Software patent debate

Encyclopedia : S : SO : SOF : Software patent debate

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''For general information on software patents, see the main article.

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.

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): [Bronwyn H. Hall, Business Method Patents, Innovation, and Policy, May 2003]

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 commission study expressed the opinion that patent monopolies in the software industry diverted money away from R&D and into defensive patent activity. The report states that "commentators were generally skeptical about the benefits of the patent system in the [software and Internet industries]." ^{[#endnote_FTCreport]}
• If we did not have software patents we would not have technologies like CDs, mobile phones and ABS brakes.^{[#endnote_P4I]}
• * Software "as such" is not patentable in Europe but these technologies are certainly available.
• * Many inventions, software or otherwise, revolutionized the world before patents even existed. The lack of patents did not block their progress.
• **Software can be patented in Europe provided that it produces a "technical effect". A technical effect might be the improved operability of a cell phone. See patents by [InterDigital] for examples. (e.g. ["ADAPTIVE UPLINK/DOWNLINK TIMESLOT ASSIGNMENT IN A HYBRID WIRELESS TIME DIVISION MULTIPLE ACCESS/CODE DIVISION MULTIPLE ACCESS COMMUNICATION SYSTEM"]) These patents are licensed worldwide, including to European companies (e.g. [Philips]).
• The need for protection is demonstrated by the huge number of software patents filed.
• * 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.^{[#endnote_WIPO]}
• * 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.^{[#endnote_ZDNet]}
• * 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.^{[#endnote_WIPO]}
• * 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:

• The costs of determining if a particular piece of software infringes any issued patents is too high and the results are too uncertain. Even if a software developer hires a patent attorney to perform a clearance search and provide a clearance opinion there is still no guarantee that the search will be complete. Different patents and published patent applications may use different words to describe the same concepts and thus patents that cover different aspects of the invention may not show up in a search. A simple clearance search might cost $US2,000. A more comprehensive clearance search might cost $20,000 and up. This is often beyond the means of many inventors.
• * Patent infringement insurance is available to help protect developers against inadvertent patent infringement. Insurance companies also provide services to help an insured avoid infringement.
• *If a developer files patent applications on his/her own invention, then the process of preparing the application will help the developer become aware of any existing patents that his/her invention might infringe.
• *A developer can set up a patent watch where patents that issue with certain key works are automatically brought to the developer's attention.
• *Most patent applications are published. If a developer finds a patent application that might cover their software then the developer can attempt to get a license. A license to a pending application should be much lower in cost than a license the patent that issues from said application.
• **Patent applications that are only filed in the US can still be kept secret. These submarine patents can issue at any time without warning and thus disrupt a given marketplace.
• Traditional copyright has provided sufficient protection to facilitate massive investment in software development.^{[#endnote_NSPBasics]}
• * Copyright only protects a particular creative expression. It can be circumvented by rewriting code so that the same steps are performed, but using a different series of commands. Patents provide protection for the actual steps performed, no matter what series of commands are used to carry them out. "[P]rotection conferred by copyright alone is considered too risky. This attitude can easily be understood when considering the huge investments made in order to develop these programs." ^{[#endnote_PatentabilityComputerPrograms]}
• ** Software patents affect more than competion of a developer's software, they affect many developers working on many different types of software due to the size and number of uses of whatever algorithm has been patented. Why else have so many patents been unintentionally violated, some by companies working on unrelated software projects?
• Independent economic studies have observed that a rise in software patents in a particular company has not been accompanied by a rise in software R&D in that company (see software patents). This does not show the causal links between patents and their effects on R&D, but does refute the theory that making software patents more readily available will increase R&D spending.
• Software is fundamentally about building and marketing systems rather than making individual inventions.
• * Both overall systems and individual components of a given system can be patented.
• A vast number of trivial software patents have been granted by government patent offices that directly profit by granting them.^{[#endnote_NSPInflation]}
• * Patent examiners are evaluated based on the number of cases they dispose of, not whether or not they issue a notice of allowance.
• *In the US, in order to address the issue of patent quality, the patent office has become more strict in its examination of patent applications, particularly those in the software area. Unfortunately, this has led, at least in part, to an increase in backlog at the patent office. It currently takes almost four years for a software patent to issue in the US. ^{[#endnote_usptoannualreport2005]} The increased backlog has aggravated the problem of inventions becoming widespread and considered in the public domain years before a patent issues. When patents do issue, inventors have little choice but to bring legal action to enforce their patent rights. Inventors that do this are often referred to as patent trolls.
• *In Europe, software “as such” is not patentable. See European Patent Convention

• Most patented inventions have been or could easily be independently invented due to their trivial "inventive step".
• * All patent applications are examined to determine if the claimed inventions are “not obvious to a person of ordinary skill in the art” (US standard) or contain a nontrivial “inventive step” (standard for most of the rest of the world, including Europe).
• *If any member of the public disagrees with a patent office's determination, they can challenge the validity of the patent once it issues. This is done by an [inter partes reexamination] in the US and an [opposition proceeding] in Europe and Japan. In the US, a party may also bring a lawsuit in Federal Court to have a patent declared invalid.
• *Currently about 5% of all issued patents in Europe are opposed [link]. Of those, 1/3 are fully upheld, 1/3 are partially overturned, and 1/3 are fully overturned.
• *Recently introduced patent reform legislation in the US, the Patent Reform Act of 2005, will seek to make the US interpartes examination more like the European or Japanese opposition proceedings.

• Developers may be forced to pay license fees for standards that are covered by patents.
• * Most organizations that set standards require that members disclose any pending patents they may have that cover the standards. They also require that the members make those patents available on a nondiscriminatory basis and at a reasonable license fee. Members that hide the existence of patents for inventions that standards are based on can be subject to legal action. See Rambus
• Patent applications are often kept secret until after a new invention becomes widely used. Hence developers have no way of knowing if a useful new idea may become patented in the future and no longer available to them.
• *Patent applications must be filed before a new idea becomes public. Patent applications are published 18 months after they are filed. In the US, however, there is a one-year grace period between when an invention becomes public and when an inventor must file. Also in the US, inventors can get an exception to the publication rule if they give up their rights to patents outside of the US. The Patent Reform Act of 2005 proposes to close this loophole and force the publication of all US patent applications 18 months after they are filed. The act is still pending before the US Congress as of Jan 2006.
• 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.
• 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.
• ** Open source and small to medium companies might be inventive in creating new ideas and software, but maybe blocked from doing so by an existing patent on one of the algorithms they need to use, originally created for one use, that ends up blocking all uses.
• 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".

• 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.
• *Pure mathematical algorithms are not patentable in the United States (see State Street Bank decision). A method for producing a concrete useful or tangible result, however, is patentable. That method is not rendered unpatentable merely because it incorporates a software or mathematical algorithm. Similar conditions for patentability apply in other jurisdictions, such as Japan and Europe.

• Patent examination (US) is too slow. As of June 2006, the projected delays in the examination computer implemented inventions, particularly business method patents have been reproted to be as long as 14 years [link] By the time patent applications issue as patents, the inventions claimed therein will be perceived to be 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.
• *Inventors can use a Petition to make special to accelerate the examination of their US patent applications.

Quotes supporting patentability

"...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."^{[#endnote_ZDNet]}

Robert Barr ( “Patents help protect the right to innovate at Cisco."^{[#endnote_Cisco]}

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."^{[#endnote_FFIIHearings]}

Quotes against patentability

''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."^{[#endnote_Lessig]}

In a letter to the US Patent Office in 2003

"I strongly believe that the recent trend in patenting algorithms is of benefit only to a very small number of attorneys and inventors, while it is seriously harmful to the vast majority of people who want to do useful things with computers."

"When I think of the computer programs I require daily to get my own work done, I cannot help but realize that none of them would exist today if software patents had been prevalent in the 1960s and 1970s. Changing the rules now will have the effect of freezing progress at essentially its current level."

"If software patents had been commonplace in 1980, I would not have been able to create T_EX."^{[#endnote_ifso]}

"We don't believe that patents serve the security community."

"In our opinion, the cost of the current patent system for the IT industry far outweighs the advantages."^{[#endnote_ifso]}

"In the majority of cases in software, patents [affect] independent invention. Get a dozen sharp programmers together, give them all a hard problem to work on, and a bunch of them will come up with solutions that would probably be patentable, and be similar enough that the first programmer to file the patent could sue the others for patent infringement. Why should society reward that? ... The programmer that filed the patent didn't work any harder because a patent might be available, solving the problem was his job and he had to do it anyway. ... Yes, it is a legal tool that may help you against your competitors, but I'll have no part of it. It's basically mugging someone."^{[#endnote_Carmack]}

''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..."^{[#endnote_Oracle]}

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..."^{[#endnote_FFIIHearings]}

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..."^{[#endnote_FrenchMinistry]}

Robert Barr ( "...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..."^{[#endnote_FFIIQuotes]}

Douglas Brotz ( "...I believe that software per se should not be allowed patent protection..."^{[#endnote_FFIIQuotes]}

Jim Warren ( "...There is absolutely no evidence, whatsoever—not a single iota—that software patents have promoted or will promote progress..."^{[#endnote_FFIIQuotes]}

Mitch Kapor 1994 (Founder of "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."^{[#endnote_BASE]}

Notes

• ↑ [US Federal Trade Commission 2003 patent report]
• ↑ [Patents4Innovation]
• ↑ [Ways in Which Patents can Help Your E-Commerce Business]
• ↑ ["Restricting IP rights is tantamount to communism"]
• ↑ [link]
• ↑  IPR Helpdesk, Patentability of Computer Programs [link]
• ↑ [link]
• ↑ [The Times 17Jan05]
• ↑ [FFII Directive Analysis]
• ↑ [Indian Government Reference]
• ↑ ["Indian Government Orders Legalisation of Software Patents"]
• ↑ [FFII - Europarl Hearings]
• ↑ [Lawrence Lessig]
• ↑ [John Carmack] on Slashdot
• ↑ [Software Patents: Other Voices of Opposition]. Irish Free Software Organization.
• ↑ [link]
• ↑ [French] (in French)
• ↑ [FFII]
• ↑ [link]
• ↑  [2005 USPTO annual report]
• ↑ http://newsroom.cisco.com/dlls/hd_070803.html Defending Innovation: Cisco VP of Intellectual Property Discusses the Cisco Patent Strategy, July 8, 2003

References

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

See also

• Debates within software engineering

External links

Sites in favor of the patentability of computer-implemented inventions

• [Patents4Innovation.org], a web site to promote innovation and competition in e-Europe.
• [EICTA web site] (see also: European Information, Communications and Consumer Electronics Technology Industry Associations or EICTA)
• [Article] from IEEE on the business model of Acacia Technologies Group.
• [iusmentis.com] is a web site from a patent attorney. It contains a good explanation of how patents work.
• [ipjur.com] Patent Attorney Axel H Horns' Blog on Intellectual Property Law.
• [Insurance IP Bulletin] Bimonthly e publication on the impact of patents on computer implemented inventions in the insurance industry.

Sites against software patents

• Foundation for a Free Information Infrastructure (FFII)
• * [Webshop example] Demonstrates the extent of software patents.
• * [Opposition by FFII to software patent legislation in Europe]
• * [The report from the hearings of the FTC] a summary of what was said to the FTC.
• [No Software Patents - a web campaign supported by companies (1&1, Red Hat, MySQL)]
• [The History of Software Patents] from BitLaw.
• Free Software Foundation: transcript and audio of [Software patents – Obstacles to software development] which Richard Stallman gave about software patents (the audio archive linked contains two more speeches about software patents)
• [Irish Free Software Organisation (IFSO)]
• * From [event organised by IFSO]:
• * [A transcript of a talk by Ciarán O'Riordan]
• * [A transcript the closing panel Q&A session]
• The European Consumers Group(BEUC)
• European SME groups (UEAPME, CEA-PME, dmmv, DIHK, WKO, ...)
• [EU campaign NoEpatents (Eurolinux-alliance)] with more than 360 000 European signatures one of the largest Internet campaigns ever.
• League for Programming Freedom
• [Sequential Innovation, Patents, and Imitation] by James Bessen and Eric Maskin
• [Software Patents vs. Free Software] by Bruce Perens
• [Report on Software Patentability by Conseil des Mines Study Group - Stimulating Innovation in the Information Society]
• [SWpat information page by ESR Pollmeier (German SME), opposed to swpat]
• AEL (Association Electronique Libre) Wiki [Software Patent Main Project page]
• * [on patent history, e.g. Diamond vs. Diehr]
• * [Coverage of Brussels 27 aug 2003 demo, AEL, Belgium]
• * [List of local campaign sites]
• http://www.softwarepatents.co.uk/
• attac (Globalisation critics)
• W3C: [Letter from Tim Berners-Lee to Rogan] (about Eolas Plugin Patent):
• [Code Liberty] is a web site dedicated to the rights of software authors, and argues that patents are incompatible with the Berne Copyright Convention, and the WIPO and WTO treaties.
• [Us action against Software patents]
• [Libro blanco del software libre] FOSS situation in Spain
• [Steven Young's legal advice]
• [www.patenti.si] Slovene web site dedicated clarify running SWPAT discoussion.

 

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