Software patent debate

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

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

Contents

[edit] Economic overview

Some of the main economic consequences in general to be expected from patenting business methods, particularly business methods implemented over the Internet, are summarized by Fine.[1] Some believe that the two areas of patenting business methods and patenting software are equivalent, but this may not always be the case.

The table below is based on, but is not exactly the same as the one provided in the a largely anti-patent paper benefits and costs which are mentioned by Hall are indicated in bold.[2] Those benefits and costs which are mentioned by that paper are indicated in bold:

Some of the economic effects of patentability
Benefits Costs
Innovation
  • Creates an incentive for research new process/product development.
  • Encourages disclosure of inventions
  • Encourages commercialization of inventions[3]
  • Requires innovations to be disclosed to the public rather than potentially being kept secret indefinitely[4]
  • 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 an incentive to generate workarounds[5]
  • Inhibits the entry of new (small) firms with limited assets owing to the high cost of patent acquisition and litigation.
  • Creates time-limited monopolies
Transaction Costs
  • Creates a neatly packaged negotiable IP right
  • Provides a tangible asset to encourage venture investing
  • Creates patent risk uncertainty and/or search costs
  • Creates economic friction
  • 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 that all people including those in the software industry act relatively rationally in accordance with economic incentives and therefore will be encouraged to innovate for the benefit of society by a patent system that allows software patents. Skeptics argue that the particular nature of software and the software industry exacerbate the likely costs of patentability, and reduce or invalidate many of the incentives and benefits that patents usually supply.

[edit] Arguments for patentability

 The neutrality of this section is disputed.
Please see the discussion on the talk page.(December 2007)
Please do not remove this message until the dispute is resolved.

Arguments commonly given in defense of software patents or in defense of the patentability of computer-implemented inventions include the following (counter-arguments are sometimes indicated within the successive bullet points):

  • Patenting software inventions promotes investment in research and development.[1][2]
    • The basic principles of patent law were developed before computers were invented and have served the US for centuries. The principles serve to promote the development of useful arts. [6] Supporters of software patents argue that inventions in the software arts are useful to modern life and therefore deserve the same incentive provided for inventions in other useful arts (i.e., to promote investment in research and development.)
  • A patent must publicly disclose the invention and so educate the public and advance the state of the art of the invention. Thus patents accelerate software development by making previously unknown and not obvious software inventions public.
    • Patents must disclose how to make and use an invention in sufficient detail so that other persons of ordinary skill in the art of the invention can make and use the invention without undue experimentation.[citation needed] Furthermore, patents are only valid if the inventions they disclose were not known by the public prior to the filing of the patent application, or if the inventions were not obvious to those of ordinary skill in the art at the time the patent application was filed. (US laws are somewhat different from other countries. In the US the focus is on when the invention was made, not when the patent application was filed).
      • This is the formal law, and a rule that if violated could lead to invalidation of a patent, so is followed strictly by patent lawyers[7]
    • The time delay between when a software patent application is filed, and when it becomes public is 18 months. This is a compromise position allowing US innovators to develop their software before revealing details about it and giving competitors an unfair look at their R&D, and providing the public notice within a fair amount of time to allow others to develop their own technology. The format in which software inventions are disclosed in patents (plain language text, flow charts, line drawings, etc.) allows a person with reasonable programing skills to recreate software capable of performing the ideas patented, as required by law. Copyleft publications by contrast, provide a different type of information addressing a different legal standard with different incentives.
  • Organizations should be able to protect their intellectual property.
    • The US congress has stated that "anything under the sun made by man" deserves patent protection[8] to promote innovation.
    • Some aspects of software are also covered by copyright law, but those are largely different than the protection of ideas and innovation in the useful arts provided by patent law.[9]
  • Protection for software by patents is already sufficiently limited
    • Inventions can only be patented if they are non-obvious. This reduces the chance of patents being granted on mere algorithms with no technical effect or the granting of "trivial" patents with no inventive step.[10]
    • Other countries such as the US, Australia and Japan do not have the same limits on software patents and this puts pressure on Europe to expand the scope of protection.
    • The limits in Europe are not sufficient in the eyes of opponents to software patents.
  • The United States has led in creating companies, creating jobs, because it has had the best intellectual-property system.[3]
    • This is an argument for patents generally, and especially for software patents because of the amazing leadership the US has had in that area. Therefore, software patent may encourage the creation of software companies and jobs.[11]
  • Software patents resulting from the production of patentable ideas can increase the valuation of small companies.[4]
    • Patent lawsuits are one of the only tools available to combat large players in the software marketplace (e.g. Microsoft) and allow innovative small companies to build a market of their own or at least receive fair compensation for their investment.[12]
    • Small companies can normally afford to patent the innovations they may have, as a software patent costs, on average $20,000 and then many banks and other investors are available to help with litigation costs.
  • Granted patents can be revoked if found to be invalid.
    • Development of new ideas is therefore not blocked by bad patents, and so the proposed negative effects of patents are moot.
    • 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., an opposition in Europe, or a lawsuit in Court, to argue that claims are overly broad and should not be allowed.
    • Because of the relative recent innovation of the inter partes examination, few patents in the US have been challenged in an interpartes reexamination.
      • 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, a patent owner would have less security in her knowledge of her rights, and a large corporation could preempt an actual inventor's rights by filing a patent before that inventors because of a change from a first to invent to a first to file system.
    • Opposition proceedings in Europe can take 2 to 5 years to complete and can be very expensive.
    • Spending time and money innovating in the US gives Americans a competitive advantage around the globe. We have as existence proof that phenomenal technological innovation takes place and huge wealth is generated in a patent atmosphere, as illustrated by the amazing rise of the US from its inception.

[edit] Arguments against patentability

 The neutrality of this section is disputed.
Please see the discussion on the talk page.(December 2007)
Please do not remove this message until the dispute is resolved.

Opponents of software patents argue that:

  • Patenting software inventions takes investment away from research and development. [5]
    • Some[citation needed] say that the cost of obtaining patents and defending against competitors’ patents requires that significant funds be diverted away from research and development. They state that this is in part an attempt to obtain patents on relatively small incremental improvements in software. Thus this type of patent strategy might require hundreds of patents being obtained and monitored. Any one of these prior issued patents could prevent a new product from being made used or sold in the marketplace, but such minor patents are unlikely to be issued by the USPTO.[clarify]
  • 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 $US 2,000. A more comprehensive clearance search might cost $20,000 and up.[citation needed] This is often beyond the means of many inventors.
  • Traditional copyright has provided sufficient protection to facilitate massive investment in software development.[6]
    • Copyright is the right of an author(s) to prevent others from copying their creative work without a license. Thus the author of a particular piece of software can sue someone that copies that software without a license. Copyright protection is given automatically and immediately without the need to register the copyright with a government, although registration does strengthen protection. Copyrighted material can also be kept secret. Often copyright infringement is relatively easy to determine. Copyright protection has proven to be a method for protecting investment in software innovation. Some people in the software industry have asserted that the additional protection that patents afford is not needed and is not worth the downsides of expense, delay and uncertainty associated with patents. However, the differences between copyright protection and patent protection are vast. Where patent protection provides an innovator protection over a created idea, copyright protection only protects a particular manifestation of that idea. Additionally, copyright law inhibits software innovation by providing protection for software without requiring a disclosure of underlying source code or ideas, which would be required to meet the best mode requirement of patent law.[13]
  • Most software patents cover either trivial inventions or inventions that would have been obvious to persons of ordinary skill in the art at the time the invention was made.
    • Patent examiners rarely have a comprehensive knowledge of the specific technologies disclosed in the patent applications they examine. This is in large part due to the enormous number of micro-niches in the software field and the relatively limited number of examiners. As a consequence, patents are sometimes allowed on inventions that appear to be trivial extensions of existing technologies.[citation needed] Others debate that these inventions are truly obvious without the benefit of hindsight.[14]
    • If any member of the public disagrees with a patent office's granting of a patent, they can challenge the validity of the patent once it issues. This is done by an reexamination in the US and an opposition proceeding in Europe. Other countries have similar proceedings. Currently about 5% of all issued patents in Europe are opposed.[15]
  • 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. Because of the best mode requirement of the patent filing, this may require a patentee to reveal secrets to a competitor without any upside, so the 18 month requirement is an attempt to balance these interests.
  • Legal actions involving patent claims are very expensive, slow and unpredictable.
    • They can be avoided by paying royalties that are properly due to patent holders.[citation needed]
    • The U.S. patent system has companies in the U.S.[citation needed] and has allowed a new class of corporation that creates further profit for US citizens by extracting patent revenue from foreign corporations without producing any tangible products.
      • Some 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.
        • Litigation is possible to avoid by licensing from a patent holder or creating workarounds for patented techniques.
  • Enterprises that receive numerous patent infringement notices cannot afford to simply pay what each patent holder demands.
    • If an enterprise uses algorithms that are covered by a large amount of other people's patents they should expect to pay high fees.
      • Large companies regularly try to enforce their patents on smaller corporations. However, it is not possible to completely avoid patented technology, because no mechanism for avoiding patent-related risk exists other than innovative insurance and investment instruments provided by many companies.
  • Software patents may affect 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 believe they are inventive in creating new ideas and software, but maybe blocked from doing so by an existing patent on one of the algorithms they desire to use, originally created another person, that ends up blocking all uses without a proper license.
  • 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 may not be adequately protected by patents.
  • 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.[citation needed]
      • 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 the courts are undecided about how this affects patentability.
      • 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".
  • Some Patent disclosures in the software field are not readable to some programmers; they are neither used nor useful as a source of technical information.[16] Though a skilled programmer usually has little trouble generating code to solve a problem when presented with a detailed algorithm for the solution.
  • Software is a field of applied mathematics.
    • 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 and EP) is too slow.
    • For 2005, the projected average pendency for patent applications in the "Computer Architecture, Software & Information Security" department of the US Patent and Trademark Office was 3 and a half years.[17] In Europe, the average time taken to grant a patent in any field of technology was almost 4 years in 2005,[18] with the computer related fields probably being greater than the average. 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. Accelerated examination can also be requested in Europe.
    • Most patent applications are published 18 months after filing, so third parties are usually made aware of prospective patent rights well before any patent is granted.
      • Granted patents may be very different from the published applications, so the published application may only serve as a guide to the final scope of protection.
  • Companies that do not produce software
    • Software patents allow investment companies to purchase patents from others and generate lawsuits to collect revenue off the monopoly granted by the patent.[19] Some believe it to be offensive that a company that does not create software might benefit from a patent for software. Others understand that these patents are generally purchased by highly speculative investors from software producing companies that were looking for investments (e.g., companies having financial trouble, companies moving out of a particular business area, etc.) and thereby provide needed capital investment into the software industry.[20]
    • These investment companies are sometimes referred to by the derogatory terms "patent parasites" or, more commonly, patent trolls and are a consequence of the possible high damage awards that litigation in the US may provide, not of software patents.[21]

[edit] Quotes supporting patentability

[edit] William Rehnquist (Chief Justice US Supreme Court) - 1981

"A claim drawn to subject matter otherwise statutory does not become nonstatutory simply because it uses a mathematical formula, computer program, or digital computer."

US Chief Justice William Rehnquist in the majority opinion of Diamond v. Diehr on why US patents, under the The patent act of 1952, can cover practical applications of computer programs[22]

[edit] 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."[7]

[edit] Robert Barr (Cisco Systems Intellectual Property Department) - 2003

“Patents help protect the right to innovate at Cisco."[8]

[edit] Eric Schmidt (Google CEO) - 2004

“Microsoft is intently poring over Google's portfolio of patents, hunting for potential vulnerabilities”

Comment by Google CEO Eric Schmidt in response to the anticipated attempt of Microsoft to take over the search engine market[23]

[edit] Bill Gates (Microsoft) - 2005

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

[edit] Matt Schoen (Inventor) - 2005

“While it is impossible to know whether our deep pocket licensees would have run with our intellectual property in the absence of our patent and patent pending, it is reassuring to know that when their IP counsel reviewed our patent they advised their clients to obtain a license if they wish to tread in our covered markets.”

Inventor Matt Schoen on the necessity of his U.S. Patent 6,235,176  for bringing a new disability insurance software product market.[24]

[edit] Quotes against patentability

[edit] Bill Gates (Microsoft) - 1991

Internal memo

"If people had understood how patents would be granted when most of today's ideas were invented and had taken out patents, the industry would be at a complete standstill today...The solution is patenting as much as we can. A future startup with no patents of its own will be forced to pay whatever price the giants choose to impose. That price might be high. Established companies have an interest in excluding future competitors."[10]

[edit] Douglas Brotz (Adobe Systems) - 1994

"...I believe that software per se should not be allowed patent protection..."[11]

[edit] Jim Warren (Autodesk) - 1994

"...There is absolutely no evidence, whatsoever—not a single iota—that software patents have promoted or will promote progress..."[12]

[edit] Mitch Kapor (Founder of Lotus 123) - 1994

"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."[25]

[edit] Oracle Corporation - 1994

Submission to USPTO

"Oracle Corporation opposes the patentability of software. The Company believes that existing copyright law and available trade secret protections, as opposed to patent law, are better suited to protecting computer software developments..."[26]

[edit] 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..."[13]

[edit] Robert Barr (Cisco Systems Intellectual Property Department) - 2002

"...The time and money we spend on patent filings, prosecution, and maintenance, litigation and licensing could be better spent on product development and research leading to more innovation..."[14]

[edit] Donald Knuth - 1994

In a letter to the US Patent Office in 1994

"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 TEX."[27]

[edit] Bruce Schneier and Niels Ferguson - 2003

"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."[15]

[edit] Richard Stallman (GNU project) - 2004

"When you are restricting what the citizens can do with their own computers that's not just an economic issue any more. That's an issue of people's rights."[28]

[edit] John Carmack (id Software) - 2005

"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."[16]

[edit] 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..."[17]

[edit] Notes and references

[edit] Notes

[edit] References

  1. ^ To Issue Or Not To Issue: Analysis Of The Business Method Patent Controversy On The Internet
  2. ^ Bronwyn H. Hall, Business Method Patents, Innovation, and Policy, May 2003
  3. ^ Patent Prospector: Patent Economics: Part 4 - Incentives
  4. ^ 2165 The Best Mode Requirement - 2100 Patentability
  5. ^ Patent Prospector: Patent Economics: Part 4 - Incentives
  6. ^ LII: Constitution
  7. ^ 2165 The Best Mode Requirement - 2100 Patentability
  8. ^ DIAMOND V. CHAKRABARTY, 447 U. S. 303 (1980) - US Supreme Court Cases from Justia & Oyez
  9. ^ Patents for Software-Related Inventions
  10. ^ Computer-Implemented Inventions (CII)
  11. ^ Patent Prospector: Patent Economics: Part 5 - Theories
  12. ^ Office Depot
  13. ^ 2165 The Best Mode Requirement - 2100 Patentability
  14. ^ Debunking the Software Patent Myths
  15. ^ The European Patent Office Homepage
  16. ^ Software patents need shelter from the storm | Tech News on ZDNet
  17. ^ Table 4: Patent Pendency Statistics
  18. ^ The patent process
  19. ^ Patent absurdity by Richard Stallman
  20. ^ IEEE Spectrum: Hooray for the Patent Troll!
  21. ^ Morag Macdonald, Beware of the troll. The Lawyer (September 26, 2005). Retrieved on 2007-07-27.
  22. ^ Diamond v. Deere
  23. ^ Markoff, John, “The Coming Search Wars” New York Times, February 1, 2004
  24. ^ Schoen, Matt, “Lessons from a First Time Insurance Patent Applicant”, Insurance IP Bulletin, April 15, 2005
  25. ^ Testimony of Mitchell D. Kapor in congressional hearing
  26. ^ Oracle Corporation - Patent Policy
  27. ^ Letter to the Patent Office from Professor Donald Knuth
  28. ^ Richard M. Stallman: The Dangers of Software Patents (2004-05-24)

[edit] See also

[edit] External links

 This article or section may contain an excessive amount of external links.
Please improve this article by incorporating them into the appropriate end section, or by converting them to inline citations (March 2008)

[edit] Papers

[edit] Neutral sites

[edit] Sites in favor of patents on computer-implemented inventions

[edit] Sites against software patents