Working Paper No. 10-42:
The Rules and Standards of Patentable Subject-Matter
Date Posted: September 2010
Abstract (below) | Full text (most recent) on SSRN
Two arguments are commonly made against restricting patentable subject-matter. The first is that such restrictions are over-inclusive. If an invention is “new, useful, and non-obvious,” critics ask, why should it be denied patent incentives because it falls into some “wrong” category? The second criticism is that patentable subject-matter doctrine is difficult to administer, with no coherent principle to explain the case law in the area.
When viewed from a rules versus standards perspective, these arguments contradict each other. Over-inclusiveness is an attribute of rules. Difficulty of administration, vagueness, and inconsistent application are attributes of standards. A doctrine cannot be too rigid and too fuzzy at the same time.
This Article refutes both criticisms of subject-matter doctrine. The insight is that patentable subject-matter doctrine comes in two distinct types. The first is a rule-like categorical exclusion. The second is a standard-like scope limitation, which does not pose problems of over-inclusiveness, while sharing the same heightened administrative cost as other aspects of individualized examination. Since individualized examination is the only alternative to subject-matter restriction, flexible scope limits should not concern critics of subject-matter restriction.
The remaining concern is the over-inclusiveness of categorical exclusion. This Article argues that categorical exclusions can be justified if they create corresponding administrative cost savings that outweigh the over-inclusiveness cost, and this cost-benefit balance is an empirical question. For example, if 99% of business method patents are socially detrimental, it is likely better to categorically reject all business method patents using a simple rule, and accepting the loss of 1% of meritorious patents.