Software patent

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The expression software patent refers to a patent on software, and might be defined as a patent that has been, will be or could be granted on products or processes (including methods) which include or may include software as a significant or at least necessary part of their implementation, i.e., the form in which they are put in practice (or used) to produce the effect they intend to provide.

This is just one of many legal aspects of computing, and one of many aspects of intellectual property.

Definition

There is no universally accepted definition of the expression software patent and no legal text defines what exactly is a software patent and what it is not. What could be considered as a synonym put forward by the European Commission is "computer-implemented invention" (however this expression is rather narrower than the expression "software patents").

Software patents may however be classified in three categories: 1) patents on products or processes that may or may not include software in order to be implemented, 2) patents on products or processes that need software in order to be put into effect (along with some sort of hardware) and 3) patents that are nothing more than source code or algorithms.

These categories are arbitrary and have no legal direct value, but they may help to understand the issues at stake. Moreover, a same patent may contain several different claims, each of which belonging to a different category. So, it is actually and rigorously a classification of software patent claims rather than one of software patents, but it is quite equivalent as far as conferred protection from competition is concerned, since the claims are the most important part of a patent for determining the monopoly it confers to its owner.

Patents potentially including software

The "first" type of software patents can be defined as the patents on products or processes that may or may not include software in order to be implemented.

For instance, a (fictional) patent with a claim such as "A high-pass filter comprising first means for converting an input analogue signal into a digital signal, second means for... and so on" refers to a product, e.g., a filter in this case, which may or may not include software. Indeed, the filter may be implemented using either electronic "first means for converting..." or software "first means" running on a hardware support.

Patents including software

The "second" type of software patents can be defined as patents on products or processes that need software in order to be put into effect (along with some sort of hardware).

For instance, a (fictional) patent with a claim such as "A high-pass filter comprising 1) a computer, 2) a program able to run on it and to convert an input analogue signal into a digital signal, 3)... " refers to a product, e.g., a filter, which needs a computer and a computer program (or a software) to be implemented.

Patents on source code or algorithms

The "third" category consists in patents that contain nothing more that source code or algorithm. In other words, it could be said that this category includes methods which describe a process which can be implemented without using "forces of nature", if it is understood that the intellect is not a force of nature.

For instance, a (still-fictional) patent with a claim such as "An algorithm which consists in taking a sequence of numbers as an input, applying to each of these numbers some kind of transformation, ..." falls within this category.

Patentability of software

Software patents are treated differently under different jurisdictions.

In the US

In the 1950s, 1960s, and 1970s, the United States Patent and Trademark Office (PTO) did not grant a patent if the invention used a calculation made by a computer. The PTO's rationale was that patents could only be granted to processes, machines, articles of manufacture, and compositions of matter; patents could not be granted to scientific truths or mathematical expressions of it. Since the PTO viewed computer programs and inventions containing or relating to computer programs as mathematical algorithms, and not processes or machines, they were therefore not patentable. This view was upheld by the U.S. Supreme Court in Gottschalk v. Benson (1968) and Parker v. Flook (1975).

In the 1981 case of Diamond v. Diehr, the U.S. Supreme Court ordered the PTO to grant a patent on an invention, even though there was no invention claimed besides the use of a computer program (which used well-known formulas, this was also said before the U.S. Supreme Court by the patent attorney) for calculating the time when rubber was cured and the mold could be opened. The Supreme Court stated that in this case, the invention was not merely a mathematical algorithm (which it in fact was, exactly the industrial use of it), but was a process for molding rubber, and hence ordered the PTO to patent it.

After this point, more patents on software began to be granted, albeit with conflicting and confusing results. The Federal Circuit attempted to clarify the rules; requiring that the computer program must have a practical application. However, since all software is written to perform some useful activity, many believe this to be the exception that swallows the rule.

Meanwhile, the Clinton administration pushed software patenting from the administrative agency side, by appointing Bruce Lehman as Commissioner of the Patent and Trademark Office in 1994. Unlike his predecessors, Lehman was not a patent lawyer but the chief lobbyist for the Software Publishing Industry. In 1995, the PTO established some broad guidelines for examining and issuing software patents. The PTO interpreted the courts as requiring the PTO to grant software patents for an extremely broad variety of circumstances, including those that are essentially algorithms only distantly connected to physical processes. Note, that although the US Congress has never legislated specifically that software is patentable, the broad description of patentable subject in the Patent Act of 1952 and the failure of Congress to change the law after the court decisions allowing software patents, has been interpreted as Congressional acquiescence.

Another impetus for software patenting was the growing recognition that using the copyright law to protect non-literal infringement of computer programs (rather than just piracy) was getting out-of-control. When comparing patent protection to the use of non-literal copyright infringement, many commentators argued that many protections for competitors are built into the patent system that are lacking in the copyright laws. Specifically, these commentators pointed out copyrights are not examined, but patents must first be examined to determine if the program is both novel and non-obvious; the scope of patent rights is defined by the patent claims, while the scope of non-literal copyright infringement is unclear; and the patent term of 17 or 20 years is much shorter than the copyright terms. When courts began to permit software invention to be patentable, other courts also began restricting the use of copyright law to obtain patent-like protection of software.

Those who favor software patents believe that software can be considered a branch of science or engineering, and that therefore inventions can be exisit to the same extent as in other engineering of science disciplines and that the law should not and, in practice is not able to, distinguish software inventions from hardware or other inventions. Proponents also argue that the patent system should therefore reward inventors of innovative approaches in software, and thus promote innovation. This belief is important in the US, because this is the only permitted reason for a patent to be granted according to the US Constitution. More specifically, the Constitution only permits Congress "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."

Opponents charge that software patents are particularly favored by lawyers, who financially benefit from patent litigation, and by some (though not all) very large software companies, who hope to use patents to prevent competitors from using the patented technology. Proponents respond that very large software companies, such as Microsoft, have not so far aggressivly sought to enforce software patents, and in fact the most agressive users of software patents have been small and medium sized companies, or major companies in decline.

In Europe

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). The EU Commission proposed a directive on the Patentability of Computer-Implemented Inventions, which was heavily amended in 2003 when reviewed at the EU Parliament. In response to this, the Commission proposed a compromise in May 2004, which opponents of software patents consider to be worse than the original proposal.

European Patent Convention

Main article: Software patents under the European Patent Convention

Almost all European countries are members of the European Patent Organisation but the European Patent Convention does not govern infringement and revocation proceedings before national Courts. As far as such actions are concerned, every European country may have, and indeed has, its own rules and case law.

The practice regarding software patent before the European Patent Office is however significant since the so-called "European patents" are examined and may be opposed according to the rules laid on the European Patent Convention.

Although it is widely misbelieved that software patents have been granted by the EPO only recently, thousands of software-related patents have been granted (rightly or wrongly) since the EPC entered into force. For instance from 1977 to 1994 only, about 11,000 software-related patents were granted by the EPO. Well-known article 52(2) has been interpreted by the EPO as only excluding methods for performing mental acts, mathematical methods and programs for computers as such. Products and processes including such subject-matter, that are expressed in terms of their technical features and that provide a technical effect, have not been considered to be excluded as such (see for instance VICOM decision of 1984).

Controversy

Software patents are subject to a widespread controversy.

Origin

Opposition of software patents has come from many quarters. Many software developers oppose software patents in general, because patents can make it difficult to develop software of any kind (due to a "patent thicket"), inhibiting their livelihood. Compared to other industries, production and development of software products by an individual (e.g. "shareware") or a small group is very common.

Many opponents of software patents come from the free software community. Their principles are rather opposed to the underlying principles of the patent system. While the patent system is based on the assumption that a temporary monopoly is a way to encourage scientific and economic progress, their principle is that sharing is a better way to encourage scientific and economic progress.

Even outside the free software community, some opponents view the premise on which patent law is based — that invention is rare and that monopolies must be granted in order to encourage it — to be demonstrably false, with independent invention and reinvention being a common occurrence (particularly although not exclusively in the field of software).

Some corporations (such as Oracle) have protested against software patents, because they view patents as more likely to impede development of products than to help them in the long run. This view is not universally shared; many corporations do not want to share their applications as they feel they must in order to protect their R&D investments, and thus approve of software patents.

There is a widespread view among software developers that many software patents are granted only because patent offices and reviewers fail to rigorously apply the criteria for patentability, such as non-obviousness, and do not perform adequate searches for prior art. Some believe that the fees collected by patent offices give them a perverse incentive to be loose in enforcement of restrictions on patentability.

Liberal economists are inclined to oppose patent law in general.

Additional opposition to software patents can be traced back to more recent patents granted in the U.S. that appear absurd to many, even those who are not software development professionals. These include the "one-click shopping" patent granted to Amazon.com, and the State Street Bank decision of 1998, according to which "everything made under the sun by man can be patented."

In IP intensive industries, the problem of technology being 'ripped off' as soon, or before, cost recovery occurs is an acute one. The issue is how to address this problem. Realistically, if an investment in IP (i.e., paying programmers a paycheck for example) cannot be recovered, we might as well all go fish (using an antique reel and bamboo rod.) If this is the case the question becomes how much protection is necessary to make the investment in developing IP viable. Copyright as a form of protection for software presents significant difficulties, especially its extraordinarily long term, which means that under present rules, software written for say ENIAC a compuer built almost 60 years ago, could still be under copyright. Another issue is that all that need be publsihed is the object code -- source code is not required to be disclosed, a fact which creates problems such as access to APIs. Why does this problem exist -- well the main issue is stretching a form of protection designed to help struggling writers, painters and composers heat their garrets in their old age to cover the products of large industrial software companies. Hence 70 odd years or protection for products whose commercially important life is, usually, at most a decade.

In some respects patents, at least in principle should be better than copyright -- they do for example require enablement, which might mean that some API's would be disclosed; patent terms are also much shorter. Since patents cover ideas and not expression, taking an idea rather than slavishly copying code can also be addressed. The downside is that patents and the patenting system was designed around areas of engineering and scientific endeavour where technical boundaries are cleared than software and where broad taxonomies of knowledge already exist.

However, realistically one must recognise that there is a gulf between what patent office practice is supposed to be and what it in fact is the reality. Patent Offices, the USPTO in particular, have become productivity driven, which means that they seek to 'close cases' (i.e., patent applications) as quickly as possible -- and the fastest way to close a case is to grant a patent. In addition, US patent examiners are relatively badly paid, but have one major benefit, subsidized tuition, and Washington DC (near where the USPTO is located) has numerous law schools. Not surprisingly, skilled examiners tend to leave as soon as they qualify as lawyers. One result of this situation has been a wave of very dubious patents emerging from the USPTO, whose existence has heavily colored the debate (indeed, intellectual property lawyers now reagrd the USPTO's work as so poor, that they tend to look for parallel patents issues by the European and Japanese patent offices as an indicia of a quality patent.) It is arguable therefore that in many instances, the row should not be about the principle of software patents, but about raising the quality of patent examination.

In the United States the problem is compounded by the dueling presumptions, in favor of grant and of validity. The presumption of validity goes back to at least the early 20th century and was based on the idea that if a patentee had struggled to show the patent office that he or she deserved a patent, the process should not be repeated in court. This was at the time an important and positive reform. However, now USPTO principles have changed, so that the patent office has the burden of showing why a patent should not be granted, i.e., the presumption is in favor of grant. The result is that in court, patents are treated as if they had already undergone a tough examination where the patentee "proved" his or her right to a patent, and should not therefore have to do so again, when in fact, for current patents, the patentee never had to prove the right to a patent, but merely the absence of clear prior art objections. It may be therefore necessary to say that if the patent office will continue with a presumption if favor of grant, the courts should drop the presumption of validity, or at least modify it.

One view that is expressed is that perhaps software needs some 'sui generis' form of protection, crafted to suit the interests of the public and the interests that need to be protected rather than stretching concepts from copyright, know how law and patents to cover it. Certainly, this si waht the EU chose to do with database protection (not debating the outcome). This outlook is that we are stuck with intellectual property forms, patents, secrets, copyright, trademarks that were in principle largely established two centuries ago, to cover the technological world of that time -- perhaps new technolgy calls for a new IP system. The view also sees a world where some sort of IP protection for commercial software is necessary and will of necessity happen. If this is the case the current "four legs good, two legs bad" debate will fail. Perhaps it would be much better would be for those who think software patents as they now stand to be a mistake to propose something else.

In doing so it is necessary to acknowledge the immense inertia resulting from the TRIPS. Put simply, the Uruguay trade round was many years in negotiation and the TRIPS was something that major industrial countries had to invest a lot of time and prestige to achieve. Realistically, the TRIPS offers a limited menu of IP protection options -- expanding it to include a new sui generis form of IP would be a huge battle. Thus the natural tendency is to slot software into one of the existing internationally recognised forms of IP. As a result, it may be that copyrigh and software patents are the only two things on the menu.

Issues

If all technologies are patentable, why not software?

An underlying idea in the original patent system in America was that there should be a 'public commons.' As such an inventor should not be able to stake a claim, by filing a patent, to ideas that are part of the commons, either because they are already known, or because most members of the public (or at least that subset of those skilled in the art that are interested in such ideas) could easily come up with the same ideas themselves. Thus before a patent is granted, the inventor should have to show that he or she has in fact contributed something to the store of knowledge in the world that would not otherwise have rapidly become part of the public commons. As a reward for advancing the fund of knowledge available to be part of the commons, the inventor gets exclusive rights to use the idea for a period of time. In simple economic terms, the public wins if the ideas in the invention become available to the public sooner than it otherwise would have, either because the inventor publishes something which would otherwise have remained secret or because ideas which would otherwise never have been discovered are worked on because of economic incentives. This benefit can only wholly accrues to the public when the invention falls into the public domain (i.e., the patnt expires) since the exclusive rights granted by a patent also allow the patent holder to completely stop use by others, or require them to pay license royalties. (Some economists argue, reasonably soundly, that benefits on an invention accrue to the public even when the invention is under patent. Although it should be noted that this argument depends on the patent being an actual invention. Without an invention, all the public gets is a cost, a monoploly conferred on someone who has traded nothing of value for it.)

The history of European patent systems is much more complex -- originally many technology based systems were set up to encourage in effect economic espionage, hence the 'patents of importation' granted by England and Venice (to encourage skilled tradepeople to bring in technology from abroad ranging from "sweet white soap" to mining techniques). In many, if not most instances the original purpose of patents had nothing to do with inventions or technology -- they were state monopolies on existing businesses sold to the highest bidder, to raise money for the crown. It was the rebellion against the consequences of this system that led to limiting patents to being granted for "inventions." Rather than inventions being regarded as simply the property of the inventor, the key consideration was that technologists would keep their ideas and inventions secret (or they would be secrets of guilds) and the patent system encouraged the inventor to disclose the idea, in return for 'teaching the invention.' Indeed early patents of importation were highly conditional and negotiated, many required the technologist (or inventor) to train a specific number of apprentices.

In the belief that some sort of patent protection would help to encourage software inventions, but that the current uniform system is not appropriate, some people have suggested specific variations for software which might be different from other technologies, such as semi-conductors. In granting patents a number of variables could be considered, for example:

  1. the software patent term, should it be 21 years? Should it be 10, 5?
  2. the degree of originality required (i.e., the inventive hurdle),
  3. the scope of the exclusive rights conferred by a software patent, should they say be limited to the area of intended application of the software invention, e.g., phones, but not laptops?

Suggestions for variations in the terms of patents according to their field have never been put into practice in any domain and run counter to the standardisation being imposed by WIPO on national governments. Undoubtedly they would complicate the patent system further, where, for example, a primarily software patent which also includes some hardware related claims would lead to a dispute over which terms applied to that patent. However, in most patent systems, the shorter term could be applied to any claims that required software protection.

In some respects these issues have already been addressed in another area, pharmaceuticals. There, a specific problem existed, in that although chemical compounds were relatively quickly discovered and patented, converting those compounds into useful drug therapies could easily take much longer than the life of a patent on the compound and cost potentially hundreds of millions of dollars. In an effort to resolve this problem, the concept of 'orphan drugs' was devised, which provided for an additional period of intellectual property protection for such drugs which is much shorter than that conferred on a patent. Although there is some controversy about the actual application of the orphan drug system (in particular with respect to certain specific orphan drugs rights granted in Europe), it is important to consider the principle, that where some sort of IP protection is necessary to encourage research and innovation, the term of protection does not have to be 20 years, it can be 5 or 7, if that is sufficient to pursuade someone to do the innovation.

The question of whether some sui generis form of protection for software patents could be easily evolved depends on one key issue, are software patents required by the TRIPS. If software does fall within the TRIPS, the scope for varying the terms on which software patents are granted may be limited. If software patents are outside the TRIPS, then the Eu for example has much more flexibility. As for issues of the degree of originality required, or the prior art considered, this already varies widely between patent offices, with the USPTO generally being regarded as a the most lax, the JPO the strictest, and the EPO and German offices in between.

Legalistic deduction perspective: TRIPS 27 provides that all fields of technology must be patentable. It is an open discussion whether software is regarded as part of technology. Often colloquial understanding is mixed up with legal language, for example software is in a sense, a branch of mathematics and pure ideas, but it can be useful in implementing technology and companies sometimes talk about "software technology". This does not mean that it actually is a technology in the same sense that the combustion engine is a technology.

From the instrumental perspective: This question is a rhetoric trap that reverses the burden of proof. An application of patent law to a field has to be justified by economic evidence. Patent law is seen as an instrument of economic policy.

Are software patents economically harmful?

The following arguments are offered:

  • There is a massive cash drain to the legal system, including lawyers, courts and IPR departments. This money is not productive. (I've heard it's $2bn per year in the US. Can this be confirmed?)
  • There is no evidence that software patents actually encourage innovation. Computer implemented ideas are hardly connected to any research costs. The implementation itself is usually the most difficult part, and that is protected by copyright.
  • Software patents actively impede innovation. A patent is a right to block others from exploiting an idea. It is not right to use the idea. Every software and every website actually infringes several patents. If these patents were enforced all Internet activity could be halted by a few patent holders.
  • Software patents do not add to a country's competitiveness. If an idea were to be conceived in a country without software patents it could still be patented elsewhere.

Are software patents especially harmful for small companies and individual developers?

There are several reasons that contribute to the fear of small companies and individual developers that software patents are especially harmful to them.

  • It is relatively expensive to obtain and enforce patents. Every company needs a defensive patent portfolio to reach a patent sharing agreement with large firms.
  • Since software patents potentially span any kind of thoughts, permanent patent study is required. For ideas implemented purely in software, there are no material inputs or outputs to an implementation of an idea. This results in the idea being frequently re-expressed in ways which are not likely to share the same key words. Full text searches of software patent databases will not necessarily yield patents which cover the field of software programming you are interested in.

However, there are counter-arguments that patents can benefit small companies and developers. Small, new software companies are intensly vulnerable to large competitors in the software industry imitating their ideas. The problem for small companies is one of resources, large competitors who identify a commecially attractive field of endevour have usually much greater commercial resources, highly developed marketing channels, advertising budgets, established business relationships, etc. Using these resources they can move into a business sapce and simply crush the small players already there. Patents can make such a strategy a high risk proposition even for a very large company. The key problem is that at present, patents take a long time to secure and are expensive to enforce.

Obtaining patents

In contrast to copyright, obtaining patents is relatively more expensive. Copyright is granted automatically when publishing a work. Through the Berne Convention and TRIPs the copyright is automatically extended to all countries that are part of those treaties. There are no costs involved. In order to obtain a patent, an inventor must file an application with a patent office and a fee must be paid. This patent is only valid within the jurisdiction of the patent office. In principle, in order to obtain a worldwide protection, an inventor must apply to every patent office in the local official language and pay a fee. Additionally there are sometime barriers that make it difficult to acquire a patent. Some countries require patent applicants be natural or legal persons within the jurisdiction, though this is rare. Most simply require you to appoint an agent for service in that jursidiction (which is frequently required to do business there anyway.) In practice, few companies, even the largest bother with seeking worldwide protection. Realistically, all technology has a minimum 'amortization' market, which means that if patents are secured for a few very important markets, competition is essentially closed off because a competitor cannot recover the sunk cost of developing products by selling in the markets that are not subject to the patent.

Obviously this process it lengthy and expensive. Small businesses and individual developers usually do not have the monetary resources to pay for all the fees, translations, etc. to obtain a world-wide protection. They also would have to divert important human resources for this purpose.

This makes it far more difficult for small businesses and individual developers to obtain patents than for big corporations.

Enforcement of own patents

The ownership of a patent does not automatically prevent its infringement. The ownership of a patent just allows the owner to use the legal system to obtain a remedy for the patent infringement.

In order to do so, the patent owner must first know about the infringement. To obtain such knowledge is far easier for a multi-national corporation with the presence at the market where the infringement occurs than for small businesses or individual developers, which probably never know about such occurrence outside their realm of clients. realistically, though the speed with which knock-offs of successful products appear in home markets is extraodinarily quick. One study showed in some contexts the time between commercial launch of a product (games) and 50% of the market being copies or other knock-offs as averaging only 9 months.

Secondly, in order to legally enforce a patent the patent owner must hire locally registered lawyers, and start proceedings in court. All of this is costly and distracts from the main business. Small businesses and individual developers are rarely able to spend the upfront costs and time necessary to followed up in this way without neglecting their business. Multi-national corporations, however, have legal departments for such tasks, and therefore have an advantage in pursuing patent infringements over small businesses and individual developers.

Avoidance of patent infringement

Already today the European Patent Office (EPO) has granted more than 30,000 software patents. It seems very difficult for a small business or individual developer to know all those patents to avoid using them, or to negotiate terms that would allow them to use the patented technology. Even big corporations might have problems investigating whether they are infringing patents. Working with mutual shared patent portfolios as described below does not necessarily help. In addition, the legal costs and damages that a small business or individual developer would have to pay for unintended and incidental infringement would probably cause bankruptcy in most cases. Large corporations often absorb such costs on an annual basis.

Effect of patent enforcement on small businesses and individual developers

A defence against accusations of patent infringements is not a trivial task for a small business or individual developer. If this action has to be fought against a large corporation it is also a fight against the vast resources, lawyers, and experts that can easily overwhelm the resources of a small business or individual. Apart from being a distraction from the main business, small businesses and individual developers can suffer and even be destroyed by an action which they win because their clients are likely to be affected by the uncertainty of legal action and are likely to consider switching away from products or services that potentially use patented technology. What weighs heavily on the customers is that, if the legal action is successful and is not settled to protect them, they might be the next ones being accused of patent infringement.

The difficulty and cost of defence against allegations of breach of patent creates a competitive disadvantage for small business and the individual developer, since customers have to weigh the additional risks they take by selecting a small business or individual developer instead of a big corporation which will usually be able to settle such procedures in way that protects their clients. This is a solution which small businesses and individual developers cannot afford.

Sharing of patent portfolios

Large corporations are aware that building a large patent portfolio is of increasing importance. Not so much to generate licensing revenues from the patent portfolio, but to gain access to ideas owned by other corporations through a cross-licensing deal. If your corporation has a large portfolio of patents, and a corporation which operates in the same field as you attempts to threaten your corporation with one of their patents, there is a good chance that your corporation can return the threat, solving the issue in a cross licensing deal. This, in effect, creates an exclusive club of corporations able to exploit technology.

This effect occurs more in the field of software than in mechanical or pharmaceutical fields; a piece of software may contain hundreds or thousands of ideas which may be patented. In mechanical and drug fields it tends to be closer to one patent, one product. Many patents per product, coupled with the abstract and hard-to-search nature of software patents makes the cross-licensing protection system (described above) the dominant business method to deal with software patents.

Therefore, software patents tend to block the field of software development for small businesses and individuals. Given that small businesses and individuals count for some of the most revolutionary advances, one might argue that the US constitutional rationale for permitting the issuance of monopolies is being broken in the field of software.

This concentration of power, according to standard economic theory, will tend to increase the price of the product (computer software) whilst reducing competitive pressure for improvement.

Intellectual Property Companies

The patentability of software especially has recently created a new line of business. New companies are formed with only one business goal, to obtain patents for the purpose of collecting license fees and damages in legal proceedings. These companies have no aim to produce any products or innovative technology. Moreover, if these companies were to innovate in the field of software, their own innovation may leave them open to threat. The only income these companies generate is by "participating" in the success of other companies. Such companies are a particular threat to small businesses and individual developers, because of their relative lack of legal expertise and resources. While the profit that could be made from big corporations is certainly bigger, the risks are also higher. Big corporations will more likely fight a long fight about patent issues. Therefore small businesses and individual developers are more likely initial targets to generate enough revenue and precedent to launch large, costly cases against big companies.

Effects of patents on employee mobility

The value of employees to their employers is often primarily their experience. A very broad policy on patentability will lead to a situation in which most of the experience an employee gains, will be protected in some form by patents. This in turn means that the experience is not easily transferable from one company to another. Therefore the possible mobility of the employee decreases, as does their market value. This would make employees very strongly dependent on their employer, since only there can their experience be applied. Certainly not only patents, but all intellectual property rights play a role in this issue. In summation, however, patents can have the biggest impact, since they represent an exclusive monopoly to an idea. Trade secrets and copyright can be avoided while still using the obtained experience.

Is the patent system adapted to the particularities of software?

Other arguments

Very often, what is monopolized this way is not even a simple method but the pure idea that something could be done, whatever means are used.

Since such methods are very generic, the scope of such patents is often very wide and they are very hard to find using keyword searches and there is no classification for them, thus they are applied for in the language of some field. A computer does not even need to be mentioned in the patent, the description could even refer to traditional machines or electronic circuits; what counts is how the claims are written and if they do not describe new teachings of forces of nature, the patent can be described as software patent.

Since there is no standardized language enforced by the patent offices to describe pure ideas, patent search quality in this area is very low and this is not only a problem for the patent office's patent searches in the course of examination of the patent before granting it but also in private patent searches and litigation.

Though it sounds strange, some lawyers have recommended that parties are better off not examining or searching for software patents. It is said that knowledge of a patent that was later infringed can lead to being charged with "willful infringement", which means much more serious penalties. See this article by a patent attorney (Article checked on August 1, 2004.) This advice serves to defeat the advantage (and a supposed justification for patents) that patents increase the public knowledge. Linus Torvalds has said that "no engineer should ever go looking for a patent." due to the willful infringement risk. (See this article) (Article checked on August 26, 2004.)

Two other reason lawyers discourage clients from looking for patents is privilege and skill. Privilege means that what a lawyer does for their client or discusses with their client is usually confidential and not subject to disclosure in litigation. Lawyers do not like clients looking at patents on their own and for themself because such research is not privileged, nor are internal discussions about patents. This brings up the problem of skill -- reading patent claims is actually a skilled task; many patent claims read inexpertly seem to have a very broad scope, but when read in light of the specification and the file wrapper (prosecution history) are actually quite narrow. When non-IP-lawyers read the claims without knowing how they should be interpreted, there is a risk that they will conclude that the claims are infringed and worse, generate evidence such as internal e-mails and other correspondence to that effect. This happens so frequently that most IP lawyers and law departments bar anyone not trained as to how to read patents from doing patent searches, because of the hair-raising things they tend to say.

Software patents are very controversial. For many decades, patent offices around the world rejected most applications for software patents. In Europe, the European Patent Convention states that "programs for computers (...) as such" are excluded from the patent system . The meaning of "as such" in this context was clear for decades, but recently the European Patent Office spontaneously (without change of the Convention or any political signal) changed its interpretation from "as long as the program is the claim itself" to "as the text of the program". This is strongly opposed by many European software companies, developers and users.

The exclusion of software from patentability did not suit the interests of many patent professionals and certain computer manufacturers (such as IBM), which already were used to getting patent protection for their hardware but continued to seek routes to exclusive rights over algorithms and general software which they started to sell independently of the hardware. Gradually, cases began to appear in various jurisdictions (such as the United States, Japan and Australia), holding that software could be patented in various ways. The European Patent Office (responsible for granting European patents, and separate from the European Union) decided that it could grant patents on software using a politically controversial interpretation of the European Patent Convention.

Had the story remained typical of the history of intellectual property laws, the alignment of intention between key corporations (especially IBM and Microsoft) and the patent offices of the US, Europe, and Japan, would soon have lead to mandatory software patents under international law.

At the present moment, however, armed with evidence suggesting that software patents are likely to be economically harmful, coalitions of interest groups including the free software and open source movement and software firms without large patent portfolios are attempting to reverse the trend of patent expansionism. This conflict has been played out over the EU Directive on the Patentability of Computer-Implemented Inventions.

Opposition to Software Patents

There remain many opponents of software patents, including an overwhelming majority of professional software developers. For example, Burton Systems Software conducted a survey of professional programmers, and found that by a margin of 79.6% to 8.2% (10:1), computer programmers said that granting patents on computer software impedes, rather than promotes, software development (the remaining 12.2% were undecided). By 59.2% to 26.5% (2:1), most went even further, saying that software patents should be abolished outright.

Opponents of software patents argue against them for a diverse range of reasons. Here are some of the reasons opponents give for opposing software patents:

Innovation

  • There is no evidence that software patents actually encourage innovation. The 1950s, 1960s, and 1970s included a large number of software innovations, when software patents were not permitted. These innovations can be measured both as published papers and as new kinds of products.
  • Many in the computing field believe software patents actively impede innovation. In 1991, Microsoft's Bill Gates wrote a memo saying, "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." (Mr. Gates' company now acquires a vast patent portfolio, since to do otherwise would be suicidal, and that portfolio may be helpful in preventing competition). Donald Knuth, a highly-respected computer scientist, stated that "If software patents had been commonplace in 1980, I would not have been able to create [the TeX system used by 90% of all books and journals in mathematics and physics], nor would I probably have ever thought of doing it, nor can I imagine anyone else doing so."
  • Some believe that the problem besetting the software field is not a lack of innovation, but difficulty in developing the large number of desired products. The patent process interferes with, not aids, the development of useful products.

Economics

Professors James Bessen and Eric Maskin, two economists at the Massachusetts Institute of Technology (MIT), have demonstrated that introducing patenting into the software economy only has economic usefulness if a monopoly is the most useful form of software production. This is concerning, because few believe that a monopoly is truly the most useful (or desirable) form of software production. Bessen and Maskin also demonstrated a statistical correlation between the spread of patentability in the United States and a decline in innovation in software. In particular, between 1987 and 1994, software patents issuance rose 195%, yet company-funded R&D fell by 21% in real terms in these industries, while rising by 25% in industries in general.

(It should be noted that in general, the fact that two variables have both changed over time does not necessarily support a causal link between them; on the other hand, if the arguments by proponents of expanding patentability that this promotes innovation were correct, then we would expect the opposite correlation.)

Obviousness

  • Some believe the standard for "obviousness" in other fields is inappropriate for software. Because software is malleable, small, incremental changes and generalization are normal and obvious to practitioners. However, the PTO normally grants patents to small, incremental changes, even if they would be obvious to practitioners. This is an error in the first place and having no real obviousness standard is especially bad when working with software because software doesn't consist of a couple of parts but millions of lines of text, each of which could infringe on a trivial patent.
  • Many techniques are considered too obvious to publish by practitioners. However, a patent may be granted later by the PTO, because no paper was found by the PTO discussing the topic. Patent search is another problem with the huge number of trivial patents: You can never be sure that you licensed everything that you'd ever need to license to get the money back which you invest through the live cycle of your software. That's legal insecurity.
  • Some believe that switching from a copyright-based system to one permitting patents puts established experts at a severe disadvantage. Experts cannot patent many concepts because they are obvious (and sometimes verbally shared among peers)—yet they can be patented by novices because they are not as obvious to novices. Dan Bricklin, inventor of the spreadsheet, is a well-known proponent of this position.
  • The cost structures for software development are fundamentally different. Extremely complex software systems with hundreds of thousands of parts are often built for small amounts of money compared to physical products. However, the costs of dealing with the patent system presumes that complex systems will result in large profits, on the order of those for physical products. For most software systems, this simply is not true. Also the work and cost lies in actually getting the complex system to work in every use case (debugging); the challenge very seldom lies in finding new algorithms.

Litigation Culture

  • The risk of a lawsuit greatly reduces the incentive to innovate new products. This risk is exacerbated because software patent searches are prohibitively expensive and unreliable. Besides, patents may be granted to another after the software has already been written, so even a perfect search would not prevent risks to software developers.
  • Patent licenses are especially harmful to open source software / Free software, which are becoming an increasingly important type of software and in many markets are the only alternative to no software or establishing a permanent monopoly in a functional area.

"The licensing market, such as it is, seems to be defined characterized by patentees looking for infringers, rather than productive companies looking for technology." Brian Kahin

Other arguments

  • Software patents are of dubious legality. Under international treaties, there exists the obligation to protect computer programs as "literary works" in a way that is without prejudice to the author. Claiming functionality in a patent claim can cover the expressions of hundreds of original works at a time. There has not been a serious review of the question of software patents and copyright interactions.
  • Some software patents may be granted in the United States years after they were filed. However, until recent changes in US patent law, the first public knowledge of the patent application was when the patent issued, since the US did not publish applications 18 months after filing as was and is the case in other patent systems.  As a result, by deft filing of Divisionals, Continuations and CIPs followed by abandonment of the original application, a patent applicant could keep a patent secret for decades, allowing to surface as a patent only when an industry using the technology had evolved.  Typically, the applicant also used the CIP process to steer the claims in the direction of industry trends. These patents appliactions were known as "submarines" or "submarine patents."   Further complicating this activity was the fact that US patent terms were until the TRIPs agreement measured from the issue date of the patent rather than from the application date, so stalling in the patent office was beneficial to the applicant, since it meant the patent expired later.  The most notorious user of submarine patents was Jerome Lemelson, who with patents that appeared to cover bar codes, extracted over one billion dollars in royalties before many of the patents were found unenforceable and indeed not enabling. This problem was solved by aligning the US with the rest of the world, by publishing applications at 18 months.
  • Patent licensing strongly discourages, and in some cases prohibits entry of newcomers into the software field. Large companies collect patents and attempt to force cross-licensing with others to protect themselves from software patents. But this means that small companies (SMEs), without a large body of patents to cross-license, may be forced to license from a large number of companies to develop software at all. The total of these royalties could exceed all possible benefits, permanently blocking newcomers from the software field.
  • Small litigation companies (whose only contribution is to buy patents and sue other companies) can threaten large companies, even if those companies cross-license patents. Thus, even large companies can be at risk of a patent suit. However, these companies may exist solely to create patents of previously existing or obvious ideas, and litigating these patents can be more expensive than the product is worth.
  • Patent examiners tend to be paid less than they could make doing other activities in software, so they tend to be less skilled. In addition, they must be generalists, so they are unlikely to be aware of well-known approaches in any particular area. However, at EPO, patent examiners are very well-paid and they could make a better job, but there are not enough of them, so there are long examination delays as well. It is said that the job is so monotonous that nobody who is really qualified would do it, so this is even more of a problem.
  • Databases of prior work are inadequate for the task of determining if something has already been done before. Keyword searches are also inadequate to find prior art for generic software patents, even if internet search engines could do a quite comprehensible and fast job on worldwide text search. Unfortunately, specialized patents applications are not always made available in full text and the EPO started to give full text only to paying customers. Before, while application were available, they were not available in clear text but in graphics (pixel) format so you could not do full text searches.
  • The patent process has little incentive to identify pre-existing work. The process rewards patent requesters who do poor research, since by doing poor research, they will not find preceding work that would invalidate the claim. However, since patent officers tend to be less skilled, have inadequate databases, work under significant time pressure, and must of necessity be generalists, it is difficult for them to find preceding work. These resultant patents can still be useful to patent-holders as threats, since court cases are expensive (minimum 1 to 5 million dollars) and very uncertain.
  • Patent offices are notorious for granting absurd patents, yet once they are granted they can be enforced by simply the threat of an expensive lawsuit. For a non-software example, Patent 6,368,227 is a patent on a particular method for swinging on a child's swing, one that has no doubt been used by children for decades. In Australia, one man patented the wheel. This is not a problem because such patents are only jokes and nobody really cares about them. But the equivalent in the software patent world is a serious patent which is Intellectual property, which is vigorously defended (for 20 years)...
  • The patent system diverts many able-bodied experts into processing patents instead of innovating.
  • Patent litigation is extremely expensive, and owners of patents that should never have been issued can nevertheless impede innovation or cause others to pay unnecessary fees to avoid the cost of litigation. The cost of litigation in the US starts at $500,000 per side, so the trigger level where it becomes possibly economically useful to fight before a court starts at $1 million of damage. According to a survey by the American Intellectual Property Law Association, the median cost of litigating a patent infringement case in which $1 million to $25 million is at stake is $1.5 million. Below this level, litigation makes no sense and patent deals would have to be done, which is very hard if the defending party has no patent portfolio itself to have a negotiation mass. This encourages "patent extortion" (forcing an individual or small business to give in to arbitrary demands from the holder of a patent that should never have been granted and/or an implausible interpretation of it).
  • These high costs also make it difficult for patents to be used by individuals. Few individuals can afford to enter a court to defend their patents, so only companies with large resources can effectively enforce them. This provides strong disincentives for individuals to become inventors, since they will generally be forced to sell their patents to large organizations. In some fields where innovation typically requires teams and expensive equipment, this is not a disadvantage, but in software many new ideas come from small individual developers, who have difficulty gaining from patents.
  • The term of patents (20 years in the US) is inappropriately long for software; software has a very short life cycle. A single patent creates a monopoly over ideas used in generations of software. Many otherwise viable births of software projects are aborted or die young from patents granted generations ago.

Software patents tend to be opposed by individual software developers, who view software patents as a risk to their livelihood and are a high risk to SMEs.: if enough patents are granted, they will not be able to sell their software. Some large software companies also oppose patents, fearing that they will be sued for implementing obvious techniques, resulting in continuous payments to avoid court costs or steep fees for court battles. Well-known opponents of software patents include Richard Stallman (author of the gcc compiler), Dan Bricklin (inventor of the spreadsheet), Donald Knuth (an expert on computer algorithms and the author of the TeX typesetting software), Hartmut Pilch of FFII, Alex Macfie (Taiwan), Eurolinux Alliance, Lawrence Lessig, Mitch Kapor, Michel Rocard (former Prime Minister of France), Adobe and Oracle.

Dealing with Software Patents

Most software development companies in the US have decided to acquire software patents, even if they oppose the granting of them. Their motives include acquiring a patent before someone else does, or forcing competitors who acquire patents on obvious approaches to cross-license with them. Often these patents are only used defensively, e.g., they are only used against someone who first sues the company. Some organizations and licenses have formalized a nonaggression policy (a policy of never pursuing or profiting from aggressive software patent suits) and/or of mutual defense (in which a pool agree to this). Such systems, however, provide little defense to individual developers or small businesses, and it is unclear if they will prevail once companies come into financial hardship, needing patent revenues to persist. Often a patent can be worked around once the patent is known, but this can be a significant hardship if there is a significant amount of data in a format requiring the use of the patented algorithm.

A recent concern is the role of patents in the standards process. Some standards bodies have no patent policy; thus, it is possible for a member to convince a standards body to make certain technologies required by a standard while at the same trying to get a patent on that technology. As a result, many standards bodies (such as W3C) are now requiring their members to promise to grant either reasonable and non-discriminatory (RAND) or even royalty-free licenses on their patented technology that is incorporated into the standard.

See also: List of software patents

References & Resources

Groups against software patents

Statements of Officials

  • In 2002, then French state secretary for industry Christian Pierret, who is directly in charge of the French Patent Policy stated in an interview to 01 Informatique, the leading IT magazine in France: "I am against software patents in Europe. It would kill innovation and promote juridical terrorism because multinational software publishers would multiply legal disputes against start-ups".

As of 2004, the current position of the French executive (which changed hands since the above remark) is unclear.

Groups in favor of software patents

  • Large software and IT companies having built up a stock of software and other patents, the patent attorneys of these companies set the patent position of these companies. They also benefit from drawbacks for smaller companies.
  • Patent lawyers, they provide the extremely expensive service needed for software patents.
  • Patent offices, they gain money and power from software patents.
  • Patent judges and patent courts also gain power because of unpredictable software patent cases.
  • Article from IEEE on the business model of Acacia Technologies Group.

Neutral resources

Biased resources

  • iusmentis.com is a neutral-looking but biased web site from a patent attorney. It may, however, offer an insight into how patent attorneys think and argue, and contains a good explanation of how patents work.

Discussion lists

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