Exogenous factors: Supreme Court decision on patents, and patents on legal strategies

When economists create a model to describe how an economy, a region, or a company functions, they typically allow for some influences that are outside their model’s scope – so-called exogenous factors. In a like manner, a general counsel can do everything within her powers to run a tight law department and plan for the future, but then – wham – in slams an exogenous factor (See my posts of Aug. 28, 2006 on crisis planning; and May 13, 2007 on decentralized locations of lawyers and business continuity.). What seem to me to be two exogenous factors in the patent world have come to my attention.

According to the ABA J., Vol. 93, May 2007 at 44, “the Patent and Trademark Office has issued at least 52 patents covering specific tax strategies. Another 84 published applications for tax strategy patents are pending.” It is rumored that legal strategy patents have been applied for in other practice areas, such as real estate and corporate law. Out of nowhere comes this new legal risk, that what the department wants to do runs afoul of someone else’s patent.

The second exogenous factor is the recent US Supreme Court decision as to what constitutes novelty for an invention to be patentable. That judicial pronouncement will perhaps dramatically reduce intellectual property work and spending; or, possibly for a period of time, there will be a surge. Either way, it’s hard to anticipate such external changes.

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