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Software patent

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Software patents are patents on computer-implemented inventions. The European Patent Office (EPO) provides a general definition of a computer implemented invention as "an expression intended to cover claims which involve computers, computer networks or other conventional programmable apparatus whereby prima facie the novel features of the claimed invention are realised by means of a program or programs" [link].

There is intense debate as to what extent such patents should be granted, if at all.

Contents

Software patents vs copyright

Software patents are sometimes confused with software copyright. Under international agreements, such as the WTO's TRIPs Agreement, any software written is automatically covered by copyright. This allows the copyright owner to prevent another entity from directly copying the source code. There is no need to register code in order to get copyright protection. If an author does register source code, however, they may collect punitive damages if their code is copied without a license. Copyrights may be enforceable for up to 90 years.

Copyleft (that include several open source and free software licences) license agreements are examples of how copyrights are used to encourage the public disclosure of improved versions of a particular piece of software. The license agreements prevent third parties from copying a given piece of source code unless said third parties agree to make their improvements to the source code available to the public under similar open source terms when they distribute the program.

Patents, on the other hand, give their owners the right to prevent others from copying a claimed invention. A software patent claim is a one sentence definition of a method or system for performing a given computer implemented invention.

Patents are not granted automatically. Inventors must file patent applications in each and every country (such as Japan, China, US or India) or region (such at the European Patent Office) that they want protection in. These patent applications must disclose how to make and use the invention in sufficient detail so that another person of ordinary skill in the art can reproduce the invention without undue experimentation. If it is not self evident, then a patent application must also disclose what practical utility an invention has. Patent applications also have one or more claims which set out the boundaries of the invention that the inventor asserts is his/her original and non-obvious invention.

Most, but not all, countries or regions then assign one of their patent examiners to the case to determine if the inventor is entitled to the patent claims they are requesting. If so, then the claims are allowed and, upon payment of a fee, a patent issues.

Different countries have different standards for allowing patents. This is particularly true of computer implemented inventions. Thus a particular computer based invention may be patentable in one country, such as the US, but not patentable in another country, such as the member states of the European Union.

Once a patent issues in a given country, the patent owner can prevent others from making, using or selling the claimed invention in that country. Patents are generally enforceable for up to 20 years.

The Unisys US LZW patent [U.S. Patent 4,558,302] is an example of a software patent. It covers the GIF method for data compression. This patent expired on June 20, 2003 and thus Unisys can no longer prevent third parties from practicing the claimed invention in the US.

Patents and copyrights form complementary means for protecting software innovations. Patents cover the underlying methodologies embodied in a given piece of software, independent of the particular language or code that the software is written in. Copyrights protect against the direct copying of some or all of a particular version of a given piece of software, but do not prevent other authors from writing their own embodiments of the underlying methodologies. Copyrights can also be used to protect a given proprietary set of data from being copied while still allowing the author to keep the contents of said set of data a trade secret.

History

Growth of Software Patents in US
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Growth of Software Patents in US

The first software patent ever granted is probably a patent for a "computer having slow and quick access storage, when programmed to solve a linear programming problem by an iterative algorithm, the iterative algorithm being such that (...)" applied for in 1962 by British Petroleum Company ([link], see end of page 3). The patent relates to solving simultaneous linear equations.

The USPTO has traditionally not considered software to be patentable because by statute patents can only be granted to "processes, machines, articles of manufacture, and compositions of matter". In particular patents cannot be granted to "scientific truths" or "mathematical expressions" of them. This means that most of the fundamental techniques of software engineering have never been patented.

The USPTO maintained this position, that software was in effect a mathematical algorithm, and therefore not patentable into the 1980's. The position of the USPTO was challenged with a landmark 1981 Supreme Court case, Diamond v. Diehr. The case involved a device that used computer software to ensure the correct timing when heating, or curing, rubber. Although the software was the integral part of the device, it also had other functions that related to real world manipulation. The court then ruled that as a device to mold rubber, it was a patentable object. The court essentially ruled that while algorithms themselves could not be patented, devices that utilized them could. This ruling wasn't as straightforward as many would have liked, forcing many electronic device makers into the courts to establish that their inventions were in fact patentable. [link]

Due to different treatment of federal patent rights in different parts of the country, in 1982 the U.S. Congress created a new court (the Federal Circuit) to hear patent cases. The new circuit rejected rulings from some parts of the country, and nationalized others. For example, the court made patents generally easier to uphold by presuming patents were valid unless proven invalid and weakening the defence of nonobviousness. This court allowed issues, such as patentability of software, to be treated uniformly throughout the US. Due to a few landmark cases in this court, by the early 1990s the patentability of software was well established, and in 1996 the USPTO issued [Final Computer Related Examination Guidelines]. See Software patents under United States patent law.

In Europe, the EPO (and other national patent offices) has been issuing many software patents since the 1980s, although (or since) Article 52 of the European Patent Convention excludes "programs for computers" (Art. 52(2)) but only to the extent it relates to activities "as such" (Art. 52(3)). See Software patents under the European Patent Convention.

In India, a clause to include software patents was quashed by the Indian Parliament in April 2005.

The recent expansion of the Internet and e-commerce has led to many patents being applied for and being granted for related software and business methods. There have been several successful enforcement trials in the USA.

Law

Jurisdictions

Substantive law regarding the patentability of software and computer-implemented inventions, and case law interpreting the legal provisions, are different under different jurisdictions.

The national jurisdictions relating to software patents in Europe and in the European Union are not harmonized even though some harmonization has been brought into the national jurisdictions in the 1970s and 1980s. Interpretation of the substantive law varies to some extent from state to state. In 2002, in order to harmonize the national laws a step further, the EU Commission proposed a Directive on the patentability of computer-implemented inventions, but setting the exact terms of the Directive has been difficult. In 2003, the European Parliament deeply amended the original draft from the Commission. Two years later, the Council of the European Union (i.e. national government ministers) mostly reinstated the original text, but the text was eventually rejected by the Parliament on July 6, 2005. The proposed directive will not become law.

Software patents under multilateral treaties:

Software patents under national laws:

Scope of software patentability

As noted above both the EU and the US have traditionally restricted the ability to patent software. This has led to several proposals for some very narrow definitions of what software actually is. For example:

Ben Klemens, a Guest Scholar at the Brookings Institution, proposes that patents should be granted only to inventions that include a physical component that is by itself nonobvious. 6 This is based on Justice William Rhenquist's ruling in the U.S. Supreme Court case of Diamond v. Diehr that stated that "... insignificant postsolution activity will not transform an unpatentable principle into a patentable process." By this rule, one would consider software loaded onto a stock PC to be an abstract algorithm with obvious postsolution activity, while a new circuit design implementing the logic would likely be a nonobvious physical device. Upholding an "insignificant postsolution activity" rule as per Justice Rhenquist's ruling would also eliminate most business method patents.

A further difficulty in drawing a clear boundary between software patents and other patents may come from the fact that a patent claim can be written so as to embrace many different implementations (some using purely mechanical or electrical means, others using software), for instance by using functional features under certain jurisdictions (for example, "means for controlling"). The expression "computer-implementable inventions" has been coined to refer to this reality.

Additionally, under the so-called doctrine of equivalents and its analogues, a patent that on its face does not appear to require software can be infringed in certain circumstances if software is used as an equivalent of (that is, a substitute for) a non-software element, making it even more difficult to draw the boundary. However, no U.S. court has yet ruled that a physical device violates a software patent via the doctrine of equivalents or vice versa.

Software patents specifics

Apart from generally accepted and well known advantages of the ordinary patents, software patents have several specific features, creating unwanted effects ([link]). The patent supporters suggest various methods to minimize such effects.

Patents against compatibility
Patenting data exchange standards frequently forces another programming group to introduce an alternative format. For instance, the PNG format was introduced to avoid the GIF patent problems, or the Ogg Vorbis format was introduced to avoid the MP3 patent problems. If this new suggested format is patented again, the final result may be a large number of incompatible formats. Creating such formats and supporting them costs money, creates inconvenience to users and even threatens to split the Internet into several partially incompatible sub-networks (ASF and non-ASF, for instance).

Defensive patents
Some large companies (Oracle Corporation, Red Hat) have clearly said that they do not need software patents to prevent others from using their ideas (the main purpose of the patent), but must accumulate such patents with the purpose of defense against possible attacks. This means that such companies are forced to buy the work of the patent management institution, rather than investing that money into software improvement.

Taking these and other effects into consideration, the EU Parliament rejected the proposed Software Patent Directive in July 2005 with the vast majority of votes.

On the other hand, this argument is rather beside the point. Once a de facto standard is established, the company that controls that standard has a legal monopoly that can be even more impenetrable than one protected by patent. See the varous court decisions in the Microsoft antitrust case. Thus, Microsoft and Oracle need very little patent protection, but their competitors are crucially dependent on patents to protect against predation by larger competitors. Red Hat is another special case: it has no original intellectual property of its own, but only markets intellectual contributions by others.

Computer-implemented invention

The term "computer-implemented invention" was put forward by the European Commission, based on an expression used by the European Patent Office [link], and proposed as "any invention the performance of which involves the use of a computer, computer network or other programmable apparatus and having one or more prima facie novel features which are realised wholly or partly by means of a computer or computer programs." [link] The term has been criticized as a politically motived obfuscation manoeuver [link]. The German chancellor Schröder is quoted as saying "the manuscript is titled with 'software patents' - wait, I may no longer say that - well the 'protection of computer-implemented inventions'" [link].

The terms "software-enabled invention", "software-related invention", "software-operated invention" are also sometimes used to convey a similar meaning.

Litigation

Several successful litigations show that software patents are enforceable in the USA. For example, Eolas was awarded $565 million from Microsoft. See List of software patents for more examples.

So far there does not appear to have been any case before a European Court where infringement of a software patent has been proved and damages have been awarded. However, there have been a few court cases where the validity or not of a patent involving software has been the question, where in some European countries a national court has ruled either that a particular patent is valid (eg Germany); or that other patents involving software could be (eg UK). See Software patents under the European Patent Convention for details.

Licensing of software patents

Total US software patents by class of invention as of 2004
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Total US software patents by class of invention as of 2004
Patenting software is widespread in the US. As of 2004, approximately 145,000 patents had issued in the 22 classes of patents covering computer implemented inventions. (see table to the right). About 17,000 new patents are issued each year.

A large fraction of these patents are assigned to major companies. Microsoft, for example, had about 5000 patents issued to it as of April 2006. IBM has over 3,000 patents issued to it every year, although a significant fraction of these are unrelated to software.

Many software companies cross license their patents to each other. These agreements allow each party to practice the other party's patented inventions without the threat of being sued for patent infringement. Often, there is no payment of any royalties between the parties. Microsoft, for example, has agreements with IBM, Sun Microsystems, SAP, Hewlett-Packard, Siemens AG, Cisco and recently Autodesk ([IDG News Service]). Microsoft cross-licensed its patents with Sun, despite being direct competitors, and with Autodesk even though Autodesk has far fewer patents than Microsoft.

The ability to negotiate cross licensing agreements is a major reason that many software companies, including those providing open source software, file patents. As of June 2006, for example, Red Hat has developed a portfolio of 6 issued US patents, 1 issued European patent, 13 pending US patent applications, and 25 pending international PCT (Patent Cooperation Treaty) patent applications. Red Hat uses this portfolio to cross license with proprietary software companies (e.g. Microsoft, IBM) so that they can preserve their freedom to operate. [link]

Many software patent holders license their patents in exchange for monetary royalties. Some patent owners, such as IBM, are in the business of selling the products they patent and view licensing as a way to increase the return on their investment in innovation. IBM generates an additional $US 2 billion per year by licensing.([Newsweek Article]).

Other patent holders are in the business of inventing new computer implemented inventions and then commercializing the inventions by licensing the patents to other companies that manufacture the inventions. Walker Digital, for example, has generated a large patent portfolio from its research efforts, including the basic patent on the Priceline.com reverse auction technology. US universities also fall into this class of patent owners. They collectively generate about $1.4 billion per year through licensing the inventions they develop to both established and start up companies in all fields of technology, including software. [link].

Still other patent holders focus on obtaining patents from original inventors and licensing them to companies that have introduced commercial products into the marketplace after the patents were filed. Some of these patent holders, such as Intellectual Ventures, are privately held companies financed by large corporations such as Microsoft, Intel, Google, etc. Others, such as Acacia Technologies, are publicly traded companies with institutional investors being the primary shareholders [link].

The practice of acquiring patents and licensing them is controversial in the software industry. Companies that have this business model are pejoratively referred to as patent trolls. It is an integral part of the business model that patent licensing companies sue infringers that do not take a license. Furthermore, they may take advantage of the fact that many companies will pay a modest license fee (e.g.$100,000 to $1,000,000) for rights to a patent of questionable validity, rather than pay the high legal fees ($2,000,000 on up) to demonstrate in court that the patent is invalid.

Software Patents and Open Source

Several free software / open source initiatives, such as an open source alternative to dolby audio compression, have had to be shut down when the owners of patents covering different aspects of the initiatives demanded license fees. The initiatives did not have the budget to pay the license fees.. This has lead to tremendous animosity in the open source community towards patents (see Software patent debate).

Several proprietary software companies, such as IBM, have granted royalty free licenses to open source initiatives. Novell has gone further by committing to actively use its patent portfolio against companies that bring actions against certain open source products. These actions, however, cover only a small fraction of existing software patents.

Ironically, open source solutions are creating copyright infringement problems for proprietary software companies. The developers of proprietary software often incorporate open source code into their systems. This may violate the copyright licenses of said open source code if the proprietary companies do not make their code similarly available. Systems, such as [blackduck], are available to scan software to determine if it contains copyrighted open source code.

See also

Notes

External links

Economic studies

 

From Wikipedia, the Free Encyclopedia. Original article here. Support Wikipedia by contributing or donating.
All text is available under the terms of the GNU Free Documentation License See Wikipedia Copyrights for details.

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