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Do Software Patents Work?

7dUuM63-S-YPhR9jn0ySd94zkEfNF3TS_8dtrygeqhtKAQAA6wAAAEpQ_260x196If you ask what is wrong with the current patent system, most people might cite problems with low quality patent or patent trolls. However, a recent research from the Government Accountability Office presents a more specific problem: software patents don’t work.

More and more patent litigation

The amount of software patents has skyrocketed in the last two decades. In the year of 1991, software-related patents only accounted for less than one quarter of all the patents issued by the U.S. Patent and Trademark Office. However, in 2011, for the first time ever, the software-related patents accounted for the majority of all the patents issued:

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The increase in patent litigation is a more recent phenomenon. The report from GAO noted:”The overall number of defendants in patent cases increased by approximately 129 percent from 2007 to 2011. Lawsuits involving software-associated patents accounted for around 89 percent of the rise in defendants during the period.”

 By6edmnzLBhCNmXD45qzKORi90L-loBVadJ7yw-Bj_rtAgAAmwEAAFBO_645x353Image source:gao.gov

Although patent trolls get a disproportionate amount of press, interestingly, the GAO found very little evidence that these trolls were responsible for the patent litigation growth.  During the past five years, the percentage of lawsuits initiated by trolls, who are patent monetization entities, and non-trolls, who are operating companies, have not changed significantly. In another word, we have no reason to conclude that the recent increase in patent litigation is due to the patent trolls.

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Image source:gao.gov

The major cause of the increasing litigation

The real and major cause for the phenomenon is that patents from both trolls and non-troll companies keep increasing and they are much more prone to litigation that other patent categories.

One of the reason for the more and more litigation is that software is now widely applied in all fields. For instance, even retail businesses have suddenly begun facing software-patent lawsuits.

A representative from a retail company said that historically, they would face patent infringement lawsuits, all of which used to be related to products they sold. However, as of mid-2002, half of the lawsuits against the company were associated with e-commerce software that the company uses for its shopping website, for example, software that allows customers to locate stores on the website. The same thing also happens in other field. For example, city public transit agencies have been sued for allegedly infringing patents by using software for real-time notifications on public transit arrival.

The GAO noted that a lot of recent patent infringement lawsuits are related with the prevalence of low quality patents. Such patents generally define unclear property rights, excessively broad claims, or both of them.  Although inherent uncertainty exists for patent claims, some of the stakeholders with this opinion pointed out that claims in software patents are too broad, unclear or both.

Why the quality of software patent is so low? The GAO speculates that “using language to describe emerging technologies like software, might be inherently inaccurate because these novel technologies are continuously evolving.” Another possible reason is that claims in software patents sometimes define their scope of invention via encompassing the entire function, such as sending emails, instead of the specific means of achieving that function.

Another issue: the complexity and rapid development cycle of software makes it impractical to research. The GAO noted:” Representative from a startup software company told us that searching for relevant patents prior to developing a new product is unrealistic and diverts resources that are already scarce, especially when the product development process can be as short as 2 months. Some venture capital and software startup companies said that they don’t always apply for patents until their firms are well established, because patent attorneys are too expensive and time consuming. They also note that comparing with the cost of applying for patents, the R&D cost is relatively low. Therefore, there is minimal incentive in the industry of software to apply for patents in order to recoup R&D costs.

This is very different from the pharmaceutical industry. The GAO points out that “some representative from the pharmaceutical industry said that patents are really crucial for them because developing a new drug can cost as much as $1 billion and 10 to 15 years, while acquiring patents is able to recoup the costs for them.”

The GAO recommends some modest alternations to improve the quality of software-related patents, such as amending the law to “require more details for algorithms” in software patents. However, the policy makers could consider a more radical option: completely eliminating software patents. In the final analysis, there is little evidence that software patents are helpful in promoting innovation in software, while there are plenty of evidence that they impede it.

This is more than an abstract probability. Recently, New Zealand voted to ban software patent. The new patent law emphasizes that computer program is not an invention; if the computer program is just a realization of the patentable process, then this process is able to be patented. For example, if there is a better method to improve the process of washing clothes and it can be realized through computer software, then it is patentable; if an inventor just developed a software to help people deal with legal documents, then the software is not patentable. In the same time, the European Union is debating whether to allow patents of software for more than a decade, under a strong grass-roots movement pushing to ban them.

SourceThe Washington PostNew Zealand just abolished software patents. Here’s why we should, too.

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