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2010 | OriginalPaper | Chapter

What Effects Do Legal Rules Have on Service Innovation?

Author : Pamela Samuelson

Published in: Handbook of Service Science

Publisher: Springer US

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Abstract

Intellectual property, contract, and tort laws likely have some effects on levels of innovation in service sectors of the economy. Legal rules that are too strong or too strict may discourage investment in service innovation; yet, rules that are too weak or too loose may result in suboptimal investments in sound innovation. Intellectual property protections have traditionally been quite strong in protecting innovation in manufacturing sectors, but much less so in service sectors. Services have, for example, traditionally been unpatentable because they were perceived to be non-technological. Whether digital information services, such as web services, should be patentable is currently unsettled and highly controversial. Contract and tort rules are currently quite strict as to manufactured goods, but less so as to services.

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This article will focus on U.S. law because it is the law that the author knows best, but she believes that the legal principles articulated in the essay are generally applicable in other jurisdictions, particularly those in the developed world.

35 U.S.C. sec. 101 (setting forth these categories of patentable subject matter).

See 17 U.S.C. sec. 102(a) (copyright protection extends to original works of authorship), 102(b) (excluding methods and processes from the scope of copyright protection). If, however, one develops a computer program to carry out specific services, the program is eligible for copyright protection because the program itself is considered a “literary work” under U.S. and other national copyright laws.

17 U.S.C. sec. 101 (defining “fixation”), 102(a) (requiring fixation). In some countries, however, a live performance of music or dance—that is, the service of providing them—do qualify for copyright protection.

35 U.S.C. sec. 287.

17 U.S.C. sec. 110(5).

Gottschalk v. Benson, 409 U.S 63 (1972).

The two major “SSO” and “look and feel” software cases were: Whelan Associates, Inc. v. Jaslow Dental Lab., Inc., 797 F.2d 1222 (3d Cir. 1986)(copying of file and data structures and manner of operation of some subroutines); Lotus v. Paperback, 740 F. Supp. 37 (D. Mass. 1990) (copying of command hierarchy and feel of spreadsheet program).

450 U.S. 175 (1981).

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149 F.3d 1368 (Fed. Cir. 1998).

Id. at 1373.

See, e.g., In re Bilski, 545 F.3d 943, 1001-03 (Fed. Cir. 2008)(Mayer dissent, giving examples of non-technological inventions that had been patented after State Street Bank).

See Lab Corp. of Am. v. Metabolite, Inc., 548 U.S. 124 (2006) (Breyer, J., dissenting from dismissal of Lab Corp.’s appeal).

“In my view, claim 13 is invalid no matter how narrowly one reasonably interprets [the discovery of a natural phenomenon] doctrine.” Id. at 135.

Id. at 126-27.

Id. at 127-28, quoting Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130 (1948).

548 U.S. 388 (2006).

In re Bilski, 545 F.3d 943, 954 (Fed. Cir. 2008).

Id. at 966-76 (Dyk, J., Linn, J. concurring), at 998-1011 (Mayer, J. opinion). Mayer’s opinion is characterized as a dissent, id. at 998, but he agreed with the majority that Bilski’s method was unpatentable. However, he dissented from endorsing the machine/transformation test for patentability endorsed by the majority. Judge Rader similarly agreed that Bilski’s method was unpatentable as an abstract idea, but disagreed with the machine/transformation test announced in the majority opinion. Id. at 1011-15. Only one of the judges would have upheld the patentability of Bilski’s method and continued to endorse the State Street Bank test. Id. at 976-98 (Newman, J. dissenting).

Id. at 998.

Id. at 1000.

Id. at 1000-01. Judge Mayer cited numerous cases as rejecting patent claims for business methods (i.e., services). Id. at 1001-03.

This is why some states have adopted “caps” (e.g., no more than $5 million) on punitive damage awards for torts such as negligent design of products.

Drafts and supporting materials on proposed Article 2B can be found at http://www.law .upenn.edu/bll/archives/ulc/ulc.htm

The full text of UCITA can be found at http://www.law .upenn.edu/bll/archives/ulc/ucita/ucita200.htm.

UCITA, secs. 402, 403.

Id., sec. 404(a).

Id., sec. 404(b).

Id., sec. 405(a).

UCITA, sec. 103(d)(list of exclusions).

Id., sec. 3.05.

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Title: What Effects Do Legal law/legal Rules Have on Service Innovation innovation ?
Author: Pamela Samuelson
Publisher: Springer US
Book: Handbook of Service Science
Print ISBN: 978-1-4419-1627-3

Electronic ISBN: 978-1-4419-1628-0

Copyright Year: 2010
DOI: https://doi.org/10.1007/978-1-4419-1628-0_26

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