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Software Patents and their Effect on Innovation

To What Extent is Software Patentable?. Are the building blocks of software (algorithms, user interfaces, etc) patentable?Are software patents necessary for the software industry in the same way that they are for other industries?. Who Benefits from Software Patents?. Does the consumer benefit from

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Software Patents and their Effect on Innovation

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    1. Software Patents and their Effect on Innovation

    2. To What Extent is Software Patentable? Are the building blocks of software (algorithms, user interfaces, etc) patentable? Are software patents necessary for the software industry in the same way that they are for other industries?

    3. Who Benefits from Software Patents? Does the consumer benefit from software patents, or do corporations benefit? Mutual benefit from software patents can be linked to an increase in innovation Consumers benefit as better software is released Corporations benefit from a more competitive and profitable environment

    4. What is a patent? According to the USPTO, it is an exclusive right granted to an inventor for any new and useful Process (e.g. Industrial Process) Machine Manufacture (any manufactured article) Composition of Matter A useful improvement to any of the above

    5. What is a patent? “Useful” means that it must do what it is intended to do Filing a patent brings details of the invention into the public domain A patent grants a “negative right” A patent grants the right to the holder to exclude others from producing, selling or using the patented invention

    6. Example Bob invents a widget and obtains a patent for it Tom improves upon Bob’s widget and obtains a patent for his improvement Tom can obtain permission from Bob to use/sell his improved widget Bob must obtain permission from Tom to use Tom’s improved widget design

    7. Effect on Innovation Previous example illustrates the rationale behind patents Details of the invention are made available to the public Improvements can be made to the invention This process stimulates innovation and growth in the widget industry

    8. Are the benefits applicable to software? Software patents can be very vague and wide-ranging System has potential to be abused for software Innovation may be stifled under software patents

    9. Early Computing Early computers were specialized machines Software wasn’t portable, it was tied to the machine that it was run on Software was considered a mathematical algorithm implemented by the machine, and hence was unpatentable

    10. Modern computing As software becomes portable, and computers become more general-purpose software is seen as a separable entity from the machine that it runs on Software in and of itself becomes a patentable intellectual property

    11. Software Industry Without Patents Example: Xerox PARC PARC develops GUI, WYSIWG, Ethernet PARC does not attempt to patent or protect its innovations Steve Jobs tours PARC in 1979, obtains inspiration for Apple Macintosh Ethernet developer Rob Metcalfe leaves PARC and starts 3Com

    12. Software Industry Without Patents Result: Apple’s development of GUIs for the Mac spurs development from other companies Ethernet is an open protocol, which helps bring about development of network technologies in the 90s. Xerox didn’t protect or market their innovations, so they lost out

    13. Software Industry Without Patents Pros: Robust R&D operations are undertaken, profitable businesses spring up No one company can claim a monopoly under a particular innovation, increases competition Cons: Small companies can be squeezed out of the market by larger ones

    14. The Shift to Software Patents Gottschalk v. Benson (1972) Benson developed an algorithm for converting base 10 to binary Patent was rejected on the basis that it was a mathematical algorithm Court agreed, granting a patent to all uses of a mathematical equation/algorithm within a computer would be like granting Morse a patent for all possible uses of magnetism to communicate

    15. The Shift to Software Patents Diamond v Diehr (1981) Diehr developed a machine that cured rubber through a computer controlled process The computer algorithm was an integral part of the invention Court ruled in favor of Diehr, stating that his invention is patentable This ruling did *not* overturn Gottschalk v. Benson

    16. The Shift to Software Patents In re Appalat (1994) Case centered around Tektronix’s patent of an antialiasing method for displaying waveforms on a raster display Court sided with Tektronix This case established software as patentable

    17. Software Industry with Patents Example: Quickview and Zoomracks Former PARC researcher develops and patents a “rack and card” system allowing users to snap together various multimedia data into a working application Calls his program Zoomracks, starts a company “Quickview” and releases it for the Atari ST The Atari ST is a flop, and Quickview is in trouble

    18. Software Industry with Patents Apple computer, who had seen Zoomracks under NDA, releases their own version of “rack and card”, Hypercard Quickview takes Apple to court, settles with Apple licensing Quickview’s patent Quickview is saved financially, and now has a source of income

    19. Software Industry with Patents IBM has a Hypercard clone, refuses to license Quickview’s patents IBM has far more resources than Quickview and Quickview is forced to back down IBM continues to bundle it’s Hypercard clone free with new PCs

    20. Software Industry with Patents Pros: Smaller company was able to obtain a revenue stream from larger companies licensing its technology Licensing of patents gives companies an incentive to innovate Cons: Larger companies with more litigation resources were able to squeeze smaller ones out of the loop

    21. Software Patents Today 15 Percent of all patents are now software patents Only 5 percent of those patents are held by companies that actually write software

    22. Problems with Software Patents Today Many software patents are held by pure-litigation companies (‘patent trolls’) that acquire as many broad ranging patents as possible Harms open-source software Freetype Eolas May actually decrease R&D output as companies put more resources into defending patents

    23. Ethical Analysis Kantianism If we make a moral rule regarding patenting software, we find no conflict under the first categorical imperative The second categorical imperative becomes difficult as we are left with the question “who is treating who as a means to an end?”

    24. Ethical Analysis Act Utilitarianism Does the action of patenting software produce an increase in utility? Yes, it does. The details of the software are made a matter of public record, developers have a means to protect their intellectual property, and hence have an incentive to innovate

    25. Ethical Analysis Rule Utilitarianism If we evaluate the utility of a moral rule regarding software patents, we see evidence for a net decrease in utility Much of this is caused by the potential for the system to be abused

    26. Ethical Analysis Social Contract Theory People may not create anything of value without rules and a means to enforce them The current system is inherently unequal (large corporations have more power than small businesses) Right to own property may actually be violated by vague patents Inequalities may not benefit least advantaged members of society

    27. Conclusion Software patent system currently has ethical problems due to loopholes Innovation in the software industry is stifled by these problems Possible solutions: Make it more difficult to obtain broad patents Make litigation more difficult Abolish software patents altogether

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