Software Patents Are A Frustrating Mess

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The recent news that Yahoo was suing Facebook for patent infringement unleashed a torrent of blog posts and tweets. Many felt that Yahoo, once an Internet startup itself, had crossed the line by suing another startup. While it may eventually pay dividends, assuming the role of a patent bully has the potential to turn the entire industry against the company.

Another company, AOL, is dealing with a group of activist investors that also wants to see the company unleash its arsenal of software patents on the media and technology industry. Over the next few years we could see the portals wage a litigious war of mass destruction. The result could stifle innovation and exacerbate a situation that is already a significant burden on the media and technology industry.

At the root of all of this is a patent system that appears broken. Technology startups are often encouraged to obtain patents to prove that they own defensible intellectual property, thus making the company more valuable to investors. This process of filing patents requires time and money -- the two resources that are in shortest supply at a startup. In a best-case scenario, it can take years to get a patent --if you get one at all.

Larger technology companies acquire patents through the startups that they buy, as well as their own patents they get through the course of developing new products. Over time, companies like Yahoo and AOL amass a great stockpile of patents. The temptation, which Yahoo has given in to, is to make money by successfully suing other companies.  

And then there are other companies that do nothing but acquire software patents for the sake of suing any company of means that could conceivably be infringing on their “rights.” These patent trolls don’t make or do anything with the patents other than sue people over them.

The practice has become so pervasive that when a technology startup is acquired, often 10% of the purchase price is put into escrow to cover any potential patent lawsuits. If a patent troll does sue, those millions of dollars are paid out to the lawyers over a number of years as they endlessly litigate the case. The result is a tax on business, through which neither the entrepreneurs nor the investors that built the company benefit.

Surely this was not the intention when the patent system was created.

The problem with software patents today is that they are being used to protect ideas, not just designs. Yahoo ’s suit includes patents for things like “an ability to share things with certain friends,” “messaging your friends,” and “customizing a home page.” These ideas are so broad and widely adopted that if Yahoo were to win its suit, it could set back innovation in media and technology industry for years. With all the risks associated with starting a company, who is going to build the next Facebook or Pinterest if they think the reward for being successful will be to be sued into oblivion?

Software, like art, is the crafty combination of many ideas and styles, all of which are based on other ideas and styles. This process of mixing different elements to create something new is the same whether it is a painting, a piece of music or software. In this way, software is really just another form of self-expression.

What we need to do is treat software as art. Copyright law and design patent law are constructed to protect specific designs and expressions, not ideas. This would mean, for example, that the Yahoo home page could not be copied, pixel for pixel, but the ideas that underlie it could be shared freely, without threat of a lawsuit.

It’s time to end software patents and treat software as art.

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7 comments on "Software Patents Are A Frustrating Mess".

1. Paula Lynn from Who Else Unlimited
   

   commented on: March 19, 2012 at 1:58 p.m.
   Isn't there a time limit on patents ? If not or they are too long, then shortening would help, but I really can't picture that happening with such legal and lobbying against it. Or can you imagine trust fund babies giving up a patent ;) If a patent is not used lets say within 2 years , then no one ever has that patent and it is good to go for all, but there are devils in those details, too. I hope you can find the correct technical balance.
2. Robert Repas from Machine Design Magazine
   

   commented on: March 19, 2012 at 2:12 p.m.
   Once upon a time, way back when, software was copyrighted. Patents for software or "ideas" (nontangible items) were not allowed. Then some upstart sued the patent office, and a really misinformed judge declared you could patent ideas based on business operations. The floodgate was opened to the disaster we now see unfolding. One of the key rulings in determining a patent is that the item had to be a new, nonobvious, and useful process, machine, article of manufacture, composition of matter, or improvement of any of those. The key here is "nonobvious." Out of all patents on software processes I've seen filed 99.999% are quite obvious to someone who knows software and system operation. Unfortunately, those making the determination in the patent office have little to no experience in software design or operations. They go by what they're told by the person or company applying for the patent. Of course that company is going to say it's nonobvious, even when I myself may have thought of it a decade earlier. Gee, maybe I should've filed a patent. But back then, I thought it was an obvious extension of pre-existing work.
3. Kaila Colbin from Missing Link
   

   commented on: March 19, 2012 at 4:32 p.m.
   GREAT column. The whole point of patents is to encourage innovation by protecting innovators and making sure they can get rewarded for their hard work. As you rightly point out, the current system achieves exactly the opposite of its intended purpose.
4. Doug Garnett from Atomic Direct
   

   commented on: March 19, 2012 at 6:04 p.m.
   Just to offer an alternative view (because in truth I'm pretty torn on this issue). There are startups and their venture firms behind them who target knock-off work because then they can reap profit from someone else's investment. Probably more numerically than the big guys who abuse patent law in this way. What I fear is a groundswell that ends with abandonment of restrictions that effectively protect innovations - which would stop investing in new work. All this to observe that it's really quite complicated - and far more than noted herein.
5. Robert Zager from iconix, inc.
   

   commented on: March 19, 2012 at 9:56 p.m.
   I have been doing M&A as a lawyer for over 30 years. Indemnity escrows are nothing new. Patents are just one of the concerns covered by escrows. The protections afforded by copyright and patent are completely different. Copyright protects the expression, not the idea. It is pretty easy to circumvent a copyright because all you need to do is a cleanroom engineering project to avoid copyright infringement. Patent protects the idea and independent development is not a defense to patent infringement. The sustainable competitive advantage afforded by a copyright is nominal. The sustainable competitive advantage afforded by a patent is substantial. If an "invention" is truly obvious, then it cannot be patented. If the examiner issues a patent to an idea that is obvious, the patent, if the invention is really obvious, will be invalidated in litigation.
6. Gwyneth Llewelyn from Beta Technologies
   

   commented on: March 20, 2012 at 7:15 a.m.
   Over here in Europe, until recently, the EU fought software patents on all fronts. Software was always considered "art" — that is, protected by copyright laws. In the 90s there was a big fuss around cryptography because its description was published academically and in the public domain, and its implementation was done either on open source libraries or commercial ones which were protected under copyright — but US companies thought that cryptography was way too interesting as a business to "allow" crypto software to be "merely" protected by copyrights... vendors used to ship different versions of their software using cryptographic libraries, depending if the software was to be sold in the US and Europe. We've overcome that mess, but "patented software" became ubiquitous, to the extent that these days European patent offices are accepting applications as well. Surprisingly, the first to apply seem to have been... universities. Because of the way academic funding works, universities having a lot of patents in their name get more money. So computer science departments have been filing software patents like crazy. But of course corporations are joining the bandwagon: big US patent law firms had already established offices throughout Europe, half a decade ago, in preparation for the big reaping of income from a market that is twice as large as the US market. Europe, once the last bastion against software patents, crumbled before the impetus of the all-powerful US patent law firms, and it seems unlikely that there is a U-turn ahead. @Paula, in most countries, patents expire after 10 or 15 years and then become public domain. Patent lawyers are aware of that, so they just tweak the wording lightly and resubmit a new patent. Patent offices are supposed not to let that happen, but they have their hands against the muzzles of lawyer guns and pretty much accept everything. There is simply too much money at stake these days. The irony is that in a decade or so, the only way to innovate might be to sell software applications from "data safe havens" like Russia or even China, where software patents are laughed at... how this will impact the world-wide software development market is hard to predict. Right now, big megacorps still have plenty of money to invest in innovative development and fight patent wars, making lawyers rich. So innovation can only come from them, and, to a lesser degree, from some academic institutions wealthy enough to hire lawyers. The small-scale startup, once the source of the most dramatic innovations in the computer industry (do you remember how Microsoft, Apple, and Google started?), will be roadkill in the software development highway and a thing of the past. And we're powerless to prevent that.
7. Bruce May from Bizperity
   

   commented on: March 20, 2012 at 1:56 p.m.
   Robert Repas hit the nail on the head. The idea of patents in the industrial age made perfect sense. It was clear in almost every case whether an invention was obvious or not. Now that we can patent processes there has been a tidal wave of bogus patents. Again, Robert hits the hail on the head when he points out the patent office is not competent to evaluate such ideas... but who is? Where do you draw the line between obvious and non-obvious? What’s obvious to me may not be obvious to you. Too often this looks like a race to the bottom where the dumbest, silliest ideas get patent protection. When these ridiculously stupid ideas are buried deep inside proprietary code that is hardly open to public viewing, what safeguard is there against bogus patent claims? Would you be happy to pay a user fee for the right to pull on your shoes because some fool claims he invented the process? That may seem like a farfetched example but when you get into the code there are plenty of equally ridiculous claims. Of course the silliness isn’t all lying hidden inside software code. Clear Channel claimed that it created a monopoly on a process to create post-concert digital recordings and threatened to sue anyone who tried to do that without their service. Thankfully, the U.S> Patent and Trademark Office e (PTO) revoked the patent. Virtually any band could do this for themselves with equipment they are likely to already own. This shows just how far some are willing to go to claim ownership of common processes that anyone is likely to create on their own in the real world. The claims for hidden secrets buried deep inside someone’s proprietary code are likely to be even more farfetched than this. We need to all work together to create better law which was written in the first place to stimulate creation and innovation, not stifle it.

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