20 years ago last week, Jeff Bezos penned an open letter with his thoughts on patent policy. Following his conversation with Tim O’Reilly the prior week regarding Amazon’s 1-Click ordering patent, he stated in the letter:
I now believe it’s possible that the current rules governing business method and software patents could end up harming all of us — including Amazon.com and its many shareholders, the folks to whom I have a strong responsibility, not only ethical, but legal and fiduciary as well.
Though Bezos wrote in the letter that “the vast majority of our competitive advantage will continue to come not from patents, but from raising the bar on things like service, price, and selection,” he does not explain the exact harm of business method and software patents. He would elaborate on this in the joint memo that O’Reilly brought to Washington a month later. By this time, they write, courts and the Patent Office had already expanded the scope of what is patentable, so much so that companies had incentive to patent obvious digital applications of existing innovations and other companies sought to defend their own innovations against would-be patenters. This resulted in a “huge tax on innovation,” further evidenced by the overwhelming disdain from programmers.
Bezos suggested instead a 3-5 year term for business and software patents with a short window for public comment on prior art. He predicted that this would dramatically reduce the amount of patents and that remaining patents would be higher quality innovations.
His views are similar to those of Niskanen Center. “Patent laws should recognize that business method and software patents are fundamentally different than other kinds of patents.” Instead of working around the edges, however, Brink Lindsey and Daniel Takash proposed doing away with software and business method patents in their entirety. Tim O’Reilly prefers a similar approach.
Given that Jeff Bezos, an industry leader with a multitude of high-profile business method and software patents, called for a rethinking of innovation incentives in ecommerce, it is worth considering how a Congress seeking to strengthen the digital economy could be more responsive. Reform would benefit consumers, innovators, and innovators-to-be.