Software patent debate

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There is heated debate as to whether and to what extent it should be possible to patent software and computer-implemented inventions as a matter of public policy.

A particularly active focus of the debate in recent times has been the proposed European Union directive on the patentability of computer-implemented inventions, also known as the "CII Directive" or the "Software Patent Directive," which was ultimately rejected by the EU Parliament in July 2005.

Contents

Economic overview

Some of the main economic consequences in general to be expected from patentability are summarised in the following table, taken from Hall (2003) [1]:

Some of the economic effects of patentability
Benefits Costs
Innovation
  • Creates an incentive for research and new process/product development.
  • Encourages disclosure of inventions
  • Impedes combination of new ideas and inventions
  • Provides an opportunity for rent-seeking
Competition
  • Facilitates the entry of new (small) firms with a limited asset base or difficulties in obtaining finance
  • Creates short-term monopolies, which may become long-term in network industries
Transaction Costs
  • Creates a neatly packaged negotiable IP right
  • Creates patent risk uncertainty and/or search costs
  • Raises transaction costs for follow-on development

The relative economic significance of each of these effects varies strongly from one industry to another. Supporters of software patentability generally believe the positives decisively outweigh the negatives. Skeptics argue that the particular nature of software and the software industry exacerbate the likely costs of patentability, while making the expected benefits less real or less important than in other industries.

Arguments for patentability

Arguments commonly given in defense of software patents or in defense of the patentability of computer-implemented inventions (which could be defined differently) include:

  • Patenting software inventions promotes investment in research and development.
    • Many panelists in a recent US Federal Trade commision study expressed the opinion that patent monopolies in the software industry diverted money away from R&D and into defensive patent activity.[2]
  • If we did not have software patents we would not have technologies like CDs, mobile phones and ABS brakes.[3]
  • The need for protection is demonstrated by the huge number of software patents filed.
    • This is like saying that the need for thieves is demonstrated by the large number of locks installed.
    • The huge number of software patents filed is caused by (large) software companies feeling that they need to protect themselves against the threat of competitors using patents as weapons against them.
  • Software patents incentive schemes motivate employees to produce patentable ideas.[4]
    • As opposed to building useful software systems that would directly benefit the company.
  • The United States has led in creating companies, creating jobs, because it has had the best intellectual-property system.[5]
    • The U.S. became dominant in software before software was patentable in the U.S. It is now losing that lead.
    • The U.S. patent system has caused serious harm to small companies in the U.S. and has allowed emergence of litigation-only companies that attempt to extract patent revenue without producing any real value.
      • Litigation companies help small companies by providing deep pockets in case a small company's patents are infringed. The litigation company will fund the legal expenses of a lawsuit (typically 2 to 10 million US dollars) so that a small company can afford to bring a patent infringement lawsuit against a big company that is infringing their patents. In exchange, the litigation company receives a substantial fraction of the settlement.
      • Litigation companies also provide a means for investors in small companies to recover some of their investment should the small company go out of business. The litigation company will buy the patents and investors will recover at least some of their funds.
  • Software patents can increase the valuation of small companies.[6]
    • Certainly, and a lawsuit for unintentional software patent infringement can destroy small companies. The question is which of the two is most likely and how important small companies are, compared to big ones, for the competition in the free market.
  • A patent must publicly disclose the invention and so educate other inventors.
    • The very obscure language makes "published" patents extremely difficult to search and review, even by patent professionals.
    • This disclosure does not have its intended effect for software, because source code is not required to be disclosed.
  • Software invention requires considerable investment that should be protected.
    • Copyright adequately protects that investment. The risk of unforseeable patent infringement strongly discourages investment.
  • International law provides that any invention can be protected by patents (see software patents under TRIPs Agreement).
    • It is unclear whether software is an invention for the purposes of TRIPs, and copyright law may offer more appropriate protection than patent law.
  • It is inventions that should be encouraged and patentable. The distinction between hardware and software is academic.
    • Software patent monopolies clearly do not add net economic value to society. Patents may add value for other fields of endeavour such as pharmaceuticals.
    • The distinction between hardware and software is essential, because for software there is no concept of manufacturing. For hardware, manufacturing cost amounts for majority of cost. This is not the case for software, where R&D costs dominate.
  • Organizations have the right to protect their intellectual property.
    • This statement contains an unstated premise that software is something which is subject to intellectual property law. The software patent debate is about this very issue.
      • The claims in a patent application clearly define the protection being sought by way of a patent.
        • Claims often do not clearly define the scope of an invention; generalised claims are not valid because they do not precisely describe the invention or how it works.
          • Claims are examined by patent examiners to determine if an inventor is entitled to the breadth of protection they ask for. In the business method area, almost all claims are initially rejected. Inventors then typically amend their claims to reduce the scope of coverage. Nonetheless, only about 5 to 10% of the current business method patent applications issue as a patent with any claims at all.
          • If members of the public feel that an examiner has allowed an overly general claim in a patent, they may file an interpartes examination in the U.S., a lawsuit in US Federal Court, or an opposition proceeding in Europe or Japan to argue that claims are overly broad and should not be allowed.
          • Approximately 5% of all patents that issue from the European patent office are challenged by one or more members of the public in an opposition proceeding. About half of the claims that are opposed are found to be overly broad and are either rejected or reduced in scope. Opposition proceedings can take 2 to 5 years to complete.
          • Almost no patents in the US are challenged in an interpartes reexamination since it weakens an infringer's ability to defend themselves if they fail in the interpartes reexamination and are then sued for patent infringement.
          • The Patent Act of 2005 (H.R.2795) has been introduced into the US Congress by Representative Lamar Smith (R - TX) to reform the US patent system. Among other reforms, this act would introduce a full patent opposition system into the US similar to the European system. If the bill passes in its current form, members of the public will have much greater capability to challenge patents that they feel are invalid.

Arguments against patentability

Opponents of software patents argue that:

  • Traditional copyright has provided sufficient protection to facilitate massive investment in software development.[7]
    • Copyright can be easily circumvented by reimplementing code because it does not place restrictions on the underlying ideas.
      • Ideas should not be patentable, so patents should not place restrictions on ideas.
      • Competition is beneficial to society. Reimplementation of ideas in better ways should be encouraged.
  • Independent economic studies argue that patents are not productive (see software patents).
    • These studies are generally written by economists that may not understand patents or copyrights.
      • Economists typically take a wider view than patent attorneys, whose perspective tends to reflect primarily only the implications for their (patent-seeking) clients.
  • Software is fundamentally about actually building and marketing systems rather than "inventing" individual cute ideas.
    • The whole is the sum of the parts. Making restrictive divisions on individual ideas would inhibit colloboration and cooperation to combine the ideas into a greater one.
  • A vast number of trivial software patents have been granted by government patent offices that directly profit by granting them.[8]
    • Public servants are generally honorable and not self serving.
      • They still seem to award patents for applications that are either obvious, have existing prior art, or have over-general claims.
  • Most patented inventions have been or could easily be independently invented due to their trivial "inventive step".
    • If this was true then they would have already been invented (and patented) by someone else.
      • And they have. Such patents are still awarded. Many software patents awarded in the U.S. are overlapping with each other without being found in prior-art searches.
  • Developers cannot avoid patents of standards and interfaces even though the invention may not be useful otherwise.
    • Being used in a standard demonstrates the high value of a patent.
      • More likely, it demonstrates that the patent-holder has managed to keep knowledge of the patent from the standardization organization until it is too late to change the standard. Standardization organizations usually do not allow patented technology in standards.
  • Legal actions involving nebulous intellectual property issues are very expensive, slow and unpredictable.
    • They can be avoided by paying royalties that are properly due to patent holders.
      • It is not reasonable to expose small companies to the risk of being required to pay such royalties for independent software development without clear mechanism to avoiding the risk.
  • It is impossible to tell whether claims of patent infringement are valid due to their obscure language and weak examination.
    • Patent attorneys are experts at determining these issues.
      • Then why doesn't anybody seem to know a good way of avoiding any risk of patent infringement *before* the risk realises?
  • Enterprises that receive numerous dubious patent infringement notices cannot afford to simply pay what each patent holder demands.
    • If an enterprise uses a large amount of other people's intellectual property they should expect to pay high fees.
      • No enterprise wants to misuse rights of others. However, it is not possible to avoid patented technology, because no mechanism for avoiding patent-related risk exists.
  • Software patents introduce substantial business risk that discourages investment.
    • This risk is avoided if companies commission professional patent searches of the publicly available databases.
      • This does not actually avoid the risk, because nobody can predict whether some other company has a patent application covering the software, which is not currently available in patent databases, or whether somebody will successfully patent that software in future.
      • Having to search those databases and match your product with badly written and obscured patent language of huge number of patents is time-consuming, costly and does not provide adequate level of certainty.
  • Software patents are likely to destroy open source and small to medium software enterprises (SMEs) that do not have a large defensive patent portfolio.
    • If SMEs are not as inventive as large corporations then society would benefit from their removal.
      • The number of patents filed is not a measure of inventiveness.
      • The value to society should not be measured by inventiveness.
  • The costs of software distribution are minimal compared to the cost of manufacture of physical goods. Therefore, methods of protection intended for protecting availability of physical goods are not applicable to software, because no manufacturing is necessary for software to become widely available. Thus, patents should not apply to software.
    • Software invention requires considerable investment that should be protected.
      • Certainly, but, this investment is not adequately protected by patents, which only protects manufacturing. Patents are only relevant for R&D if you assume that manufacturing is the primary contributor for overall cost (and therefore should be primary source of revenue, so R&D would by default not be the target of investment). For software industry, this assumption is not true, since majority of revenue does not come from manufacturing.
  • Granting a monopoly on an idea when this is not offset by sufficiently balanced disclosure of an associated method of manufacture of material goods will harm society, because it will prevent use of the idea without the corresponding benefit to society that would justify it.
    • Ideas are not patentable, inventions are. For a software or computer-implemented inventions to be patented, it needs to be disclosed in a manner sufficient clear and complete for the man skilled in the art to reduce it to practice.
      • Since all software are just descriptions of ideas, it is not clear which software can be inventions and which cannot. All software can be reduced to practice trivially by running it in a computer, but it does not seem reasonable to hold all software as patentable due to this fact.
      • Source code for software is the preferred form for making modifications to the software, so it would seem that "sufficiently clear" should mean "source code for the invention is disclosed".
  • Trivial pieces of software would be subject to numerous claims of patent infringement. It would be impossible to write any software that would not infringe a patent.
    • Trivial pieces of software by definition are obvious or do not involve an inventive step and so are not patentable.
      • However, since it is not clear where is the line between obvious and non-obvious, it is not possible to know this beforehand. Is, say, the Linux kernel obvious by this standard? The Linux kernel is a relatively small piece of code.
  • It is impossible to determine beforehand whether a particular piece of software or particular kind of design of software infringes patents. Thus, patent-related risk cannot be eliminated by software developers by any means.
    • Patents are available through free databases. Patent search experts can help.
      • If it seems easy, please perform this determination for the Debian Linux distribution and explain the method by which you did it.
      • Patent search databases do not seem to help at all with this task, because even identifying the parts that are in theory patentable seems like a very difficult task.
  • Software is a field of mathematics. Software is a mathematical algorithm, a fancy mathematical equation, a calculation. Mathematical algorithms, equations, and calculations are not inventions any more than a number can be an invention.
    • Some software or computer-implemented inventions are concrete and have a technical character and are not merely mathematical methods. They should be patentable. This requirement is not met by pure mathematical methods.
      • All software is by definition a description of a mathematical method (that is, an algorithm or a way of structuring those algorithms.). If it does not try to get a monopoly on a mathematical method, then it is not a software patent.
        • Pure mathematical algorithms are not patentable in the United States (State Street v. Signature Financial Group, Inc., 47 USPQ2d 1596, 1601-02 [Fed. Cir. 1998]) or any other country in the world.
  • It is clearly not reasonable to require software developers to hire attorneys just to determine whether there is a risk of patent infringement.
    • All developers of new technology in the engineering arts, manufacturing arts, pharmaceutical arts, electronics arts, chemical arts, and biological arts hire attorneys to mitigate the risk that they infringe on someone else's patents.
      • In all of those cases, the processes patented require expensive equipment to develop and reproduce. In the case of software, a kid at home on a cheap PC can write an application, and distribute it to millions via the Internet. Is that kid supposed to hire attorneys to mitigate the risk that he or she might infringe on someone's patents?
        • There are a large number of patents outside of the field of software that cover inventions that are inexpensive to develop and easy to copy. The Starbucks© cardboard insulating sleeve for their coffee cups is one example. This invention is covered by US patent 5,205473.
        • Someone who infringes the Starbucks patent by making millions of copies of the sleeve and giving them away for free is liable for the lost profits or a reasonable royalty of the patent owner. (See 35 USC 384). If they do it on purpose, the damages could be trebled.
        • Software does pose a special problem because the cost of distribution of millions of copies is well within the means of an ordinary individual (e.g. a kid on a cheap PC). It would be difficult to justify suing an individual for patent infringement since it is unlikely that the individual has enough assets to compensate the inventor(s) for their damages or cover their legal costs. Lawsuits are rarely brought for total damages that are less than $3,000,000 since the legal fees can easily run $2,000,000 or more.
  • Patent examination (US) is too slow. As of June 2005, the average delay between when a patent application is filed and when it is examined is over three years. By the time patent applications issue as patents, the inventions claimed therein are already in the public domain. This hurts inventors who see their inventions copied without permission, investors who fail to earn a suitable return on the salaries they paid to inventors and the public, which is faced with the uncertain prospects as to exactly what inventions are in the public domain and which inventions will be covered by a pending patent application.

Quotes supporting patentability

Bill Gates (Microsoft) 2005

"...There are some new modern-day sort of communists who want to get rid of the incentive for musicians and moviemakers and software makers under various guises. They don't think that those incentives should exist... I'd be the first to say that the patent system can always be tuned...the United States has led...because we've had the best intellectual-property system."[9]

Harald Hagedorn (SAP Patent Department) 2002

"...software is a multi-billion dollar industry with expected growth-rates of 10% p.a. during the next years ... like in any other industry such growth can only be sustained if patents are available."[10]

Quotes against patentability

Bill Gates (Microsoft) 1991

Internal memo

"If people had understood how patents would be granted when most of today's ideas were invented and had taken out patents, the industry would be at a complete standstill today...The solution is patenting as much as we can. A future startup with no patents of its own will be forced to pay whatever price the giants choose to impose. That price might be high. Established companies have an interest in excluding future competitors."[11]


Oracle Corporation 1994

Submission to USPTO

"Oracle Corporation opposes the patentability of software. The Company believes that existing copyright law and available trade secret protections, as opposed to patent law, are better suited to protecting computer software developments..."[12]

Prof. Hasso Plattner when Chair of SAP Board

"...SAP would not need patents to protect its investments and is collecting them only as a defensive weapon to prepare for litigation in the U.S..."[13]

Pierre Haren, board director of ILOG 2001

"...The American experience of software patents is a disaster. Before imitating them we should rather try to see if they won't agree to change their system..."[14]

Robert Barr (Cisco Systems Intellectual Property Department) 2002

"...The time and money we spend on patent filings, prosecution, and maintenance, litigation and licensing could be better spent on product development and research leading to more innovation..."[15]

Douglas Brotz (Adobe Systems) 1994

"...I believe that software per se should not be allowed patent protection..."[16]

Jim Warren (Autodesk) 1994

"...There is absolutely no evidence, whatsoever—not a single iota—that software patents have promoted or will promote progress..."[17]

Mitch Kapor 1994 (Founder of Lotus 123)

"Because it is impossible to know what patent applications are in the application pipeline, it is entirely possible, even likely, to develop software which incorporates features that are the subject of another firm's patent application. Thus, there is no avoiding the risk of inadvertently finding oneself being accused of a patent infringement simply because no information was publicly available at the time which could have offered guidance of what to avoid."[18]

R. Buckminster Fuller 1939

"The patent files are glutted with relative nonsense." (Fuller, R. Buckminster, Nine Chains to the Moon, Doubleday Anchor, 1971 p 277)

Notes

References

  • Mark H. Webbink, A New Paradigm for Intellectual Property Rights in Software, 2005 Duke L. & Tech. Rev. 0012 (2005) [23]

External links

Sites in favor of the patentability of computer-implemented inventions

Sites against software patents

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