Arts" limitation and may, therefore, require some adjustments. See supra notes 57-85 and accompanying text (discussing the definitional quandary); infra note 216 and accompanying text (noting similar possible ramifications for a new competitive arts regime).

[142] See supra notes 112-13 and accompanying text.

[143] See Chiappetta, Article of Manufacture, supra note 8, at 131-32 (discussing the far ranging preclusive effect of granting patents on such fundamental discoveries). On the other hand, certain types of scientific endeavor may require such enormous investments of resources and time, or the benefits of earlier identification may be so great, that some form of additional incentive is appropriate (for example, the recent mapping of the human genome). In all events, on policy grounds the distinction between invention and discovery relied on in a number of natural phenomena, law of nature cases is irrelevant. See, e.g., Parker v. Flook, 437 U.S. 584, 591-92 (1978); Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130 (1948); Chiappetta, Article of Manufacture, supra note 8, at 131 n.219 (discussing the Constitutional use of "discoveries"). In fact, one could argue that a law of nature is not really a discovery at all, but rather just another human invention which works in an objectively verifiable manner like any other technology. There is no evidence that laws of nature represent an underlying Platonic truth, just that it will accurately predict the way we see the shadows on the wall. In all events, the same empirical question applies equally to inventions and discoveries: will the patent incentive provide sufficiently increased "innovation" (discovery) to offset the costs? Cf. Karjala, The Relative Roles, supra note 100, at 60-61

[144] O'Reilly v. Morse, 56 U.S. 62, 112 (1853).

[145] At least in those cases in which some implementation is objectively enabled (as was the case in Morse's patent which included a number of specific applications). If no objective verification can be made, then the claim does not meet the patentable subject matter requirement in the first instance. See infra note 147.

[146] See Morse, 56 U.S. at 113.

[147] The objective verification requirement for patentable subject matter helps clarify the relationship between a § 112 enablement rejection and a § 101 abstract idea subject matter rejection. Both address the problem of excessive costs, but do so in different ways. The former turns on the actual objective confirmation that the described method fails to permit implementation by one of ordinary skill in the art. The latter addresses claims which provide no means to perform the necessary objective verification. In cases like Morse, where one or more objectively verifiable enablements exist, one could view a § 101 "abstract idea" rejection as tantamount to a § 112 over-breadth rejection. See Robert P. Merges et al., Intellectual Property in the New Technological Age 152 (1997). The better view, however, is that the inability to objectively verify the full operation of the "over-broad" claim makes it unpatentable subject matter as a whole, not merely indefinite under § 112. To illustrate, a § 112 indefiniteness rejection was appropriate in The Incandescent Lamp Patent, 159 U.S. 465 (1895), because it could be objectively confirmed that the asserted enablement failed by inserting any of a wide variety of carbonized fibrous or textile filaments which do not work as claimed. In contrast, a § 101 abstract idea rejection more properly applies to Morse's claim 8, which could be neither objectively confirmed or rejected as a whole. In abstract idea cases, although the broad form of the claim is properly treated as unpatentable subject matter, narrower objectively verifiable claims might still be presented as proper subject matter (as they were in Morse) for testing under § 112. See Stern, supra note 5, at 117 (discussing the famous Claim 8 in O'Reilly v. Morse, 56 U.S. 62 (1853)).

[148] Some would argue we have too much political innovation as it stands. More importantly, patenting of political processes implicates a variety of non-market values such as free speech, freedom of association and the basic franchise. In such cases, the importance of non-market economic variables makes patent coverage inappropriate. See supra note 140 (discussing the problem of dealing with such considerations within the patent incentive model).

[149] In other situations the converse may apply, with significant risks of under investment in innovation justifying avoiding the administrative costs of making fine-grained distinctions within the class of activity despite over-protection of the less objectively verifiable subclasses within a category of innovation.

[150] Like those in the patent at issue in Amazon.com, Inc. v. Barnesandnoble.com, Inc., 73 F. Supp. 2d 1228 (W.D. Wash. 1999), vacated by 239 F.3d 1343 (Fed. Cir. 2001).

[151] Or whether novelty and non-obviousness in that process can provide the necessary innovation to permit patenting of what would otherwise be an obvious computing implementation. See supra notes 39-40 and accompanying text.

[152] It might also be questioned whether even demonstrably increased sales or goodwill arising solely from the consuming public's interest in novelty for its own sake rather than any actual cost savings is sufficient to justify a patent. If consumers flock to the site because it is "cool," it has utility to them for which they are willing to pay a premium. However, that utility may also have been generated by inappropriate differentiation causing an irrational response in economic terms. Cf. Merges et al., supra note 147, at 527-29 (discussing the similar problem of trademark based differentiation).

[153] In effect, generating the same harm as permitting patents on laws of nature or abstract ideas, see supra notes 143-47 and accompanying text; or "unjustified" trademark differentiation, see supra note 152 and accompanying text.

[154] See supra note 113 and accompanying text (noting the newness of business method patents).

[155] See Dreyfuss, supra note 5, at 274-76; Raskind, supra note 5, at 77-78, 92-93.

[156] See Chiappetta, Myth, supra note 11, at 136-38 (discussing the related preemption argument).

[157] The system, however, is not without critics. See supra note 11.

[158] Although some innovations will apply to "back room" and internal processes, most sales and marketing techniques must be shown to potential customers in the market to be effective. Cf. Reichman, Legal Hybrids, supra note 14, at 2511-18 (discussing "innovation bearing know-how on its face").

[159] To the extent they do, the investment is in developing the enabler not the method itself. Provided the patent law requirements are satisfied, a patent will issue on the enabler, protecting the investment. See supra note 30 (explaining that the fact that an innovation is used to "do business" should not affect its patentability). Although the enabler patent may give de facto control over the method, it should not be confused with a right to a patent on the method itself. A proper enabler patent does not prohibit others from using the method itself, thus permitting others to work around the patent constraint and find improved implementations. See supra notes 28-30 (discussing the need to separate computing innovation from competitive arts innovation).

[160] See supra notes 41-46 and accompanying text (noting that until State Street Bank it was generally assumed business methods, including the competitive arts, could not be patented).

[161] See Lerner, supra note 112 (noting the frequency of innovation in the financial products market); Raskind, supra note 5, at 92-93. Although it may be anecdotally observed that competitors tend to use very similar sales and marketing techniques, that says nothing about the rate of innovation. So long as the sales and marketing techniques continue to change, as appears to be the case, "sameness" is not equivalent to stasis. Rather the similarity among competitors merely confirms the normal pattern of rapid emulation in the competitive arts. See Raskind, supra note 5, at 81.

[162] There was no concern about Internet patents 10 years ago, because there was no e-commerce.

[163] See Dreyfuss, supra note 5, at 275; Raskind, supra note 5, at 92-93.

[164] The market drive to obtain competitive advantage, even temporarily, should not be underestimated. Cf. Raskind, supra note 5, at 85-86. Even with oligopoly and express mutually beneficial (if illegal) collusion the pressure to cheat is intense, leading to frequent self-destruction of cartel activities. See Areeda, supra note 90, at 167-68.

[165] See Glynn S. Lunney, Jr., E-Obviousness, 7 Mich. Telecomm. & Tech. L. Rev. 363 (2001), available at http://www.mttlr.org/volseven/Lunney.html. The argument developed in the following text might logically be applied with equal force to product and service innovation. The differences in development costs, discussed infra, may provide a partial explanation for why patent coverage remains appropriate in products and services situations. To the extent it does not, the arguments applicability raises doubts about the efficacy of the patent system itself. See supra note 11 (noting that the proper operation of the patent system is hardly a foregone conclusion). It certainly does not argue for extending an improperly functioning system yet further to cover the competitive arts.

[166] See Dreyfuss, supra note 5, at 270-71, 275; Jared Earl Grusd, Internet Business Methods: What Role Does and Should Patent Law Play?, 4 Va. J. L. & Tech. 9, ¶¶ 43-48 (1999); Lunney, supra note 165; Reichman, Charting, supra note 14, at 518; Reichman, Legal Hybrids, supra note 14, at 2506-15 (noting the breakdown of this normal lead-time in the Information Age).

[167] See, e.g., Dreyfuss, supra note 5, at 270-71; Grusd, supra note 166, at ¶¶ 48.

[168] Cf. Raskind, supra note 5, at 81-82, 102 ("most business methods are developed in the arena of competition, rather than in a laboratory environment").

[169] In those instances where substantial investment in infrastructure innovation is required traditional patenting will independently provide the necessary incentive to investment in the implementation technology. See supra note 159 and accompanying text.

[170] See Dreyfuss, supra note 5, at 276-77; Raskind, supra note 5, at 102 (reaching the same conclusion).

[171] See Merges, supra note 5, at 582-83.

[172] See Dreyfuss, supra note 5, at 275-76; Raskind, supra note 5, at 81-82. Imagine, for example, a world in which the inventor of credit sales was able to preclude its use by others. See John Tauranac, The Empire State Building 87 (1995) (attributing this innovation to John J. Raskob of the General Motors Acceptance Corporation in 1919). On the other hand, it could be argued that although the patent incentive might not produce substantially more innovation than normal market forces, it accelerates the inventive process. Although others might have to pay GMAC to use the credit sale competitive method (a transfer of wealth), it would have been made beneficially available to the consuming public earlier thus generating increased aggregate wealth (it was clearly at least a popular idea with around 60% of all automobile sales being made on credit within eight years of its introduction by GMAC). Id. However, given the market's first-to-move lead-time drivers, it might be reasonably assumed that competitors already have substantial motivation to act quickly in the competitive arts and not much timing advantage would be generated. Moreover, any advantage from earlier introduction might well be offset (or overwhelmed) by the patent holder's refusal to license (generally or specifically) during the twenty year patent term thus limiting public access to the innovation.

[173] See supra notes 150-53 and accompanying text.

[174] See supra notes 109-10 and accompanying text. The possibility that the patent system even when properly applied, may not be cost justified hardly inspires additional confidence. See supra note 11.

[175] The pursuit of business method patents is part of a general trend to extend the scope of all forms of intellectual property protection, evident in recent legislative actions. See, e.g, Federal Trademark Dilution Act of 1995, 15 U.S.C. § 1125(c) (1994) (protecting against tarnishment and blurring of trademarks without confusion); Anti-Cybersquatting Consumer Protection Act, 15 U.S.C. § 1125 (d) (1994) (protecting against use of trademarks as domain names based on bad faith rather than confusion); The Digital Millennium Copyright Act, 17 U.S.C. § 1202 (1999) (prohibiting circumvention of technological protections for copyrighted material); the Sonny Bono Copyright Term Extension Act, 17 U.S.C. § 302 (1999) (extending the copyright term by 20 years); see also, Dreyfuss, supra note 5, at 263-64 (pointing out the trend). Whether this is a good thing is the subject of substantial debate. See, e.g., Dennis Karjala, Opposing Copyright Extension, at http://www.public.su.edu/~dkarjala/; Mark A. Lemley, The Modern Lanham Act and the Death of Common Sense, 108 Yale L. J. 1687 (1999). Some, but not all, of the following discussion has application to these issues as well.

[176] Certainly the experience when the examination requirement was eliminated demonstrates the eagerness for this type of "competitive advantage." See Merges, supra note 5, at 594-95.

[177] See supra notes 90-92 and accompanying text.

[178] See Chiappetta, Article of Manufacture, supra note 8, at 106-20 (examining the development of the case law); Kreiss, supra note 58, at 33 n.11 (citing a long list of articles on the subject).

[179] See Karjala, The Relative Roles, supra note 100, at 50-52; Merges et al., supra note 147, at 845.

[180] See Reichman, Legal Hybrids, supra note 14, at 2438-41, 2510-18 (Professor Reichman's work focuses largely on technologies and the related possibility of trade secret protection. His points apply equally, however, to the competitive arts).

[181] See id.; Dreyfuss, supra note 5, at 270-72 (discussing "lock in" effects).

[182] See Dreyfuss, supra note 5, at 270-72. In fact, pre-computing, natural lead-time seemed such a powerful argument that some commentators questioned whether even traditional intellectual property protection was required. See, e.g., Stephen Breyer, The Uneasy Case for Copyright: A Study of Copyright in Books, Photocopies, and Computer Programs, 84 Harv. L. Rev. 281 (1970).

[183] Arguing for copyright protection in the expression. See infra note 197 and accompanying text. But such protection provides no right to prevent use of the underlying method. See supra notes 100-107 and accompanying text.

[184] But see, Grusd, supra note 166, at ¶ 48 (noting anecdotal evidence that being first to market may be a significant advantage on the Internet). It is different, however, to be first in a market and the first to implement a particular means of competition.

[185] This effect would be very similar to the problems faced by a smaller, senior trademark holder in "reverse confusion" cases. See, e.g., Big O Tire Dealers, Inc. v. The Goodyear Tire & Rubber Company, 561 F.2d 1365 (10th Cir. 1977).

[186] See Lemley, supra note 11, at 143-44 (noting the important role of patents in venture capital financing).

[187] Cf. Raskind, supra note 5, at 93-95 (noting the presence of other remedies); Reichman, Legal Hybrids, supra note 14, at 2436-39 (noting the important role of trade secret law in protecting unpatentable and uncopyrightable inventions).

[188] See Reichman, Legal Hybrids, supra note 14, at 2442-45.

[189] The primary focus is on patent and copyright law. Trademark law although providing a means for locking-in differentiation, does not prevent adoption of the method itself. See, Grusd, supra note 166, at ¶¶ 44-47. Trade secret law poses the insurmountable difficulty of satisfying the secrecy requirement. See Chiappetta, Myth, supra note 11, at 77. Professor Reichman argues for "portable secrecy" to overcome this problem. See Reichman, Charting, supra note 14, at 519 (eliminating the "often socially irrelevant condition of actual secrecy"). The policy objectives of trade secret law, which are dependant on "secrecy" (properly defined), have nothing to do, however, with lead-time advantage and very little to do with incentives to innovation. See Chiappetta, Myth, supra note 11, at 149-50. Therefore, although Professor Reichman's proposed solution points in the right direction, the emphasis and continued connection to trade secret law is misplaced. The new regime should be articulated as what it is, a solution to the effects of quick and cheap copying on the market's natural lead-time incentives, not as a necessary modification of the trade secret law regime.

[190] This was the basic thrust of the Manifesto, see supra note 14, which argued that neither patent or copyright law were appropriate and, therefore a new sui generis form of protection was required. See Merges et al., supra note 147, at 1028-36.

[191] In re Alappat, 33 F.3d 1526 (Fed. Cir. 1994)(en banc).

[192] State Street Bank & Trust v. Signature Fin. Group, 149 F.3d 1368 (Fed. Cir. 1998).

[193] AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352 (Fed. Cir. 1999).

[194] As Professor Karjala has noted, this solution first required that patent law backup the denial of protection for methodology under copyright law. See Karjala, The Relative Roles, supra note 100, at 56; see also, supra notes 21-24 (discussing the appropriateness of patenting computer software as such).

[195] Karjala, The Relative Roles, supra note 100, at 46.

[196] See id. at 44-50 (explaining the different policies supporting each regime dictate their application to different aspects (functional and expressive) of computer software, as described below in the text).

[197] Cf. Stern, supra note 5, at 112-16 (noting the courts are drawing precisely this line).

[198] See supra notes 163-69 and accompanying text.

[199] Similar to the "ripeness of time" argument used against finding patent preemption of trade secret law. See Chiappetta, Myth, supra note 11, at 143.

[200] See supra notes 171-72 and accompanying text.

[201] Cf. Raskind, supra note 5, at 82 (noting the possibility of innovators becoming merely licensing and litigation entrepreneurs).

[202] 15 U.S.C. § 106 (1994).

[203] The current exceptions are found in 15 U.S.C. §§ 107-120 (1994).

[204] 15 U.S.C. § 107 (1994).

[205] See, e.g., 15 U.S.C. § 110(1)-(2) (1994); Thomas, supra note 2, at 47-50 (discussing the exception).

[206] See, e.g., 15 U.S.C. §§ 114-116 (1994).

[207] See 35 U.S.C. § 287(c) (1994); Thomas, supra note 2, at 47-50.

[208] See 35 U.S.C. § 271(3) (1994).

[209] See 35 U.S.C. § 273 (1999); James R. Barney, The Prior User Defense: A Reprieve for Trade Secret Owners or a Disaster for the Patent Law, 82 J. Pat. & Trademark Off. Soc'y 261 (2000) (discussing the adoption and possible effects of the defense).

[210] See Stern, supra note 5, at 132-53.

[211] Id. at 150. In many cases the doctrine would effectively prevent patenting competitive arts methods, but that is precisely the intent. See id. at 153.

[212] Competitive arts innovation is functional in nature and, therefore, granting copyright protection would conflict with the deliberate channeling of methodologies and processes to patent law to avoid copyright law's more permissive approach to granting protection. See supra note 100-07 and accompanying text.

[213] As opposed to merely limiting or eliminating their enforcement. See supra notes 207-08 and accompanying text. This over-incentive problem with standard patent rights has been observed in other contexts, notably regarding the bio-technology industry, generating similar efforts to make appropriate adjustments. See, e.g., Rebecca Eisenberg, Patents and the Progress of Science: Exclusive Rights and Experimental Use, 56 U. Chi. L. Rev. 1017 (1989) (arguing for an expanded application of experimental use); Maureen A. O'Rourke, 100 Colum. L. Rev. 1177, 1236-38 (2000) (proposing an analog to the fair use exception in bio-technology patenting).

[214] See, e.g., Barney, supra note 209, at 273 (noting the possible unintended problems arising from the prior user defense).

[215] The sui generis proposal of the Manifesto has, finally, come of age. See supra note 190. However, the struggle over software patenting has finally revealed that the real problem did not lie in software "as such." Rather, it was the use of software as a vehicle for smuggling a wide variety of non-computing process claims (including those in the competitive arts) into the patent regime without independent review. See supra notes 28-30 and accompanying text. As Professor Reichman has pointed out, the key inquiry is actually whether quick and cheap copying has led to a collapse of the traditional compartmentalization presupposed by the "bipolar model" of patent and copyright law. See Reichman, Legal Hybrids, supra note 14, at 2500-04; Reichman, Charting, supra note 14, at 478-79. When it does, then the software patent/copyright solution (supra notes 190-201) will likely over-protect, and an alternative must be found. Professor Reichman suggests that the resulting proliferation of sui generis regimes, each attacking a specific aspect of the same problem, should perhaps be replaced by a more unitary regime which directly addresses the common root cause. Specifically, his proposal follows the lead of a variety of existing laws which eschew exclusivity in favor of providing artificial legal lead-time substitutes through liability rules "prefabricated licensing provisions." Reichman, Legal Hybrids, supra note 14, at 2443-47, 2472-78 (noting in particular the Italian approach to protection of engineering projects). Although the regime proposed in this Section continues to rely on patent law qualification techniques to maintain the proper "front-end" balance between incentives and costs, the remedial approach can be properly viewed as just such a set of prefabricated licensing provisions tailored to the particular needs of the competitive arts. I am not convinced that all of the examples raised by Professor Reichman actually require a sui generis solution or that the problem, at least in the competitive arts context, stems from the inadequacy of trade secret law to perform its historical function. Regarding the former, more study is required to determine whether such a regime has broad application or whether a variety of specially tailored regimes will be required. Reichman, Legal Hybrids, supra note 14, at 2447-48 (Professor Reichman himself states that his proposal may be more appropriately viewed as a way of thinking about the problem raised by quick and cheap copying). Regarding the latter, to view the solution as replacing trade secret law (which never applied to any appreciable extent to the competitive arts) rather than shoring up market driven first-to-move lead-time incentives, risks damage to the trade secret law regime (adding further confusion to its policy justifications) and requires substantial efforts to disentangle the new regime from its requirements (including its inapplicable focus on secrecy). See supra note 189.

[216] Proposing a new form of protection also may raise Constitutional and treaty obligation questions. See infra note 292-96 and accompanying text.

[217] It could, of course, be argued that the assumed "given" of using a market economy approach is inappropriate. If so, then the entire goal structure changes and so must the analysis. See supra note 88.

[218] See supra note 197 and accompanying text.

[219] See, e.g., Merges et al., supra note 147, at 329-32 (noting that originality means to the author, not novelty in the absolute sense).

[220] 35 U.S.C. §§ 102-103, 112 (1994); Chiappetta, Article of Manufacture, supra note 8, at 100-05 (discussing the requirements).

[221] See supra notes 98-99 and accompanying text.

[222] See supra notes 137, 176 (discussing the problems encountered when the patent examination requirement was dropped). The examination requirement is also supported by the in terrorem effects of unjustified litigation as a means for impeding competitors. See Dreyfuss, supra note 5, at 270; Merges, supra note 5, at 600; Raskind, supra note 5, at 82.

[223] See Merges, supra note 5, at 588. Professor Merges correctly notes that the minimization process itself requires a cost-benefit balancing exercise. Id. at 592-93.

[224] The USPTO Business Method Patent Initiative moves in this direction. See Maulsby, supra note 2, at 9 (setting out the Initiative's call for enhanced training and availability of business specialists to act as a resource for the examiners). To implement the new regime, however, actual business professionals will be required, meaning a change should be made in the traditional technical background prerequisite for taking the Patent Bar. See Grusd, supra note 166, at ¶ 71; John Kasdan, Obviousness and New Technologies, 10 Fordham Intell. Prop. Media & Ent. L. J. 159, 180-81 (1999) (discussing the problem).

[225] See Dreyfuss, supra note 5, at 270; Merges, supra note 5, at 589-90; see also, Lerner, supra note 2, at 2; Thomas, supra note 2, at 31-32.

[226] As there would be pre-issuance publication (see infra notes 232-34 and accompanying text) an examiner could even send out a general request for prior art. See, e.g. LawCast Roundtable, supra note 112 (noting use of a similar technique to support a validity challenge in a lawsuit); Maulsby, supra note 2, at 9 (Business Method Patent Initiative calls for extended non-patent literature searches).

[227] Although an applicant must come forward with material information of which it is aware, see 37 C.F.R. § 1.56 (1999), under current patent law there is no affirmative obligation to perform a search. See, e.g., American Hoist & Derrick Company v. Sowa & Sons, Inc., 725 F.2d 1350, 1362 (Fed. Cir. 1984).

[228] See Merges et al., supra note 147, at 271-77.

[229] Cf. Merges, supra note 5, at 601 (noting that private parties will hold much of the relevant information, leading him to recommend a patent opposition system). This same consideration would also lend support for involving the applicant directly in the prior art identification system.

[230] Cf. id. at 600 (noting the desirability of avoiding excessive costs on the applicant, particularly small inventors).

[231] As the commentators have noted, one consequence of eliminating the intent to deceive standard (and increasing the applicant's duty to search) will be to create a flood of document submissions. See, e.g., LawCast Report, supra note 112 (the comments of Professor Thomas). Particularly if Rule 56 continues in its present form, making the lawyer potentially liable as well, the standard advice will be to submit everything in hand. Cf. id. (comments of PTO Commissioner Q. Todd Dickenson). One answer, of course, is that this is the price of reducing costs otherwise borne by competitors in the marketplace by ensuring only appropriate patents issue. Cf. Merges, supra note 5, at 596. Additionally, the process of collecting available competitive arts prior art benefits the system overall. However, simply placing the entire cost of handling voluminous submissions on the USPTO ignores some relatively simple adjustments. The applicant could be required to explain why a reference has been submitted and its view of the effect. Extreme cases of over-submission could be subject to some form of financial penalty to both offset the costs and provide deterrence. Finally, holding the attorney responsible only in intentional or grossly negligent cases, and using a reasonableness standard to measure applicant compliance, would mitigate the risks and related conservatism of professional advice. See infra note 255 and accompanying text.

[232] See Merges, supra note 5, at 610-15; Craig Allen Nard, Certainty, Fence Building, and the Useful Arts, 74 Ind. L.J. 759, 776-85 (1999). These arguments, among others (including pressure to conform United States law to that in many other jurisdictions), have led to the adoption of a pre-issuance publication requirement for all utility patent applications which are also filed overseas (35 U.S.C. § 122(b)) as well as the introduction of similar proposed legislation regarding all competitive arts patents. See Business Method Patent Improvement Act of 2000, H.R. 5364, 106th Cong. (2000) (introduced by Representatives Boucher and Berman proposing, among other things, a pre-grant publication requirement and a post-grant opposition procedure) [hereinafter Boucher Proposal].

[233] See Merges, supra note 5, at 615; Nard, supra note 232, at 759.

[234] This may require some form of pre-issuance, post-publication provisional rights similar to those found in 35 U.S.C. § 154(d) (addressing a similar problem regarding mandated pre-issuance publication under the Patent Act); see also infra notes 263-64 and 271-72 and accompanying text (discussing the first to market right).

[235] Professor Merges notes that although current patent law provides for third party reexamination, the evidence indicates it has not proven a useful tool. Professor Merges argues that a true opposition procedure "better taps into patent validity information, much of which is in private hands," than reexamination, and notes that until the procedure is implemented "the quality of patents will not improve." Id. at 614-15; see also John. R. Allison & Mark A. Lemley, Empirical Evidence on the Validity of Litigated Patents, 26 AIPLA Q. J. 185 (1998) (noting that most invalidated patents involve prior art not considered at examination); Nard, supra note 232, at 764-65.

[236] Cf. Merges, supra note 5, at 610 (making the argument regarding examinations).

[237] See supra note 222 and accompanying text.

[238] See Warner-Jenkinson Co. v. Hilton Davis Chemical Co., 520 U.S. 17 (1997).

[239] See Martin J. Adelman Et Al., Cases and Materials on Patent Law 918-34 (1998) (discussing Warner-Jenkinson, the presumption and its effect on the doctrine of equivalents). A focused prosecution discussion regarding amendments also provides greater confidence regarding the reasonableness of the broader inapplicability of the doctrine of equivalents called for in Festo. See Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 234 F.3d 558 (Fed. Cir. 2000).

[240] See Merges, supra note 5, at 606-09.

[241] See 35 U.S.C. §282 (1994) ("A patent shall be presumed valid.").

[242] See, e.g., Boucher Proposal, supra note 232; James Pooley, The Trouble with Patents: What's Wrong with the Current System and How to Fix It, Cal. Law. October 2000, at 42, 81-82.

[243] See, e.g., American Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F.2d 1350, 1359-60 (Fed. Cir. 1984)

[244] The result would not be as strong as a "rule of doubt" as the patentee would still benefit from the "tie-breaking" effect of the presumption. Cf. John Kasdan, supra note 224, at 182-84 (discussing the rule of doubt).

[245] See supra note 28-30 and accompanying text.

[246] For example, increased internationalization of intellectual property law may eventually require further elimination of existing geographic limitations in United States patent law. Cf., 35 U.S.C. § 104; Merges et al., supra note 147, at 296 (discussing the expansion of the inventorship inquiry). Similarly, the "printed publication" limitations in § 102 will become, if they are not already, increasingly problematic in the intangible electronic Internet environment. See 35 U.S.C. § 102(a) and (b) (1994).

[247] See Kasdan, supra note 224, at 163-79; Grusd, supra note 166, at ¶¶ 32-72 (both discussing the need for a better tailored standard of non-obviousness for business method patents).

[248] See Raskind, supra note 5, at 65-67, 81-82.

[249] To the extent it is based on differentiation without any actual benefit in terms of efficiency. See supra note 152 and accompanying text.

[250] The concept of pioneering innovations is not new to patent law. See, e.g., Boyden Power-Brake Co. v. Westinghouse, 170 U.S. 537, 569 (1898); Merges et al., supra note 147, at 250. In this respect the competitive arts may differ from the software industry. See Cohen & Lemley, supra note 24, at 53 (noting the potentially harmful effects of protecting only pioneering innovations).

[251] See AT&T Corp. v. Excel Communications, Inc., No. Civ. A. 96-434-SLR, 1999 WL 1050064, *21-23 (D. Del. 1999) (having no trouble finding the invention obvious on remand from the CAFC); Dreyfuss, supra note 5, at 10 (noting the case).

[252] See Dreyfuss, supra note 5, at 267-69; Grusd, supra note 166, at para. 70; Kasdan, supra note 224, at 174 (all noting that the current standard may be permitting issuance of too many obvious patents).

[253] These are common considerations in current non-obviousness determinations. See Merges et al., supra note 147, at 207-16.

[254] The "gee wiz" factor which Professor Dreyfuss identifies as a problem in many Internet patents can actually help direct the inquiry. Cf. Dreyfuss, supra note 5, at 270. Once the confusion of the computing aspects of the implementation are eliminated, as they should be, most competitive arts techniques will appear painfully straight-forward especially when combined with an aggressive view of analogous art. See Margo A. Bagley, 7 Mich. Telecomm. & Tech. L. Rev. 253 (2001) available at http://www.mttlr.org/volseven/Bagley.html. Consequently, they will rarely provide the "paradigm shift" necessary to support non-obviousness. Additionally, the more objective approach to obviousness proposed by Professor Lunney, specifically the focus on the amount of creative investment, may also help distinguish the routine from the pioneering inventions. See Lunney, supra note 165.

[255] This would parallel the previous version and interpretation of Rule 56. Cf. Adelman et al., supra note 239, at 735-37.

[256] See, e.g., Rockwell Graphic Systems, Inc. v. DEV Industries, Inc., 925 F.2d 174 (7th Cir. 1991)(limiting efforts to those economically reasonable under the circumstances); see also, Chiappetta, Myth, supra note 11, at 125, 149 (describing the use of a similar "reasonableness" test to define the search necessary to establish holder bona fides in a trade secret leveraging transaction)

[257] See supra notes 198-201 and accompanying text.

[258] See Reichman, Charting, supra note 14, at 516-20.

[259] 17 U.S.C. § 115 (1994).

[260] 17 U.S.C. § 115(a) requires that to trigger third party access the musical work first must be "distributed to the public in the United States under the authority of the copyright owner."

[261] See 17 U.S.C. § 115(c) (1994).

[262] The argument is not that the copyright provision be directly imported into the new regime, just that the more nuanced methodology provides important guidance. A number of significant changes in the specifics are required to match the competitive arts environment. For example, § 115 prevents any use which impairs the "integrity" of the original work, specifically prohibiting changes to the "basic melody or fundamental character of the work." 17 U.S.C. § 115(a)(2) (1994). This reflects more concern for the author's personhood than is appropriate to the competitive arts environment, and, therefore, should be omitted. The § 115 rights also limit access to those making new sound recordings, requiring a separate performance license which can be withheld. Again, this is inappropriate to the lead-time objectives of the competitive arts regime which permits all use by the competitor against payment of royalties. Additionally, the compensatory approach of § 115 is replaced by a cost-differentiation objective more suitable to the competitive arts lead-time concern.

[263] See supra note 167 and accompanying text.

[264] See supra note 232-34 and accompanying text (arguing for pre-issuance publication to facilitate prior art identification).

[265] The following analysis closely parallels the logic offered by Professor Reichman in support of his "prefabricated licensing provisions" remedies. See supra note 215 (discussing the proposal); Reichman, Charting, supra note 14, at 518-20; Reichman, Legal Hybrids, supra note 14, at 2444-48.

[266] Unlike the § 115 "cover" approach, which seeks to provide a reasonable return on the author's investment in the work and is informed by, among other things, voluntary market rate agreements as a guide. See 17 U.S.C. §§ 115(c)(3)(E), 801(b)(1)(B). The proposed regime thus avoids the common argument that compulsory licensing systems are unworkable because they cannot produce proper valuations. Cf. Lemley, supra note 101, at 1071 (indicating the preference for market driven solutions); Robert P. Merges, Are You Making Fun of Me? Notes on Market Failure and the Parody Defense in Copyright, 21 AIPLA Q. J. 305, 310 (1993) (noting the normal objective in compulsory licensing as "supply(ing) a mutually beneficial exchange where the market will not").

[267] The remedy in an infringement lawsuit should, however, take into account both the costs to the rights holder and the need to deter infringers from not voluntarily coming forward to obtain a license in the hope they will not be detected and thereby avoid the lead-time cost advantage of the regime. See infra text following note 354; cf. Chiappetta, Myth, supra note 11, at 156, 161.

[268] See supra note 167 and accompanying text (describing the normal lock-in steps which may be taken). In order to preserve initial advantage, particularly regarding larger, well-financed competitors, it may also be necessary to delay competitive entry for a short period following introduction by the innovator.

[269] 17 U.S.C. § 302 (1994). There are those that argue, convincingly, that the term of copyright protection does not even match with the objectives of copyright law; but that is a separate debate. See supra note 175 (referencing Professor Karjala's extensive Website on the subject).

[270] The term could be tied to an empirical economic analysis of ramp-up times for competitors under normal market conditions. An approach reflecting greater optimism in empirical and economic methods might even seek to tie the term to that which yielded the optimum generation of competitive arts innovation benefits for the costs incurred.

[271] To the extent practical control through confidentiality is possible, innovators will likely seek the more generous protection under trade secret law. It is precisely the recognition of this practical reality that justifies trade secret law. See generally, Chiappetta, Myth, supra note 11. In contrast, the new regime targets only methods which cannot be practically controlled, and therefore, cannot (and never could) benefit from trade secret protection. Consequently, there is no overlap and no practical or policy conflict, between the two regimes.

[272] Cf. Martin J. Adelman, Property Rights Theory and Patent-Antitrust: The Role of Compulsory Licensing, 52 N.Y.U. L. Rev. 977, 1002 (1977) (arguing against the right of a patentee to suppress a patent and the use of compulsory licensing); see also, infra notes 352-54 and accompanying text (discussing the right under current patent law not to license or use a patent during its term and it's inappropriateness in the competitive arts context). For similar reasons a first to file system may be more appropriate than the first to invent and statutory bar approach under patent law. The change would reduce uncertainty and avoid substantial administrative complexity. Although the approach does disadvantage innovators with fewer available resources to apply to implementation, this group faces the same problem in a properly operating first-to-move lead-time market environment. Moreover, making a commercial arts innovation ready for patenting will in many cases require relatively little time and capital. Consequently, a commercial arts innovator who failed to quickly file would likely face substantial § 102(g) lack of diligence, suppression or concealment risks under the existing system

[273] See Karjala, The Relative Roles, supra note 100, at 44-45.

[274] See id.; see also Lemley, supra note 101, at 1068-84 (arguing that patent law type limitations generally provide better incentives to improvement innovations).

[275] This concern has been brought to forefront of patenting discussions by the CAFC's decision in Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 234 F.3d 558 (Fed. Cir. 2000), which focused on the notice function of the claims as the justification for significantly curtailing the reach of the doctrine of equivalents whenever an amendment related to patentability occurred during prosecution. See supra notes 238-39 and accompanying text (discussing prosecution history estoppel).

[276] See Cohen & Lemley, supra note 24.

[277] Id. at 51.

[278] See supra notes 247-54 and accompanying text.

[279] As Professors Cohen & Lemley point out, many improving innovators in the software arena are partially protected against the consequences of infringement through their blocking patents. Cohen & Lemley, supra note 24. In the competitive arts the significant barrier posed by the heightened standard of non-obviousness denies this potentially off-setting right.

[280] See supra notes 172 and 248.

[281] See supra note 238-39 and accompanying text.

[282] See Cohen & Lemley, supra note 24, at 53-55.

[283] Id. at 54.

[284] Id. at 54-55.

[285] See Stern, supra note 5, at 138; Thomas, supra note 2, at 5-6.

[286] The copyright holder is only protected against copying. See Merges et al., supra note 147, at 408-16, 506.

[287] See id.

[288] Although subsequent independent creation would provide a defense, such creation would not, however, be protectable under the regime. See supra note 219-20 (discussing the need for a novelty standard), note 272 (discussing the preference for a first to file system).

[289] This exception mitigates the costs of trade secret protection. See Chiappetta, Myth, supra note 11, at 129-32. Similar cost mitigation arguments have been urged by Professors Cohen and Lemley regarding software patenting. See Cohen and Lemley, supra note 24, at 21-28. In the proposed competitive arts regime all of the necessary information would be provided by the applicant's description/enablement.

[290] See Timothy F. Myers, Foreign Infringement of Business Method Patents, 7 Willamette J. Int'l L. & Dispute Resolution 101 (2000) (discussing the problems of determining where activity related to Internet transactions is taking place).

[291] The approach is similar to the effort under § 271(g) of the Patent Act to protect United States patent holders against "off-shore" infringement of process patents. 35 U.S.C. § 271(g) (1994). That section focuses on the product output from the process, raising a number of attendant definitional difficulties. In the case of a competitive means, the "product" is much harder to define, exacerbating the problems. See Myers, supra note 290. The suggested "effects" test avoids these difficulties. The approach finds support and guidance in the antitrust arena. Cf. Areeda, supra note 90, at 146-47.

[292] See supra notes 57-87 and accompanying text.

[293] There is the possibility that the Intellectual Property Clause, specifically the "useful arts" and "science" limitations, circumscribe Congressional power to provide incentives to innovation under the Commerce Clause. See, e.g., Chiappetta, Myth, supra note 11, at 138-39 (noting the argument). The direct relevance of the competitive arts to commerce may somewhat lessen the concern, but does not eliminate it. Although an important and difficult technical question worthy of independent review, under the current policy analysis, concerned only with the normative justifications for such a regime, the problem can be swept away by the possibility of an appropriate Constitutional amendment. See supra notes 86-88 and accompanying text.

[294] Agreement on Trade-Related Aspects of Intellectual Property, Apr. 15, 1994, 108 Stat. 4809, 33 I.L.M. 81 [hereinafter TRIPS].

[295] Id. at ¶ 27.

[296] See supra note 79 and accompanying text (discussing Professor Thomas' advocacy of the "industrial arts" as a definition for the useful arts).

[297] The public disclosure objectives of patent law created substantial concern over the overlap with trade secret law. See Chiappetta, Myth, supra note 11, at 136-39. Because the purpose of the new regime is not to drive public disclosure but only to limit its adverse effects on innovation in the context of quick and cheap copying, the trade secret alternative does not interfere with the new regime's objectives. See supra notes 189, 215.

[298] See supra note 189 and accompanying text.

[299] As was the case in the software industry when it appeared that patent protection was not available. See generally Karjala, A Coherent Theory, supra note 14.

[300] See Chiappetta, Article of Manufacture, supra note 8, at 174-75.

[301] This does not mean that novel and non-obvious software solutions are unpatentable merely because they are used to implement competitive arts methods. See supra note 56. For example, computing techniques used to implement competitive arts methods on the Internet, such as cookies (for targeted advertising programs) or hyper-linking (for affiliate referrals), certainly would qualify on their own for patent protection if novel and non-obvious. Additionally, those novel techniques would support a patent claim covering their use in a specific implementation of the competitive arts method. Such computing novelty cannot, however, support a general patent claim covering all implementations of the competitive arts method. That broad claim must rest instead on the demonstrable novelty of the competitive art method itself (collecting and processing customer information for targeted advertising or providing appropriate referrals); provided, of course, my view is rejected and such methods are patentable subject matter. A likely effect will be that computing innovation patents will contain at least one broad independent claim which is not application-specific, as well as a series of dependent claims covering use in particular implementations. A related, but more difficult issue, is whether novelty in the competitive arts method can support, directly or indirectly, claims to a computing implementation which does not present any specific independent advance in computing techniques (faster processing, less resources, special data structures). This is a complex and lengthy discussion, leading beyond the time constraints imposed on completing the present endeavor, but does deserve at least a few words. In support of patentability it can be argued that the requisite novelty can be found in either: (1) the application of the pre-existing computing techniques to the new competitive art method (I am indebted to Professor Takenaka who point