Software patent debate

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Computer programs, software and patent law
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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 1 Economic overview 2 Arguments for patentability 3 Arguments against patentability 4 Quotes supporting patentability 4.1 Bill Gates (Microsoft) 2005 4.2 Robert Barr (Cisco Systems Intellectual Property Department) 2003 4.3 Harald Hagedorn (SAP Patent Department) 2002 4.4 Eric Schmidt (Google CEO) 2004 4.5 Matt Schoen (Inventor) 2005 4.6 William Rehnquist (Chief Justice US Supreme Court)1981 5 Quotes against patentability 5.1 Bill Gates (Microsoft) 1991 5.2 Donald Knuth 2003 5.3 Bruce Schneier and Niels Ferguson 2003 5.4 John Carmack (id Software) 2005 5.5 Oracle Corporation 1994 5.6 Matthew Tutaki, Head of Sanseman Government 2003 5.7 Prof. Hasso Plattner when Chair of SAP Board 5.8 Pierre Haren, board director of ILOG 2001 5.9 Robert Barr (Cisco Systems Intellectual Property Department) 2002 5.10 Douglas Brotz (Adobe Systems) 1994 5.11 Jim Warren (Autodesk) 1994 5.12 Mitch Kapor 1994 (Founder of Lotus 123) 5.13 Richard Stallman (GNU project) 2004 6 Notes 7 References 8 See also 9 External links 9.1 Papers 9.2 Neutral sites 9.3 Sites in favor of patents on computer-implemented inventions 9.4 Sites against software patents

[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 summarised by Hall (2003). ^[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 above source. Those benefits and costs which are mentioned by Hall are indicated in bold

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, where standards are important
Transaction Costs	Creates a neatly packaged negotiable IP right	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 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.

[edit] Arguments for patentability

Arguments commonly given in defense of software patents or in defense of the patentability of computer-implemented inventions include the following (counter-arguments are indicated by 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, to promote the development of traditional useful arts, such as engineering and chemistry. Supporters of software patents argue that inventions in the software arts are the same, in principle, as inventions in these other areas. Patents, therefore, should have a similar impact in promoting 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. 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).
  • The time delay between when a software patent application is filed, and when it becomes public is 18 months. This too slow to be of value in advancing software development. Furthermore, the format in which software inventions are disclosed in patents (plan language text, flow charts, line drawings, etc.) is not particularly useful. Copyleft publications by contrast, provide much more useful disclosures (functional source code) at a much faster rate (immediate publication).

• Organizations should be able to protect their intellectual property.
  • Copyright is not always sufficient to protect the underlying function in a computer program and copying must be proven. Patents are therefore an essential part of the intellectual property framework.
  • Software patents can cover aspects of an invention that are arguably more appropriate to cover in copyright. Strict limits should therefore be placed on what aspects of software can and cannot be granted and such limits are not in place (US) or are not clearly defined (Europe)

• Protection for software by patents is already sufficiently limited
  • Inventions (including software) can only be patented in Europe if they provide a non-obvious "technical contribution". 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. [3]
  • 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 on software patents in Europe are not clearly defined and are not considered to be sufficient by lobbyists

• The United States has led in creating companies, creating jobs, because it has had the best intellectual-property system.^[4]
  • This is not an argument for software patents; it is an argument for patents generally. However, as in the argument that patents encourage innovation (see above), this general argument can likewise be extended by analogy to the more specific example. Therefore, software patent may encourage the creation of software companies and jobs.

• The need for protection is demonstrated by the huge number of software patents filed.
  • The huge number of patents filed is a tactic used by large companies to intimidate smaller companies. Since virtually all code could be said to violate some software patent, large companies use their superior financial position to threaten and or pursue infringement litigation against smaller companies who cannot afford to defend themselves irrespective of the actual merits of the case.
  • 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 resulting from the production of patentable ideas can increase the valuation of small companies.^[5]
  • Lawsuits for unintentional software patent infringement can destroy small companies. It is uncertain which of the two is most likely and how important small companies are, compared to big ones, for the competition in the free market.
  • Small companies cannot afford to patent the innovations they may have, as a software patent costs, on average $20,000 and then even more to litigate - into the millions.

• International law provides that invention in any fields of technology can be protected by patents (see Software patents under TRIPs Agreement).
  • It is unclear whether software is a field of technology for the purposes of TRIPs.
  • This interpretation of TRIPS contains an unstated premise that software should be something which is subject to patent law. The software patent debate is about this very issue.

• Granted patents can be revoked if found to be invalid. Development of new ideas is therefore not blocked by bad patents.
  • 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.
  • 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.
  • Opposition proceedings in Europe can take 2 to 5 years to complete and can be very expensive.
  • Spending time and money challenging patents is a waste of vaulable resources at a time when American competitiveness is being challenged. We have an existence proof that phenomenal technological innovation (pre the year 2000 patent-frenzy era) takes place and huge wealth is generated in a non-patent atmosphere.

[edit] Arguments against patentability

Opponents of software patents argue that:

• Patenting software inventions takes investment away from research and development. ^[6]

Many leaders in the software industry have found that the cost of obtaining patents and defending against competitors’ patents requires that significant funds be diverted away from research and development. This is in part due to the fact that patents can be obtained on relatively small incremental improvements in software. Thus a new innovative product might require hundreds of patents to protect and might in turn be covered, at least to some extent, by thousands of prior issued patents. Any one of these prior issued patents could prevent a new product from being made used or sold in the marketplace.

• 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.^[7]

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. Copyright infringement is relatively easy to determine and can be automated. Thus, copyright protection has proven to be a powerful method for protecting investment in software innovation. Many leaders 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.

• 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 often allowed on inventions that appear to be trivial extensions of existing technologies.

• 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 [8]. Of those, 1/3 are fully upheld, 1/3 are partially overturned, and 1/3 are fully overturned.

• 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.
  • The U.S. patent system has caused serious harm to small companies in the U.S.^{[citation needed]} and has allowed emergence of litigation-only companies that attempt to extract patent revenue without producing any real value.
    • 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.
      • This argument is a red herring, in other words, it does not represent a major concern to the anti-software patent side. The concern is that virtually every bit of code can be patented, making infringement impossible to avoid.

• 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 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 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. [9] In Europe, the average time taken to grant a patent in any field of technology was almost 4 years in 2005, [10] 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.

[edit] Quotes supporting patentability

[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."^[11]

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

“Patents help protect the right to innovate at Cisco."^[12]

[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."^[13]

[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 ^[2]

[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 6235176  for bringing a new disability insurance software product market. ^[3]

[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 ^[4]

[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."^[14]

[edit] Donald Knuth 2003

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."^[15]

[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."^[16]

[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."^[17]

[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..."^[5]

[edit] Matthew Tutaki, Head of Sanseman Government 2003

"We can not allow a foreign company to dictate the terms of our trade or how we conduct business in a global environment, but more to the point is the fact that this Patent should never have been granted in the first place. This country is very fortunate that we have a last port of call in that at the eleventh hour, upon finding out that this Patent was about to be sealed, I had the ability to apply for an extension of time so we as a business community could file a comprehensive notice of opposition. We must do all in our power to ensure that this Patent is never sealed and that any other Patents that are similar in its threats should be located and dealt with in a similar way."

[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..."^[18]

[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..."^[19]

[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..."^[20]

[edit] Douglas Brotz (Adobe Systems) 1994

"...I believe that software per se should not be allowed patent protection..."^[21]

[edit] Jim Warren (Autodesk) 1994

"...There is absolutely no evidence, whatsoever—not a single iota—that software patents have promoted or will promote progress..."^[22]

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

"Because it is impossible to know what patent applications are in the application pipeline, it is entirely possible, even likely, to develop software which incorporates features that are the subject of another firm's patent application. Thus, there is no avoiding the risk of inadvertently finding oneself being accused of a patent infringement simply because no information was publicly available at the time which could have offered guidance of what to avoid."^[6]

[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."^[7]

[edit] Notes

• ^ US Federal Trade Commission 2003 patent report
• ^ The Competitiveness Council Priorities Paper, Department of Enterprise, Trade & Employment, Kildare Street, Dublin 2 2004
• ^ Patents4Innovation
• ^ Ways in Which Patents can Help Your E-Commerce Business
• ^ "Restricting IP rights is tantamount to communism"
• ^ [23]
• ^  IPR Helpdesk, Patentability of Computer Programs [24]
• ^ [25]
• ^ 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.
• ^ French (in French)
• ^ FFII
• ^  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

[edit] References

[edit] See also

• Software patent
• Software patents under United States patent law
• Software patents under the European Patent Convention
• Software patents under United Kingdom patent law
• Debates within software engineering
• Software patents and free software
• List of software patents

[edit] External links

[edit] Papers

• Sequential Innovation, Patents, and Imitation by James Bessen and Eric Maskin

[edit] Neutral sites

• Software Patent Index from BitLaw. Includes articles describing the history and current practice of the USPTO to granting software patents including an analysis of "bad" software patents.
• Software patents under the European Patent Convention explains EPO practice when examining patent applications involving software.
• Examination Guidelines for Software patents in Japan, Japanese Patent Office, May 2005

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

• European Information, Communications and Consumer Electronics Technology Industry Associations (EICTA) web page explaining their reasons for supporting the CII Directive and their relief that it was ultimately rejected.
• BLOG@IP::JUR Patent Attorney Axel H Horns' Blog on Intellectual Property Law.
• Insurance IP Bulletin Collection of articles providing information about patents in the insurance and business method sector, most of which use software.

[edit] Sites against software patents

• Foundation for a Free Information Infrastructure (FFII)
  • Main site
  • FFII UK
  • Patented European webshop highlights a number of European patents that relate to ecommerce.
• No Software Patents - a web campaign supported by companies (1&1, Red Hat, MySQL)
• Public Patent Foundation
  • Main site
  • Software Patent Watch
• Free Software Foundation
  • Software patents – Obstacles to software development, a presentation by Richard Stallman
• Irish Free Software Organisation
  • Preventing Software Patents: Why and How
  • Preventing Software Patents: How & Why (2005-11-18)
• Software Patents vs. Free Software by Bruce Perens
• W3C
  • Letter from Tim Berners-Lee to James Rogan, Director of the USPTO urging reexamination of US patent 5838906 (the "Eolas Plugin Patent") in light of new prior art.
• Patent information for free software developers - an analysis of the situation in the US from an intellectual property attorney.