An afternoon among the patent lawyers

Should software patents exist?

It should come as little surprise that a panel full of patent lawyers turns out to be supportive of the idea of software patents. Of all the panellists present, only Jason Mendelson was truly hostile to patenting software, and even he stopped short of saying that they should not exist at all. The first speaker, though, was John Duffy, who cited language in a 1952 update to the patent code stating that "a patentable process includes a new use of an old machine." That language, he says, "fits software like a glove." So there is, he says, no basis for any claims that software patents are not allowed by current patent law.

Beyond that, he says, the attempts to prevent the patenting of software for many years did a great deal of damage. Keeping the patent office away from software prevented the accumulation of a proper set of prior art, leading to the current situation where a lot of bad patents exist. Software is an engineering field, according to Duffy, and no engineering field has ever been excluded from patent protection. That said, software is unique in that it also benefits from copyright protection. That might justify raising the bar for software patents, but does not argue against their existence.

Damien Geradin made the claim that there's no reason for software patents to be different from any other kind of patent. The only reason that there is any fuss about them, he says, is a result of the existence of the open source community; that's where all the opposition to patents comes from. But he showed no sign of understanding why that opposition exists; there is, he says, no real reason why software patents should be denied.

Kevin Luo, being a Microsoft attorney, could hardly come out against software patents. He talked at length about the research and development costs at Microsoft, and made a big issue of the prevalence of software in many kinds of devices. According to Mr. Luo, trying to make a distinction between hardware and software really does not make a whole lot of sense.

Beyond their basis in legislation, patents should, according to the US constitution, serve to encourage innovation in their field. Do software patents work this way? Here there was more debate, with even the stronger patent supporters being hard put to cite many examples. One example that did come up was the RSA patent, cited by Kevin Luo; without that patent, he says, RSA Security would not have been able to commercialize public key encryption. Whether this technique would not have been invented in the absence of patent protection was not discussed.

Mr. Geradin noted that software patents are often used to put small innovators out of business, which seems counter to their stated purpose. But, he says, they can also be useful for those people, giving them a way to monetize their ideas. Without patents, innovators may find themselves with nothing to sell.

Jason Haislmaier claimed, instead, that software patents don't really create entrepreneurship; people invent because that is who they are. And he noted that software patents are especially useless for startup companies. It can currently take something like seven years to get a patent; by that time, the company has probably been sold (or gone out of business) and the inventors are long gone. Jason Mendelson, who does a lot of venture capital work, had an even stronger view, using words like "worthless" and "net negative." He claimed that startups are frequently sued for patent infringement for the simple purpose of putting them out of business.

What's wrong with the patent system?

In general, even the panellists who were most supportive of the idea of software patents had little good to say about how the patent system works in the US currently.

For example, Michael Meurer, co-author of Patent Failure, has no real interest in abolishing software patents, but he argues that they do not work in their current form. Patents are supposed to be a property right, but they currently "perform poorly as property," with software patents being especially bad. That, he says, is why software developers tend to dislike patents, something which distinguishes them from practitioners of almost every other field. Patents are afflicted by vague language and "fuzzy boundaries" that make it impossible to know what has really been patented, so they don't really deliver any rewards to innovators.

Mr. Meurer also noted that software currently features in about 25% of all patent applications. That is a higher percentage than was reached by other significant technologies - he cited steam engines and electric motors - at their peak.

Mark Lemley talked a bit about the effect of software patents on open source software. Patents are a sort of arms-race game, and releasing code as open source is, in his words, "unilateral disarmament." He talked about defending open source with the "white knight" model - meaning either groups like the Open Invention Network and companies like IBM. He also noted that patents provide great FUD value for those opposed to open source.

A related topic, one which came up several times, is "inadvertent infringement." This is what happens when somebody infringes on a patent without even knowing that it exists - independent invention, in other words. John Duffy said that the amount of inadvertent infringement going on serves as a good measure of the health of the patent system in general. In an environment where patents are not given for obvious ideas, inadvertent infringement should be relatively rare. And, in some fields (biotechnology and pharmaceuticals, for example), it tends not to be a problem.

[PULL QUOTE: Actual copying of patented technology is only alleged in a tiny fraction of software patent suits. In other words, most litigation stems from inadvertent infringement. END QUOTE] In the software realm, though, inadvertent infringement is a big problem. Mark Lemley asserted a couple of times that actual copying of patented technology is only alleged in a tiny fraction of software patent suits. In other words, most litigation stems from inadvertent infringement. Michael Meurer added that there is a direct correlation between the amount of money a company spends on research and development and the likelihood that it will be sued for patent infringement. In most fields, he notes, piracy (his word) of patents is used as a substitute for research and development, so one would ordinarily see most suits leveled against companies which don't do their own R&D. In software, the companies which are innovating are the ones being sued.

The other big problem with the patent system is its use as a way to put competitors out of business. Rather than support innovation, the patent system is actively suppressing it. Patent litigator Natalie Hanlon-Leh noted that it typically costs at least $1 million to litigate a patent case. John Posthumus added that no company with less than about $50 million in annual revenue can afford to fight a patent suit; smaller companies will simply be destroyed by the attempt. Patent lawyers know this, so they employ every trick they know to stretch out patent cases, making them as expensive as possible.

Variation between the courts is another issue, leading to the well-known problem of "forum shopping," wherein litigators file their cases in the court which is most likely to give them the result they want. That is why so many patent suits are fought in east Texas.

What is to be done about it?

Michael Muerer made the claim that almost every industry in the US would be better off if the patent system were to be abolished; in other words, patents serve as a net drain on the industry. But, being a patent attorney, he does not want to abolish the patent system; instead he would like to see reforms made. His preferred reforms consist mostly of tightening up claim language to get rid of ambiguities and to reduce the scope of claims. He would like to make the process of getting a patent quite a bit more expensive, putting a much larger burden on applicants to prove that they deserve their claims.

Mr. Muerer went further and singled out the independent inventor lobby as being the biggest single impediment to patent reform in the US. In particular, their efforts to block a switch from first-to-invent to first-to-file priority (as things are already done in most of the rest of the world) has held things up for years. What the lobby doesn't realize, he says, is that if the patent system works better for "the big guys," they will, in turn, be willing to pay more for patents obtained by the "little guys." This sort of trickle-down patent theory was not echoed by any of the other panelists, though.

Part of the problem is that the US patent and trademark office (PTO) is overwhelmed, with a backlog of over 1 million patent applications. So patent applications take forever, and the quality control leaves something to be desired. Some panellists called for funding the PTO at a higher level, but this is unlikely to happen: the number of patent applications has fallen in recent times, and there is a possibility that some application fees will be routed to the general fund to help cover banker bonuses and other equally worthy causes. The PTO is likely to have less money in the near future.

And, in any case, does it make sense to put more money into the PTO? Mark Lemley is against that idea, saying that the money would just be wasted. Most patents are never heard from again after issuance; doing anything to improve the quality of those patents is just a waste. Instead, he (along with others) appears to be in favor of the "gold-plated patent" idea.

Gold-plated patents are associated with another issue: the fact that, in US courts, patents have an automatic presumption of validity. This presumption makes life much easier for plaintiffs, but, given the quality of many outstanding patents, some people think that the presumption should be revisited and, perhaps, removed. Applicants who think they have an especially strong patent could then apply for the gold-plated variety. These patents would cost a lot more, and they would be scrutinized much more closely before being issued. The idea is that a gold-plated patent really could have a presumption of validity.

Others disagree with this idea. Gold-plated patents would really only benefit companies that had the money to pay for them; everybody else would be a second-class citizen. Anybody who was serious about patents would have to get them, though; they would really just be a price hike in disguise.

There was much talk of patent reform in Congress - but little optimism. It was noted that this reform has been held up for several years now, with no change in sight. There was disagreement over who to blame (Mark Lemley blames the pharmaceuticals industry), but it doesn't seem to matter. John Duffy noted that the legislative history around intellectual property is "not charming"; he called the idea that patent law could be optimized a "fantasy." Mark Lemley agreed, noting that copyright law now looks a lot like the much-maligned US tax code, with lots of specific industry rules. Trying to adapt slow-moving patent law to a fast-moving industry like software just seems unlikely to work.

What Mark suggests, instead, is to reform patent law through the courts. Indeed, he says, that is already happening. Recent rulings have made preliminary injunctions much harder to get, they have raised the bar for obviousness, restricted the scope of business-model patents, and more. Most of the complaints people have had, he says, have already been fixed.

John Duffy, instead, would like to "end the patenting monopoly." By this he means the monopoly the PTO has on the issuing of patents. Evidently there are ways to get US-recognized patents from a few overseas patent offices now, and those offices tend to be much faster. He also likes the idea of having private companies doing patent examination; this work would come with penalties for granting patents which are later invalidated. Eventually, he says, we could have a wide range of industry-specific patent offices doing a much better job than we have now.

Conclusion

There was a brief discussion of the practice of not researching patents at all with the hope of avoiding triple damages for "willful infringement." The participants agreed that this was a dangerous approach which could backfire on its practitioners; convincing a judge of one's ignorance can be a challenge. But it was also acknowledged that there is no way to do a full search for patents which might be infringed by a given program in any case.

All told, it was a more interesting afternoon than one might expect. The discussion of software patents in the free software community tends to follow familiar lines; the people at this event see the issue differently. For better or worse, their view likely has a lot of relevance to how things will go. There will be some tweaking of the system to try to avoid the worst abuses - at least as seen by some parts of the industry - but wholesale patent reform is not on the agenda. Software patents will be with us (in the US) for the foreseeable future, and they will continue to loom over the rest of the world. We would be well advised to have our defenses in place.