Do Software Patents Stifle Innovation?

Fred Wilson, a managing partner of Union Square Ventures, recently pointed out that most software patent lawsuits are brought against young, emerging companies. These companies often invent products without any prior knowledge of an existing patent. As such, Wilson and other industry experts have claimed that software patents stifle innovation. Instead of protecting actual intellectual property, they block competition and squelch new creative products.

Oracle v. Google

Oracle v. Google began when Oracle filed suit in federal court claiming that it held a patent on the Java programming language, which it acquired after purchasing Sun Microsystems. If Oracle had succeeded, then every application that utilized Java would have been in violation of Oracle’s patent. However, the federal court ruled that Oracle could not patent a programming language. While Oracle compared writing code to writing a piece of music, the court ruled that computer languages were only means of communication. In other words, patenting programming languages is like trying to patent the notes on a music staff.
The court also ruled that APIs, as tools that allow programs to communicate with each other, were not creative works that companies could copyright. While Oracle is appealing the copyright verdict, most observers predict that the company’s effort will fail. The federal court’s opinion correctly observed that Java, as an open-source language, was neither novel nor non-obvious. While Google did pay a small settlement for copying some Java code line-by-line into its Android platform, the court did not protect Java itself.

The Problem With Software Patents

In the U.S., patents are designed to cover inventions that are both “novel” and “non-obvious.” In other words, patented software should include elements that would not be obvious to anyone skilled at developing software. Unfortunately, as the Government Accounting Office (GAO) pointed out in an August 29 study, the abundance of low-quality patents is fueling the proliferation of patent lawsuits. Low-quality patents tend to include unclear property rights and overly broad claims.
In August 2013, the New Zealand Parliament banned software patents after a contentious five-year debate. Software itself, Parliament ruled, is not an invention. For instance, if software is used to improve an existing piece of hardware, such as software that helps to lessen electrical use by a washing machine, then the improvement itself is patentable, but the software is not. When ruling on Oracle v. Google, Judge William Alsup issued a similar opinion. He said that a software program with a one-of-a-kind function could be patented, but the focus of the patent was the program’s function, not its code.

Why Software Patent Quality Is So Low

The GAO lists three main reasons for low software patent quality. First, the language used to describe software has an inherent flaw. Because technology changes so rapidly, language has to be vague and imprecise to provide room for the software to evolve. Second, patents are being issued that allow software companies to improperly define the scope of their program. Instead of patenting a specific means of performing a function, such as a unique way of sending email, software companies try to claim that they invented the whole emailing process.
Third, the research and development (R&D) process for issuing new software can be as short as two months. For this reason, software companies have no time to research relevant patents. Also, because obtaining a patent costs so much more than R&D, most companies push their software to market and apply for a patent as an afterthought. In many cases, R&D costs are so low that spending a large amount to retain a patent defeats the purpose of offsetting R&D costs.

The Future of Software Patents

New Zealand has banned software patents, and the European Union may do the same. Some in the U.S. have suggested patent reform, but others want to abolish patents altogether. To have different patent benchmarks for different industries would make an already complex system almost impossible to navigate.
Companies have every right to license their software products. Licensing covers usage, but it doesn’t affect competitor innovation. As TechStars co-founder Brad Feld has said, holding software patents to the novel and non-obvious standard would cause 99 percent of all software patents to be immediately denied. The only beneficiaries of the current system are patent attorneys and patent trolls.
About the Author: Preston Thompson is an expert on patent infringement and other patenting issues. He recommends SafeNet software protection.