Pimco, according to Bloomberg Businessweek, just received patent number 8,306,892 at the end of last month. The name of this “invention” is innocuous enough: “Fixed income securities index.” And therein lies the problem.

The patent is, like many, many financial patents, merely the embodiment of things people have been saying—and doing—for years before the patent was filed back in November 2008.

I should say a few things up front. The first is that I have a tremendous amount of respect for the folks at Pimco. Whether it’s Bill Gross or Mohamed El-Erian or Don Suskind, the place is full of top-notch investment thinkers who’ve built an empire doing right by their investors.

I should also say that I’m not generally a fan of how the U.S. patent system has evolved. I’m one of those people. I believe the purpose of patent and copyright isn’t some kind of fairness for inventors and creators, but actually what’s written in Article 1 of the U.S. Constitution:

“To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”

Note that it doesn’t say “to defend the rights of inventors,” but “to promote the progress of science and useful arts.” The idea here is that if the laws of the United States didn’t provide some defense, well, then nobody would bother inventing things, because they’d be unable to profit from them.

But the U.S. patent system, at least in theory, has two super-important safeguards to prevent the wanton patenting of things. The first is the idea of “novelty”—that the thing being patented is in fact something new. The second idea is that of “non-obviousness”—that the thing being patented wouldn’t occur to essentially anyone investigating the field of the patent. And last, there’s the issue of what’s patentable or not, a subject of ongoing controversy.

So where does Pimco’s index patent come in? Well, let’s look at it.

In the abstract, it says that the invention is a computer-implemented method for generating a financial index. In other words, it’s like every single financial index that calculates regional weights, as every international index does, and for different kinds of financial instruments—again, like any index.

So far, this is entirely obvious and is how indexes have been constructed since the 1970s. The patent goes on to say that at least some of these regional weights are not based on market capitalization, but on other factors, citing regional gross domestic product (GDP) as the example.

That’s pretty much it in a nutshell. It’s an index that uses GDP weighting, and, in the examples cited in the patent, uses primarily fixed-income instruments.

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