Cybaris®
`
`Volume 5 | Issue 2
`
`2014
`
`Article 1
`
`A New Theory for Patent Subject Matter Eligibility:
`A Veblenian Perspective
`Austen Zuege
`
`Follow this and additional works at: http://open.wmitchell.edu/cybaris
`
`Recommended Citation
`Zuege, Austen (2014) "A New Theory for Patent Subject Matter Eligibility: A Veblenian Perspective," Cybaris®: Vol. 5: Iss. 2, Article 1.
`Available at: http://open.wmitchell.edu/cybaris/vol5/iss2/1
`
`This Article is brought to you for free and open access by Mitchell Open Access. It has been accepted for inclusion in Cybaris® by an authorized
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`Exhibit 1015
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`

`
`Zuege: A New Theory for Patent Subject Matter Eligibility: A Veblenian P
`
`A NEW THEORY FOR PATENT SUBJECT MATTER ELIGIBILITY: A
`VEBLENIAN PERSPECTIVE
`
`AUSTEN ZUEGE†
`
`I. INTRODUCTION ..........................................................................213
`
`II. A BRIEF OVERVIEW OF VEBLEN ...............................................218
`
`III. CHANGES IN THE MAKEUP AND CHARACTER OF THE UNITED
`STATES ECONOMY ...............................................................227
`
`A. Why It Matters ................................................................227
`
`B. Recent Expansion of the FIRE Sector ............................230
`
`C. Blurring of Lines ............................................................239
`
`D. Global Implications .......................................................242
`
`IV. CHANGING JUDICIAL INTERPRETATIONS .................................246
`
`A. Historical Overview .......................................................246
`
`B. Relative Consistency in Supreme Court Decisions ........250
`
`C. Conflicting Views on the Federal Circuit ......................264
`
`V. THE CONSTITUTIONAL LIMIT ...................................................270
`
`VI. ASSESSING PATENT ELIGIBILITY AT THE POINT OF
`INVENTIVE CONTRIBUTION ..................................................276
`
`VII. GENERAL CONTOURS OF THE NEW THEORY ..........................286
`
`A. The Veblen Dichotomy ...................................................286
`
`† Shareholder at the intellectual property law firm Kinney & Lange, P.A. in
`Minneapolis, MN and registered patent attorney. The author wishes to thank
`Michael Collins and Larrin Bergman for providing comments and research
`suggestions during the preparation of this article, Wendy Bratten for research
`assistance, as well as the entire Cybaris® staff for citation checking and
`formatting assistance. All the views expressed in this article are the author’s
`own and may not be those of Kinney & Lange, P.A. or any of its clients.
`
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`Cybaris®, Vol. 5, Iss. 2 [2014], Art. 1
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`B. Economic Surplus and Productivity ...............................294
`
`C. Asset Relationships.........................................................298
`
`D. Equal Access ..................................................................304
`
`VIII. EXPLORING SOCIAL ASPECTS FOR PATENT ELIGIBILITY
`ANALYSIS IN A VEBLENIAN FRAMEWORK ............................307
`
`A. The Nature of Pecuniary Activities ................................307
`
`B. Example Claim Analyses ................................................317
`
`IX. THE IMPORT OF THE NEW THEORY OF PATENT ELIGIBILITY ...332
`
`A. The Veblenian Viewpoint and “Progress” of the
`“Useful Arts” .............................................................332
`
`X. CONCLUSION ............................................................................350
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`Zuege: A New Theory for Patent Subject Matter Eligibility: A Veblenian P
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`I. INTRODUCTION
`
`What inventions are eligible for utility patent protection in the
`United States? The question, as simple as it appears, has been a
`topic of much heated debate. Courts have wrestled with the issue
`and have struggled to offer a cohesive and definitive standard.1 As
`a result, judicial decisions in this area have varied wildly,
`particularly with respect to determining what constitutes an
`unpatentable “abstract idea.”2 Fundamental disagreements remain.
`Even when ostensibly applying the same standards, judicial
`opinions reveal a deep, underlying ideological divide about
`fundamental purposes of patents, the ends they advance, and who
`should benefit from them. In a practical sense, the most
`problematic claims for subject matter eligibility analysis are those
`that raise the perennial question of overbreadth,3 in which a
`relatively insignificant (or nonexistent) “inventive” contribution is
`recited (and therefore a monopoly secured) in relatively broad
`claims
`that greatly surpass
`the scope of
`the
`inventive
`contribution—or simply recite a result rather than the actual
`solution to the underlying technical problem.4
`
`1 E.g., CLS Bank Int’l v. Alice Corp. Pty. Ltd., 717 F.3d 1269 (Fed. Cir.
`2013) (en banc) (per curiam), cert. granted, 82 U.S.L.W. 3131 (U.S. Dec. 6,
`2013) (No. 13–298).
`2 E.g., compare Ultramercial, Inc. v. Hulu, LLC, 722 F.3d 1335 (Fed. Cir.
`2013), with CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366 (Fed.
`Cir. 2011).
`3 Bernard Chao, Moderating Mayo, 107 NW. U. L. REV. COLLOQUY 82, 89–
`90 (2012).
`4 Results- or effect-based claiming frequently arises through the use of
`functional (rather than structural) language, or through the recitation of method
`steps that relate to the physical world in only a vague, abstract way. It is,
`nonetheless, a problem that has existed for well over a hundred years, beginning
`with the introduction of claims in patent applications along with pre-grant
`examination in 1836. See, e.g., Le Roy v. Tatham, 55 U.S. (14 How.) 156, 173
`(1852) (“A patent is not good for an effect, or the result of a certain process, as
`that would prohibit all other persons from making the same thing by any means
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`Cybaris®, Vol. 5, Iss. 2 [2014], Art. 1
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`Some key questions repeatedly arise when the patentability of
`business methods and other nontechnological activities are
`considered. Will protections of business methods displace
`technological endeavors, as historically understood? Should the
`grant of business method patents accommodate economic
`transitions that are alleged to flow from the so-called “post-
`industrial” economy, or does the Constitution, statutory language,
`or judicial gloss preclude patents from extending outside of the
`realm of “technology,” more narrowly defined? Can patents on
`business methods ever be clearly distinguished from practical
`technology? These sorts of questions are central
`to an
`understanding of the deep ideological divide in the judiciary as
`evidenced by what are clearly conflicting patentable subject matter
`decisions. These inquiries illuminate the subtext of many disputes
`about the proper bounds of patent-eligible subject matter.
`
`The Supreme Court has analyzed exceptions from patent
`eligibility under the doctrine of “preemption.”5 Yet determining
`what does and does not constitute “preemption” remains a
`contentious issue.6 The lower courts and the U.S. Patent and
`Trademark Office (“USPTO”) still struggle when patents and
`patent applications recite methods having tenuous links to tangible
`yet commonplace things like general purpose computers. In this
`legal quagmire, some degree of clarity might be found through
`reference to efforts in one of the last places patent attorneys look:
`the social sciences.
`
`The present paper presents a possible extension of standards
`for patent eligibility based upon theories developed by economist
`Thorstein Veblen, who elaborated a dichotomy between
`
`whatsoever. This, by creating monopolies, would discourage arts and
`manufactures, against the avowed policy of the patent laws.”).
`5 E.g., Mayo Collab. Servs. v. Prometheus Labs, Inc., 132 S. Ct. 1289, 1294
`(2012); Parker v. Flook, 437 U.S. 584, 595 (1978).
`6 Indeed, it is not clear that judges in lower courts are actually applying the
`preemption standard at all. See, e.g., Ultramercial, Inc. v. Hulu, LLC, 722 F.3d
`1335, 1354 (Fed. Cir. 2013) (Lourie, J., concurring).
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`Zuege: A New Theory for Patent Subject Matter Eligibility: A Veblenian P
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`economically productive and unproductive activity, extended from
`classical economics.7 This follows from Veblen’s observations that
`patents represent ways of segregating the gains and transmission of
`technology, even though “in the case of [such] intangible assets
`there is no presumption that the objects of wealth involved have
`any serviceability at large, since they serve no materially
`productive work, but only a differential advantage to the owner in
`the distribution of the industrial product.”8 While Veblen did not
`offer a precise test for determining patent subject matter eligibility,
`or even approach that question directly, he did provide a broad
`conceptual framework that can help illuminate a path toward a
`suitable patent eligibility standard, and, perhaps most importantly,
`can help evaluate various tests proffered to assess patent eligibility.
`The hope here is that a unification of many rationales given in
`judicial decisions over a period of centuries is possible by
`reclaiming the notion that patents must serve the social good,9 and
`that such a task can be accomplished using a Veblenian economic
`
`7 Veblen is generally credited with coining the phrase “evolutionary
`economics.” That term has taken on somewhat different meanings over time,
`and it now encompasses both orthodox and heterodox economic schools. The
`three leading schools of economic thought today are Neoclassical, Keynesian,
`and Marxist. See generally RICHARD D. WOLFF & STEPHEN A. RESNICK,
`CONTENDING ECONOMIC THEORIES: NEOCLASSICAL, KEYNESIAN, AND MARXIAN
`(2012). Neoclassical economics is considered “orthodox” while all others are
`considered “heterodox.” Id. Veblen’s work is considered heterodox; he was a
`critic of orthodox economics. He is variously described as either an evolutionary
`economist or an institutionalist economist.
`8 THORSTEIN VEBLEN, THE INSTINCT OF WORKMANSHIP AND THE STATE OF
`THE INDUSTRIAL ARTS (1914), reprinted in WHAT VEBLEN TAUGHT 178–79
`(Wesley C. Mitchell ed., Viking Press 1936) [hereinafter THE INDUSTRIAL
`ARTS]; Thorstein Veblen, On the Nature of Capital: Investment, Intangible
`Assets, and the Pecuniary Magnate, 23 Q.J. ECON., 104, 115 (1908), available
`at http://archive.org/details/jstor-1883967 [hereinafter On
`the Nature of
`Capital].
`9 An excellent discussion of just such a proposal is found in Dana R. Irwin,
`Paradise Lost in the Patent Law? Changing Visions of Technology in the
`Subject Matter Inquiry, 60 FLA. L. REV. 775 (2008); see also Bilski v. Kappos,
`130 S. Ct. 3218, 3232, 3239–46 (2010) (Stevens, J., concurring).
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`Cybaris®, Vol. 5, Iss. 2 [2014], Art. 1
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`theory that aligns with the preemption doctrine that the Supreme
`Court has repeatedly relied upon.
`
`The new theory presented here sets up a Veblenian dichotomy,
`whereby the productive functions of “technology” (or “industry”)
`and unproductive “pecuniary” (or “ceremonial”) functions are
`distinguished with respect to patent eligibility. The former
`provides means to support life processes in an evolutionary sense,
`whereas the latter merely deals with invidious human social
`relations—perhaps more broadly
`termed
`sociopolitical or
`socioeconomic endeavors.10 Patent claims directed to no more than
`accumulating or distributing wealth, manipulating confidence,
`exerting influence, avoiding regulation, structuring a business or
`legal organization, leveraging social position, speculating, and the
`like, would fall into the latter category, while patent claims
`directed to articles of manufacture, knowledge of the use of tools,
`application of “matter-of-fact” scientific knowledge, and the like,
`would fall into the former category. Key here is that any invention
`for which utility is contingent upon social context would not be
`patent-eligible. However, inventions that relate, in the very
`broadest sense, to applied physics and engineering with results that
`are
`repeatable, are
`independent of
`social context
`(i.e.,
`transcultural), and bear some reasonable connection to creating an
`economic surplus based around overcoming the scarcity of labor,
`energy or materials in a causal sequence of development, would be
`patent-eligible. In short, this paper suggests using a Veblenian
`technological/pecuniary dichotomy to evaluate the constitutionality
`of judicial tests for patent eligibility, and further that such
`evaluations should be applied at
`the point of
`inventive
`
`10 See, e.g., THORSTEIN VEBLEN, THE THEORY OF THE LEISURE CLASS 232
`(MacMillan 1899) (“The substantial canons of the leisure-class scheme of life
`are a conspicuous waste of time and substance and a withdrawal from the
`industrial process; while the particular aptitudes here in question assert
`themselves, on the economic side, in a deprecation of waste and of a futile
`manner of life, and in an impulse to participation in or identification with the life
`process, whether it be on the economic side or in any other of its phases or
`aspects.”); MICHAEL HUDSON, THE BUBBLE AND BEYOND 415 (2012).
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`Zuege: A New Theory for Patent Subject Matter Eligibility: A Veblenian P
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`contribution, that is, by looking at where, in a given patent claim, a
`technical problem is alleged to be solved or a technical advance is
`otherwise alleged to be made. Such an approach is contrasted
`against other observations on patent eligibility, such as a
`suggestion by Thomas Cotter that a “Burkean” approach—based
`on the political outlook of Edmund Burke—be employed.11
`
`A Veblenian context for the patentable subject matter debate
`provides a way of evaluating proposed patentability tests. In other
`words, this provides a lens that can be used to test the tests for
`patent-eligible subject matter, by exploring the ideological and
`economic impacts of patent subject matter eligibility tests. Rather
`than force judges to evaluate an abstract question of degree (such
`as evaluation of the sufficiency of connections to tangible things)
`or make hypothetical comparisons (such as assessing whether a
`process could be performed purely mentally or whether other,
`unstated mechanisms can provide the same result), a shift toward a
`more functionally-oriented metric may allow more consistent
`outcomes by providing a shared sense of purpose in resolving the
`ambiguities that arise with the consideration of individual patent
`claims. Of course, the precise formulation of a bright-line
`functional metric is not the goal of this paper. Yet it is proposed
`that an evaluation of the contingency of a patent claim on social
`context to determine a relationship to a productive contribution to
`matter-of-fact technical knowledge may be a more useful form of
`analysis than one requiring a determination of whether a given
`invention could hypothetically be performed with purely mental
`steps, or whether there is a sufficient link to a machine or
`transformation of matter, as is often used to evaluate troublesome
`method claims in patents today.12
`
`11 Thomas F. Cotter, A Burkean Perspective on Patent Eligibility, 22
`BERKELEY TECH. L.J. 855 (2007).
`12 See, e.g., id. at 855, 884–94.
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`Cybaris®, Vol. 5, Iss. 2 [2014], Art. 1
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`II. A BRIEF OVERVIEW OF VEBLEN
`
`in
`Thorstein Veblen was a political economist raised
`Minnesota, who has been called “one of the most important social
`thinkers of the last century[.]”13 He is frequently described as
`
`13 Ian Rappel, Fight the Power, SOCIALIST REV., July 2005, available at
`http://www.socialistreview.org.uk/article.php?articlenumber=9461 (statement by
`Noam Chomsky). For background and other general information on Thorstein
`Veblen, see generally KEN MCCORMICK, VEBLEN IN PLAIN ENGLISH: A
`COMPLETE INTRODUCTION TO THORSTEIN VEBLEN'S ECONOMICS (2006);
`GEORGE SOULE, IDEAS OF THE GREAT ECONOMISTS 184–92 (1952); RICK
`TILMAN, THE LEGACY OF THORSTEIN VEBLEN (Rick Tilman ed., 2003); RICK
`TILMAN, THORSTEIN VEBLEN AND HIS CRITICS 1891–1963 (1992); THORSTEIN
`VEBLEN: CRITICAL ASSESSMENTS (John Cunningham Wood ed., 1993);
`THORSTEIN VEBLEN: ECONOMICS FOR AN AGE OF CRISES (Erik S. Reinert &
`Francesca Lidia Viano eds., 2012); John Patrick Diggins, Thorstein Veblen and
`the Literature of the Theory Class, 6 INT’L J. POL. CULTURE & SOC’Y 481
`(1993); William M. Dugger, Radical Institutionalism: Basic Concepts, 20 REV.
`RADICAL POL. ECON. 1 (1988), reprinted in 4 EVOLUTIONARY THEORY IN THE
`SOCIAL SCIENCES 124 (Dugger et al. eds., 2003); Adil H. Mouhammed, A
`Critique of A Marxist Critique Of Thorstein Veblen, 6 AM. REV. POL. ECON.,
`June 2008, at 19, available at http://arpejournal.com/ARPEvolume6number1/
`Mouhammed.pdf; Rick Tilman, Thorstein Veblen
`(1857–1929),
`in A
`BIOGRAPHICAL DICTIONARY OF DISSENTING ECONOMISTS 695 (Philip Arestis &
`Malcolm Sawyer eds., 2d ed., 2000) [hereinafter Thorstein Veblen (1857–1929)]
`(“His most famous book [was] The Theory of the Leisure Class, in which he
`developed his theory of status emulation. In this satirical study of the leisure
`class and the underlying social strata which emulate it, he argued that
`conspicuous consumption, conspicuous waste and ostentatious avoidance of
`useful work were practices by which social status was enhanced.”); Andrew B.
`Trigg, Veblen, Bourdieu, and Conspicuous Consumption, 35 J. ECON. ISSUES 99
`(2001) (linking Veblen to later theorists like Pierre Bourdieu); L. Randall Wray,
`Veblen’s Theory of Business Enterprise and Keynes’s Monetary Theory of
`Production, 41 J. ECON. ISSUES 1 (2007) (linking Veblen to later economists like
`Keynes). Some earlier economists, like John Rae, worked along similar lines.
`See, e.g., JOHN RAE, STATEMENT OF SOME NEW PRINCIPLES ON THE SUBJECT OF
`POLITICAL ECONOMY: EXPOSING THE FALLACIES OF THE SYSTEM OF FREE
`TRADE, AND OF SOME OTHER DOCTRINES MAINTAINED IN THE “WEALTH OF
`available
`at
`NATIONS”
`(1834),
`https://archive.org/details/
`statementofsomen00raejrich; Anthony Brewer, John Rae on the Causes of
`Invention,
`http://citeseerx.ist.psu.edu/viewdoc/
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`Zuege: A New Theory for Patent Subject Matter Eligibility: A Veblenian P
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`the sense of valuing
`in
`having held Midwestern values
`workmanship, family, productivity and self-sufficiency, and
`opposing avaricious accumulation of wealth and power on the
`basis of social privilege, war, deception, sabotage, or looting. His
`theories were very egalitarian,14 and they included arguments that
`attacked misogyny, racism, jingoism, environmental destruction,
`and Social Darwinism.15 Much of his novel theoretical framework
`revolved around social drives toward unnecessary and wasteful
`consumption (competitive spending), the accumulation of wealth
`and other status-seeking actions brought about by invidious
`comparison with other persons, and similar human habits,
`motivations and social institutions, as distinguished from the way
`most economists focused on productive forces and marginal
`pricing.16 He is famously credited with introducing the terms
`
`(last visited Sept. 16,
`
`download?doi=10.1.1.23.2702&rep=rep1&type=pdf
`2013).
`14 Phillip Anthony O’Hara, The Contemporary Relevance of Thorstein
`Veblen's Institutional-Evolutionary Political Economy, 35 HIST. ECON. REV. 78,
`83 (2002), available at http://www.hetsa.org.au/pdf/35-A-7.pdf (explaining that
`Veblen’s critical analysis was conducted with a view toward “[s]haring . . .
`[s]urplus product in a more egalitarian manner.”); Dugger, supra note 13;
`VEBLEN, supra note 10, at 142 (“It may even be said that in the modern
`industrial communities the average, dispassionate sense of men says that the
`ideal human character is a character which makes for peace, good-will, and
`economic efficiency, rather than for a life of self-seeking, force, fraud, and
`mastery.”).
`15 William Dugger, Veblen’s Radical Theory of Social Evolution, 40 J.
`ECON. ISSUES 651 (2006); William M. Dugger, Veblen and Kropotkin on Human
`Evolution, 18 J. ECON. ISSUES 971 (1984); Ross E. Mitchell, Thorstein Veblen,
`Pioneer in Environmental Sociology, 14 ORG. & ENV’T 389, 394–98 (2001).
`16 See BARBARA H. FRIED, THE PROGRESSIVE ASSAULT ON LAISSEZ FAIRE:
`ROBERT HALE AND THE FIRST LAW AND ECONOMICS MOVEMENT (1998);
`Michael Hudson, M for Marginalism, MICHAEL-HUDSON.COM (Jan. 22, 2014),
`(“[The marginalist]
`http://michael-hudson.com/2014/01/m-for-marginalism
`approach takes the technological and institutional environment as given rather
`than making policy and social reform the major aim of economic analysis, as
`was the case with classical political economy. The antitheses of marginalism are
`thus institutionalism and Systems Analysis . . . . [M]arginalist analysis is a
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`Cybaris®, Vol. 5, Iss. 2 [2014], Art. 1
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`“conspicuous consumption” and “conspicuous waste” to describe
`tendencies people have to make unproductive displays of their
`exemption from “vulgar” (real, productive) work, in order to
`reflect social status.17 However, Veblen saw more than just
`negative “acquisitive instincts” in humans; he also emphasized
`how the “parental bent” fostered care for future generations, “idle
`curiosity” fostered a benevolent search for knowledge, and the
`“instinct of workmanship” fostered the useful employment of
`science and technology.18 He is therefore credited with introducing
`the modern meaning of the term “technology” to popular discourse
`in America.19
`
`The conflict between “vested interests” dedicated to preserving
`an existing social order against changing circumstances and
`
`synonym for asocial analysis.”); see also L. Randall Wray, MMP #52
`Conclusion: The Nature of Money, NEW ECON. PERSP. (June 27, 2012), http://
`neweconomicperspectives.org/2012/06/mmp-51-conclusion-the-nature-of-
`money.html.
`17 Veblen’s views here coincide surprisingly with later Freudian and
`Lacanian theories of the human psychology of desire. See, e.g., Slavoj Žižek,
`From Che vuoi? to Fantasy: Lacan with Eyes Wide Shut, HOW TO READ
`LACAN, http://www.lacan.com/zizkubrick.htm (last visited Sept. 25, 2013) (“The
`original question of desire is not directly ‘What do I want?’, but ‘What do others
`want from me? What do they see in me? What am I for the others?’”). It is this
`aspect that most clearly differentiates Veblen’s theories from the methodological
`individualism of orthodox neoclassical economics.
`18 THE INDUSTRIAL ARTS, supra note 8, at 25. Veblen saw the instinct of
`workmanship rivaled only by the “parental bent” (with both competing with the
`acquisitive instinct); see also Erik S. Reinert, Civilizing Capitalism: “Good”
`and “Bad” Greed from the Enlightenment to Thorstein Veblen (1857–1929), 63
`REAL-WORLD ECON. REV., Mar. 25, 2013, at 65, available at http://
`www.paecon.net/PAEReview/issue63/whole63.pdf.
`19 Eric Schatzberg, Technik Comes to America: The Changing Meanings of
`Technology Before 1930, 46 TECH. & CULTURE 486, 487–88, 498–507 (2006);
`see also Ronald Kline, Construing ‘Technology’ as ‘Applied Science’: Public
`Rhetoric of Scientists and Engineers in the United States, 1880–1945, 86 ISIS
`194, 217 (1995). Veblen has further been credited with inventing the term
`“captains of industry,” at least in its modern usage. SOULE, supra note 13, at
`188.
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`incursions from newcomers was of particular importance to
`Veblen. He assessed such conflicts through the interaction of
`technical,
`instinctive, and
`institutional factors. His greatest
`contributions arose from the warnings he issued about parasitic
`“pecuniary” interests siphoning off wealth created by industry,
`concluding that “a persistent excess of parasitic and wasteful
`efforts over productive industry must bring on a decline.”20 He was
`more astute than most at identifying the skillful sophistries of
`businessmen who were engaged in zero-sum battles over price
`differentials rather than contributing to production that benefitted
`the “generic ends of life.” In that way he distinguished “the kind of
`self-interest which contributes to wealth creation from that which
`constitutes predatory wealth extraction.”21 By most accounts he
`iconoclast,22 who broke away from
`was a reform-minded
`neoclassical economics in large part because he found its methods
`unscientific.23
`
`20 THORSTEIN VEBLEN, THE THEORY OF BUSINESS ENTERPRISE 36 (photo.
`reprint 2013) (1904); see also Dan Little, Thorstein Veblen's Critique of the
`American System of Business, ECONOMIST’S VIEW (Nov. 13, 2013), http://
`economistsview.typepad.com/economistsview/2013/11/thorstein-veblens-
`central
`critique-of-the-american-system-of-business.html
`(“One
`of
`the
`impressions that emerges from reading [Veblen’s] The Theory of Business
`Enterprise is this: the modern American industrial economy is a coordinated
`system that requires many things to happen in sync with each other; but the
`owners of the components of this system often have strategic interests that lead
`them to take actions leading to de-synchronization and short-term crisis. There is
`a serious conflict of interest that exists between the interests of the owner and
`the needs of the system — and the public's interests are primarily served by a
`smoothly functioning system. So owners are in conflict with the broader
`interests of the public.”).
`21 Reinert, supra note 18, at 58.
`22 SOULE, supra note 13, at 184–86, 190–92 (calling Veblen “the Bad Boy
`of American Economics”).
`23 Veblen is credited with coining the term “neo-classical” to describe an
`economic school. Thorstein Veblen, The Preconceptions of Economic Science –
`III, 14 Q.J. ECON. 240, 261 (1900). Neoclassical economics denotes “[t]he
`school that arose in the last quarter of the 19th century, stripping away the
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`Cybaris®, Vol. 5, Iss. 2 [2014], Art. 1
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`Those with visions of economics similar to Veblen’s are
`frequently termed “institutionalist” economists, though the term
`“institutional economics” was not Veblen’s and over time has been
`applied to a variety of different economic theories that do not
`always conform to Veblen’s own.24 Within the realm of legal
`
`classical concept of economic rent as unearned income. By the late 20th century
`the term ‘neoclassical’ had come to connote a deductive body of free-trade
`theory using circular reasoning by tautology, excluding discussion of property,
`debt and the financial sector’s role in general, taking the existing institutional
`environment for granted.” Michael Hudson, N is for Neo-Serfdom, O for
`Offshore Banking, MICHAEL-HUDSON.COM (Jan. 23, 2014), http://michael-
`hudson.com/2014/01/n-is-for-neo-serfdom-o-is-for-offshore-banking. Veblen
`was an early critic of the shift from classical economics toward the neoclassical
`school.
`24 Latter-day commentators generally describe Veblen as an institutionalist
`economist, though that term was coined by Walter H. Hamilton, not Veblen
`himself. Many later “new” or “neo-” institutionalists deviate significantly from
`theories. See, e.g., MALCOLM RUTHERFORD, THE
`Veblen’s original
`INSTITUTIONALIST MOVEMENT IN AMERICAN ECONOMICS, 1918–1947 (2011);
`Malcolm Rutherford, Institutional Economics: Then and Now, 15 J. ECON.
`PERSP. 173 (2001). Somewhat begrudgingly, Veblen’s theories are referred to
`generally as institutionalist ones in this paper. The Association for Evolutionary
`Economics is a contemporary organization that follows and extends Veblen’s
`economic outlook. ASS’N FOR EVOLUTIONARY ECON., http://www.afee.net (last
`visited Sept. 13, 2013). Veblen’s views are so pervasive, however, that some
`writers largely recreate his work without attribution. See, e.g., CHARLES H.
`FERGUSON, PREDATOR NATION: CORPORATE CRIMINALS, POLITICAL
`CORRUPTION, AND THE HIJACKING OF AMERICA (2013). Economists involved
`with post-Keynesian Modern Monetary Theory (MMT), such as those at the
`University of Missouri-Kansas City, have taken a great deal from Veblen’s
`theories and applied them to contemporary contexts. In particular, MMT takes
`an endogenous view of money and suggests that acquisition of money is a goal
`unto itself in a capitalist economy, because “Veblen recognized money as an
`institution whereupon possession of money gives the holder power.” Samuel
`Ellenbogen, Essays in Monetary Theory and Policy: On the Nature of Money
`(5), NEW ECON. PERSP. (Dec. 25, 2013), http://neweconomicperspectives.org/
`2013/12/essays-monetary-theory-policy-nature-money-5.html. This is echoed in
`the comment, attributed to either Alfred P. Sloan, Jr. or Thomas Murphy but
`possibly apocryphal, that General Motors is in the business of making money,
`not cars.
`
`http://open.wmitchell.edu/cybaris/vol5/iss2/1
`
`12
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`

`
`Zuege: A New Theory for Patent Subject Matter Eligibility: A Veblenian P
`
`thought, some of his ideas were adopted by legal realists in the
`original law and economics movement.25
`
`Veblen was noted for taking an overtly Darwinian approach to
`economics, and attempting to apply an evolutionary scientific,
`sociological and anthropological approach to economic theory.26
`That approach, combined with a special focus on the influence of
`social context, set Veblen and the other institutionalist economists
`apart from their orthodox, neoclassical counterparts.27 This also
`
`25 Robert Lee Hale and Justice William O. Douglas were perhaps the most
`noteworthy legal realists to rely on some of Veblen’s theories. See, e.g., FRIED,
`supra note 16; Neil Duxbury, Robert Hale and the Economy of Legal Force, 53
`MODERN L. REV. 421, 429-30 (1990); Ron Harris, The Encounters of Economic
`History and Legal History, 21 LAW & HIST. REV. 297, 323 n.50 (2003); William
`O. Douglas and the Growing Power of the SEC, SEC. & EXCHANGE
`COMMISSION HIST. SOC’Y, http://www.sechistorical.org/museum/galleries/
`douglas/academia.php (last visited Mar. 31, 2014). Certainly, many others were
`strongly influenced by Veblen, such as Adolph Berle, Jr., who was part of
`President Franklin Roosevelt’s “Brain Trust” and the author of a leading text on
`corporate governance. Charles O.T. O’Kelley, Berle and Veblen: An Intellectual
`Connection, 34 SEATTLE U. L. REV. 1317 (2011); ADOLPH A. BERLE, WIKIPEDIA,
`https://en.wikipedia.org/wiki/Adolf_A._Berle (last updated Feb. 4, 2014). To the
`extent that the later critical legal studies (CLS) movement traces its origins to
`legal realism, CLS lacks any coherent basis in Veblen’s theories. Cornel West
`has remarked how this represents a failing of CLS. Cornel West, CLS and a
`Liberal Critic, 97 YALE L.J. 757, 770 (1988).
`26 Sophus A. Reinert, Darwin and the Body Politic: Schäffle, Veblen, and
`the Biological Metaphor Shift in Economics, in ALBERT SCHAFFLE (1821–1903):
`THE LEGACY OF AN UNDERESTIMATED ECONOMIST 129–52 (Jurgen Backhaus
`ed., 2010); see also Geoffrey M. Hodgson, Darwin, Veblen and the Problem of
`Causality in Economics, 23 HIST. & PHIL. LIFE SCI. 385 (2001).
`27 “The institutionalists view human behavior as a process of cumulative
`adaption to changing circumstances within the cultural context in which the
`behavior takes place. This view is acknowledged to be tentative and subject to
`change in the light of evidence to the contrary. Unlike the institutionalists, the
`orthodox economists make an a priori assumption about the nature of human
`behavior, and do not subject it to any testing process.” William T. Waller, Jr., The
`Evolution of the Veblenian Dichotomy: Veblen, Hamilton, Ayres, and Foster, 16
`J. ECON. ISSUES, 757 (1982); see also Erik S. Reinert, Neo-Classical Economics:
`A Trail of Economic Destruction Since the 1970s, 60 REAL-WORLD ECON. REV.
`
`Published by Mitchell Open Access, 2014
`
`13
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`Cybaris®, Vol. 5, Iss. 2 [2014], Art. 1
`
`makes Veblen an appealing reference point with regard to patent
`policy, which professes
`some
`relationship
`to
`scientific
`methodologies. Indeed, Albert Einstein—a former patent examiner
`no less—endorsed Veblen as a leading thinker on the philosophy
`of science in an economic context, and one of the only economists
`of his day worth reading.28 But readers should scrupulously avoid
`making too many assumptions about Veblen's views on patents
`from the p