This is the Cato Daily Podcast for Wednesday, May 7, 2008.

I'm Caleb Brown.

Patents are meant to keep the good ideas flowing while letting creators profit from their ingenuity.

Recent patents have become so broad as to cover abstract ideas.

As in the case of the patent on wireless email,

the case to be heard this week in Washington

could redefine how we think of patents.

Tim Lee, a Cato Institute adjunct scholar, explains.

So the Bilsky case deals with a gentleman in Bernie Bilki who applied for a patent on a certain series of financial

transactions where you would purchase a commodity at a certain price and then you'd enter

into a series of contracts

in an attempt to reduce the risk associated with holding that commodity.

Now this might sound like something that is too abstract to be patentable and in fact that's exactly what the courts have held and

Mr Bilski appealed this to the US Court of Appeals for the Federal Circuit which has

jurisdictions over patent cases. Well he's certainly not alone though. It's a method of reducing risk and

Amazon.com has patented the one-click shopping which is a method of shopping and businesses have

patented or tried to patent their business methods in such a way that nobody could compete with them.

That's right. The Supreme Court in the early 80s held that you couldn't get a patent on abstract concepts like mathematical algorithms

laws of nature etc but in the subsequent 25 years or so the US Court of Appeals for the Federal Circuit, which has jurisdiction over patent cases,

has increasingly allowed these kinds of patents.

And there was a famous case in 1998 that basically opened the floodgates said never mind in essence

broad categories of abstract ideas are now eligible for patenting and the result

...