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June 7, 2013

The Problem with Software Patents

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On May 15, IPI convened a panel to discuss software patents, to discuss the criticism that the U.S. patent system has recently attracted, and to address whether that criticism is warranted. The goal was to explore a couple basic questions, such as can any of the existing challenges be addressed by creating a stronger system overall? If there are "trolls," then to what extent are they enabled by software patents? Is software best protected under copyright as an expression, or under patent as an invention? Why are there more software patents now? And how do we address the challenges while protecting US innovation? What role should patents be playing in protecting software? Why do they play a role at all? Doesn't copyright protect software adequately?

These critical questions were addressed by our panel of:

Gary Greenfield, the CEO of multiple software companies, such as Avid, Merant, Peregrine and GXS, and has served on the boards of many more, Bob Stoll, Former Commissioner of Patents, USPTO and Jon Potter, president of App Developers Alliance.

Video of that panel is here.

During that panel I expressed that I am quite skeptical of allowing software to be patented, believing that software should be protected with strong copyright protections, as patents do not really fit software. To be a bit glib, copyright protects expression whereas patents protect invention, an actual tangible product, or at least did historically. And the low quality software patents (which seek to protect a function rather than an algorithm) that have been granted, numbering in the thousands, seem to be the root of the legal problems. Pre-trial lawsuits have risen, with patent suits quadrupling in 7 years and 85% being over software patents. (more on this below)

What is the compelling argument in favor of the patenting of software? Because you can? Because every else is doing it? Aren't these rationalizations that were shot down your mom while we were in pre-school?

Into exactly this debate wades the President this week, with his recommendation that Congress give a relatively new (6 months now) review program at the PTO oversight of software patents in addition to the business methods patents it reviews now. The thinking is that greater review of the patents that seem to be at the heart of the problem will lead to better patents being granted and hence less opportunity for law suits which spring from low quality patents. Agreed. Hopefully this move would lead to a decrease in rapidly escalating number of patent lawsuits.

Despite the panelist assertion at our event to the contrary, patent litigation is indeed increasing, with patent trolls and software patents at the heart of it, making up 62 percent of patent cases filed in 2012, up from 46 percent the previous year according to the Patent Assertion and US Innovation study released this week by the White House. Or, put another way, as reported in the NY Times, "The companies [meaning so called “trolls” exploded onto the technology scene in the last two years, accounting for more than half of the 4,000 patent infringement lawsuits filed in the United States last year, according to several studies, up from 45 percent the year before and from less than 30 percent in every prior year."

One reason for the increase is exactly as Mr. Stoll stated, that under the 2011 America Invents Act patent holders must file individual lawsuits against each company that they sue rather being able to file one naming multiple defendants. This alone has caused an explosion in the number of suits, but the trend over the last few years was still rapidly increasing. Just one take on the increase can be found here.

Arti K. Rai, formerly the administrator for the Office of External Affairs at the patent office, and now a patent law professor at Duke University was quoted in the above noted NY Times article, as saying that "those numbers 'are a little bit manipulated.'” but went on to agree that, "There probably would still be more lawsuits without the provision in the 2011 law that required a plaintiff to file separate lawsuits."

We have a great patent system, and want it to survive and even improve, so targeting troubled areas is exactly the right approach, not ignoring problems with crossed fingers hoping they will go away. We cannot be afraid to make obviously needed improvements where problems are evident. Clearly the system is facing a challenge, and a legislative solution is likely needed despite assertions to the contrary. But what needs to be addressed? At least two things: 1. change the economics, and 2. better patent review.

Several large technology companies support the President's proposal because of the way it changes the economic incentives "A strong fee-shifting provision that evens the playing field between trolls and their targets is essential for reducing the incentives for abusive litigation, and we look forward to working with the Administration and Members of Congress to achieve that goal." More here .

But not everyone is on board, particularly companies that have a cache of software patents. BSA: The Software Alliance is already hesitant. A spokesman for them has said, "The idea of expanding the PTO’s transitional program for covered business method patents is an area of concern for many BSA members. Singling out computer-enabled inventions as a class could inadvertently put at risk innovation for many industries that rely on software, from manufacturing to biotech. The America Invents Act includes business-method provisions that have been in effect for only six months. Rushing to broaden them before we see the results doesn’t make sense.” His full statement can be found here. He, of course, makes no mention of the innovations being threatened already by continuing to allow the already identified problem of software patents to persist. Further, it is a program for business method patents that is in place, not one for software patents, the BSA statement in effect itself highlights the problem of the current system as it does not address the problem.

For all of the posturing by BSA, the President's proposal does little to directly address the heart of the problem, which is the patenting of software. Often the patents for software are of "low quality" which then makes playing "troll" games easy for those inclined to do so. One should not be shocked that these patents are not of the quality we have come to expect from the U.S. PTO, because patent does not fit software. It is a square peg in a round hole. Put most simply, trying to get a patent to fit software is exactly trying to take a system designed to protect physical invention, such as a lawn mower, and somehow have it cover expression, such as stories and poems.

Some quick history. In 1980 Congress added “computer program” to the copyright law, law designed to protect creative, intellectual, or artistic forms, or "works." Later court cases, and even later the DMCA, clearly recognized software’s copyright protected status. Copyright protection attaches to “original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.” The US patent system was codified in 1836, and was designed to protect items such as mousetraps and plows, tangible innovations not expression. In 1982, because of a new patent appellate court, obtaining patents was made easier. In the 90’s the courts overturned rulings against granting software patents, resulting in a flood of software patents including software, business methods and even mental processes, in turn resulting in many more patent lawsuits, many of which have been brought in the area of mobile communications.

When we have unclear patents, when the boundaries are vague, then people cannot adequately check whether their innovations infringe or not. Julie Samuels at the Electronic Frontier Foundation has a blog post exactly taking on why we cannot "...fully address the scourge of patent trolls without addressing those patents." She is correct that functional claiming must be tightened and that an increased review of business method patents is needed.

The problem with the patenting of software must be addressed head on and not allowed to continue to grow, ultimately causing more and more to question the validity of the U.S. patent system. To preserve a system that provides strong protection for innovation we must act, certainly after consideration, but sitting back to benefit a few while the system's use is perverted is not an option.

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