An edited version of my article, "The practical problem with software
patents," appeared in today's Economic Times (Bangalore edition). Hope
you find this interesting.
Venky
=====
The practical problem with software patents
The Bilski case judgment has reversed the trend of granting patents to
abstract ideas in the US, and is good for software developers, says
Venkatesh Hariharan
In their book, "Patent Failure: How Judges, Bureaucrats, and Lawyers Put
Innovators at Risk," Boston University professors, James Bessen &
Michael J. Meurer, show that Murphy's Law ("If anything can go wrong, it
will") has been working overtime in the area of software. The authors
dedicate an entire chapter to software and business method patents,
which are particularly problematic because they account for almost 38
percent of all patent litigation.
The authors find that in the United States, software patents are twice
as likely to be litigated as other patents while business method patents
(which act as a proxy for software patents) are seven times as likely to
be litigated. The authors say, "Our reading of the case law convinces us
that patent law tolerates too many software claims untethered to any
real invention or structure; in such a world clear boundaries are
unattainable." The authors point out that patent on abstract ideas are
often subject to multiple interpretations and are therefore more
ambiguous. An example of this ambiguity is the E-Data patent on "point
of sale location." In the IT industry, this term is jargon for the cash
register or location where the customer pays the cashier. When the US
Federal Circuit interpreted this claim, they decided that it referred to
any location where an e-commerce transaction might take place. Thus, a
patent filed 17 years ago when e-commerce did not exist, ended up
causing several lawsuits.
The lack of clear boundaries in software means that even law-abiding
software developers who intend not to violate another's patent have no
clear means of avoiding it. The authors point out that there are around
4000 patents on e-commerce and around 11,000 patents on online shopping.
Add to this the fact that getting legal opinion on each software patent
can cost around USD 5,000 and we have a vexatious, if not impossible,
task at hand. For most software developers, doing a patent search in
connection with their work is simply not economically feasible. Even
leaving aside the cost of a search, the results are seldom conclusive.
Thus it really is not possible to eliminate the risk of a patent
infringement lawsuit.
It is well known that the U.S. has the most permissive patent system in
the world. However, even in the US, there are signs that the pendulum
may be swinging the other way. In the recent Bilski case, which dealt
with a method of hedging risks in commodities, the US courts ruled that
abstract ideas which are not tethered to a device cannot be patented.
The decision reversed the 1998 State Street decision that opened the
floodgates for software patents.
In the European union, a move to patent, "computer implemented
inventions" was thrown out in 2005. In India, section 3(k) of the Indian
Patent Act says that, "A mathematical or business method or a computer
programme per se or algorithms are not patentable." In the discussions
around India's Draft Patent Manual, the interpretation of the term,
"computer programme per se" has been the most contentious one. Given the
lessons of history and considering the amount of litigation that
software patents have created in the US, India must avoid going down the
same path.
A patent is a state-granted monopoly on an invention, in return for
disclosure of the idea. The original intent of the patent system was to
encourage disclosure by the inventor in exchange for exclusive rights
for a limited period of time to the invention. This ensured that
inventors did not take their inventions to the grave and that society
could build on existing knowledge rather than re-invent the wheel. The
regime of software patents began its major expansion in the 1980s in the
US. Since then, software developers have been consistently arguing that
that software is better protected through copyrights rather than patents.
Under copyright law, if software developers write code that is similar
to that of another, they can defend themselves on the grounds of
independent invention because copyright protects the expression of an
idea. However, the same defense is not possible under a software patent
regime because a patent is a monopoly on the idea itself. Thus, even if
software developers independently create a program, they may be liable
for infringement of one of the more than 200,000 software patents in
existence in the U.S. Even end-users who use software for routine,
everyday activities may be liable for infringement. For example,
McDonalds and 400 other entities were served notices for violating
DataCard's patent on "Method for processing debit purchase transactions
using a counter-top terminal system." In another case, a company
(ironically) called Beneficial Innovations, sued the New York Times, You
Tube and many other media organizations for allegedly violating its
patent on "Method and system for playing games on a network." Therefore
the problem of software patents is not one that is confined to the
software development industry alone and ends up increasing the cost of
software for society as a whole.
The problem is compounded by the fact that litigation is an expensive
process. Dan Ravicher of the Public Patent Foundation points out that
for a patent holder to send a cease-and-desist letter, all it takes is a
post card. However, that inexpensive post card sets off an expensive
chain of events for the defendant who will typically pay a lawyer USD
40,000 to get a legal opinion, around USD 2-4 million in attorney's fees
if the case goes to court and many millions more if the defendant loses
the case in court and is required to pay damages.
The argument in favor of software patents is that patents promote
innovation. The social contract between an inventor and society was that
the inventor disclosed details of the invention in return for the
patent, and this disclosure would lead to future inventions. However,
the history of the software industry shows that innovation flourished
long before software patents came into force during the 1980s. Some of
the fundamental inventions of the computer age—the Internet, compilers,
spreadsheets etc--were created despite the lack of patent protection. It
is therefore clear that patent protection
is not necessary for innovation in the software industry.
As with any other monopoly, a patent must be treated with great
discretion, especially since this particular monopoly is bestowed by the
state itself. The act of granting a 20 year exclusive right to profit
from an idea to a private entity needs to be weighed against the cost
that it imposes on society. Since software and business method patents
prevent independent invention, do not function well as a system of
property and lead to increased litigation, India must comprehensively
reject it.
Hariharan is Corporate Affairs Director at Red Hat.
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