Wall Street: Yep, They Still Own the Place

Today the blogosphere features a fight over "business process" patents — things like Amazon's patent for one-click checkout, for example. These have been abused pretty badly, and Wall Street is fighting back. How? They got Chuck Schumer to insert a special provision in a bill that changes the ground rules for challenging business process patents related to “a financial product or service.” It's good to have friends in high places, no?

Andrew Ross Sorkin is outraged. This provision "is perhaps the most blatant demonstration of the lobbying power of Wall Street and, just as important, the willingness of Congress to support the interests of the banks, even in the face of clear evidence that the law has no purpose other than to benefit the financial services industry."

Felix Salmon is a lot less outraged. "Sorkin’s attempts to defend the idea of financial business-method patents ring pretty hollow....The law will benefit the financial services industry. No one is arguing that point. And it will hurt rentiers with patents. The important question is whether it’s a good idea from a public-policy perspective. Sorkin ducks that question entirely. But the fact is that if we want a level playing field in financial services, getting rid of business-method patents is an extremely good idea."

But why fight over this? I officially declare everyone right today. Business process patents have been abused, and Felix is right that making them more difficult to get in the financial services arena is a good idea. At the same time, the fact that Wall Street is the only industry getting patent relief from Congress really is a blatant demonstration, in Dick Durbin's immortal words, of the fact that banks "frankly own the place."

I think the Schumer provision is terrible policy. We need to overhaul the way we handle business process patents, but the worst possible way to do that is to start singling out specific industries for special treatment. After all, having gotten what they wanted, do you think Wall Street will sign on to any future effort to broadly reform policy in the area of business process patents? Nope. They might even fight it if it would replace their special provision and possibly make them slightly worse off than before. This is practically a parody of bad lawmaking, and as with nearly anything having to do with Chuck Schumer and Wall Street, it's a terrible idea and deserves an early death.

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