The Standards Blog

Telling the Truth About Software Patents and Innovation

Intellectual Property Rights

While much of what I write appears here, I also contribute to other venues as well.  The following op/ed piece first appeared in last week's print  edition of MHT (formerly Mass High Tech), the New England regional technology paper to which I periodically contribute a piece.  Starting next month, I'll be doing a regularly column for them, focusing on the New England technology scene.

How often have you heard it said that "patents foster innovation?" That phrase rings true in pharmaceuticals, where investment requirements are enormous and failure common. But does it also apply in areas such as software? Does it really take the promise of a legal monopoly to motivate a typical founder or CTO to innovate? And what about the advantages patents give big companies over emerging ones, simply because the former can credibly threaten expensive patent litigation while the latter cannot?

I'll talk about the negative impacts of software patents another time. But today I'd like to make the case that patents are irrelevant to software innovation, based on my 25 years of representing hundreds of startups, the largest number of which have been either pure software companies or other ventures whose value lay in the software at the heart of their businesses. That history tells me that if patents were to disappear tomorrow, the process of innovation wouldn't skip a beat.

Here's why: I can divide my experience with startups into three periods: In the first, software couldn't be patented. During the second, it could but virtually no startups did. And in the third (aka the present), venture-backed startups that can file patents usually do, but most boot-strapped enterprises don't. Did software startup activity increase when the Patent and Trademark Office opened its doors to software patents? Not at all. And I can't recall a single client that ever decided not to proceed with a startup because an invention could not be patented.

You could fairly discount the last statement by observing that entrepreneurs fall in love with their inventions. But investors also recognize that copyright and trade secret laws provide ample protection against actual theft, and that patents are not credible weapons for startups. Instead, software patents today appeal mostly to large technology companies, which use them defensively to guard their entry into markets dominated by competitors, rather than offensively to keep competitors out of their own. Patents have become like Cold War nuclear weapons, kept in reserve to project power rather than to actually assert it. VCs encourage their portfolio companies to file patents as a result, because startups with patents are worth more to acquirers happy to add new patents to their own arsenals. But software startups without patentable inventions still easily attract VC dollars.

Would abolishing software patents, then, lessen innovation among large companies? Again, no. IBM, Microsoft and Oracle were founded before software could be patented. They couldn't afford to quit innovating simply because patent protection became unavailable. In fact, Microsoft did not even file patents aggressively until quite recently. And Oracle's fiercest competitor is SAP -- a German company, whose home market is Europe, which does not accept patent applications for most types of software inventions. But all of these companies continue to find Europe a valuable marketplace worth pursuing.

I think we all recognize that talented people have an innate drive to create and to compete. Entrepreneurs expect the marketplace to measure their success, and not the number of patents they can hang on a wall. I believe that we perform to the peak of our abilities when challenged, and that the marketplace brings out our best when it makes us perform at the edge.

As the world becomes increasingly competitive, we need to capitalize on our heritage of risk taking and not blunt our entrepreneurial drive with promises of artificial legal protection. Otherwise, we may one day find that those playing by tougher rules than we are setting for ourselves are outcompeting us -- even in our own back yard.

For further blog entries on Intellectual Propery Rights issues, click here

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Comments

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Speak nicely to your Congress about it, then. There's absolutely nothing I can do about the situation.

NASA need software. They don't need software patents, thougn. And mostly they're perfectly happy to give you the software they wrote, too. You can take it here

Your tax dollars at work. In all sorts of ways.

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That phrase rings true in pharmaceuticals, where investment requirements are enormous and failure common.

I'd like to put that oft repeated misconception to rest. First, the same type of logic you use to debunk the myth that software patents are needed.. Pharmaceuticals are immensely profitable. Since profits = income - costs, their true costs must be nowhere near what is implied.. And/Or their income (read - sales) is too high.  Secondly, much, if not most, research is done by (under)grad students at universities.. using government (meaning tax or 'our') money.  Rather ironic that we, the people, should pay through the nose to buy what we payed through the nose to create.. All while pharmaceutical investors get rich on our illnesses?

None of that detracts in any way from the truth that standards need to be available (read, open) to all & that software patents are even more foolish than physical world patents.

For ever, it seems, engineers have battled politicos (logic versus emotion) over what is 'the best way'. It boggles the mind that in 2007, the world is still as irrational (money & power are more important than solving the worlds problems) as it was in the dark ages. Our bogeymen may have changed.. but they are still with us & the mis-truths of the emotionalists are still taken as "Gawd Given Truths".

Microsoft: A standard means "one way for everybody". Many ways to access the standard is _not_ the same as many standards. The former is good for the user while the later is good only for the monopolists.

I think following up on the pharmaceutical line of thought is needed.

I think the presence of defensive patent posturing is at least as prevalent in pharmaceuticals, as it is anywhere in software or electronics.

It is not just pharmaceutical undergraduates, but graduate students and other research people who do a considerable amount of research into the various things that any drug making it to market needs done, that never seem to get mentioned by the big companies. But yes, there is a lot of research that is done by outside people, or is related to some compound of interest, that is not paid for by the drug company in question, sometimes it is government money, sometimes other money.

The patent position in pharmaceutical research is not that simple, or rosy.

Many patents are currently about fundamental biological processes. As a result, work on medical drugs can be hampered (blocked) by the fact that the underlying, or upstream, biology is patented. That again requires a lot of cross licensing.

A short citation from:
www.firstmonday.org/issues/issue12_6/rai/index.html

In the late 1990s, when a proliferation of property rights over upstream research threatened to create a “tragedy of the anti–commons” [5] by imposing significant licensing and royalty burdens on drug development, pharmaceutical firms promoted a number of projects to defeat these patents.
See also this science commentary:
www.sciencemag.org/cgi/content/full/280/5364/698
So medical research also feels the pressure.

Winter

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I think we all recognize that talented people have an innate drive to create and to compete. Entrepreneurs expect the marketplace to measure their success, and not the number of patents they can hang on a wall. I believe that we perform to the peak of our abilities when challenged, and that the marketplace brings out our best when it makes us perform at the edge.

As the world becomes increasingly competitive, we need to capitalize on our heritage of risk taking and not blunt our entrepreneurial drive with promises of artificial legal protection.

Indeed. As a prospective entrepreneur in the software market (I am looking to start a company) patents more frighten me than encourage me as they could keep me from becoming successful. At least in the software industry, patents harm more than they help - and it doesn't help that patent applicants are writing things to be as broad as possible (also not what was intended, which was to protect specific invention).

If anything, software patents inhibit innovation - especially with companies like NTP and Acacia out there looking to just sue anyone for infringing something they don't even make (or plan on making).

Software certainly gets appropriate protection from copyright and trade secret laws. But you also can't double dip between those either. (IANAL, btw.) If you want to claim patent infringement, fine - but then you can't claim trade secret or copyright, which are far more helpful than patents.

It'll be good for the SCOTUS to return us to that first era - when software patents were, for the most part, invalid and unavailable. In fact, for the most part legally they still are, on paper - no law has been passed allowing them, and then Federal Circuit's allowance of them is in contradiction to older SCOTUS rulings - and SCOTUS has not since overturned itself with respect to such. SCOTUS has even recently hinted it will overturn the Federal Circuit's allowances, and has cited them as being in contradiction with older SCOTUS rulings that still stand too. So it's really  just a matter of time (IMHO) until we get back to having no software patents in the U.S. again.

Didn't I say - IANAL? B/c I'm not. I do have a vested interest in this matter though, so this is in accordance with my understandings of the matters at hand.

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I was playing with my fire truck the other day when my friend Amy came round with her mum. Amy offered me a sweet so I took the bag from her and went to play on MY swing. Amy began playing with my fire truck. MY fire truck. Well I jumped from the swing and went to take MY fire truck back. Amy went to have a go on the swing. I started hitting her with the fire truck. "I" was playing on MY swing. I kept hitting until she left the swing and the fire truck alone. Her Mum was furious. That night my Dad tucked me in and told me a story. He showed me a big round ball which he said is called a globe. "One day son, all of this will be yours. You did well today, there's some nasty people out there. You have to assert your authority."

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I can believe in the need for a patent for a pharmaceutical.

From the time where you identify a candidate drug, which may cure a disease in a novel way, up to the time where you can start selling it, requires a significant investment. Perfecting how to manufacture it; testing it; sorting out side effects and safety, all take time and money. And there's a risk that it will be ineffective or dangerous, and the corporation needs to abandon its investment and try something else instead.

Also, the formula for the candidate drug can easily be written down in the patent; everyone can know what you are patenting; easy to check if someone infringes.

So if we as a society want corporations to bother, we ought to give them a term of exclusivity as the reward.

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This begs the question, why is copyright appropriate for software?  Copyright is theoretically reserved for artistic expression (code is only art in the same behind-the-scenes way other useful items may be - such as an assembly line).  Would people write code if there were no copyright?  The answer is probably the same, though you can't prove it in the same way.  You can, however, note that Microsoft rose to prominence in the era of rampant software piracy, especially among its main customer base.

The same argument you make for software patents could be made for copyright.  Musicians would still make music, authors would still write, and artists would still paint (or express themselves in other media, etc) even if there weren't copyright.  In fact, they did so before there was copyright, etc.  The same argument could be made about any form of IP at all.  And that's pretty much the crux of the issue - should there be IP at all, if yes, why not in the form of software patents?