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The US Patent System in Flux?

The US Supreme Court today issued its opinion in the case most people know as "In Re Bilski". Although there is actually much more to it, this case is about whether business processes can be patented. A lot of people (mostly large corporates) have a lot riding on the patentability of business processes, so this is an important opinion, it has the ability to fundamentally change the US patent system. The software industry is interested in this case because there is the side issue of whether software is patentable. Currently the US system allows software to be patented, but many, for example http://endsoftpatents.org/, think this is wrong. The UK patent system technically does not allow software patents, but is coming under increasing pressure (mostly from big US corporates) to allow them. The EU patent system appears already to have succumbed to pressure (mostly from big US corporates) to allow software patents, which leads to real problems in the EU since there is conflict between the two systems. The correct outcome would be for EU Patent Office to agree that software itself cannot be patented and for the UK Patent Office to reaffirm that this is its position.

Why are people worrying about business and software patents? Patents are weird things in that you can be in violation of the law without knowing it. A patent is a legal instrument given to someone to create a monopoly on exploitation of an invention. The patent holder can licence others to manufacture and sell products based on the invention. Anyone found to be manufacturing a product that uses the same information as in the patent documentation is in violation of the patent and can be sued in the courts. Not only does this lead to (potentially huge) damages, but there are the costs as well. The really important issue here is that ignorance is not a defence: you can be guilty of violation of the patent even if you didn't know the patent existed. Even if you didn't know anything about the invention that was patented you can still be in violation of a patent.

Some people argue that patents are tools for small players to benefit from inventions. Someone can create an invention but not have the resources to exploit it. By taking out a patent they can benefit by getting a big player who does have the resources to manufacture and sell product based on the invention to do so and pay royalties to the inventor. Whilst this scenario is possible, and indeed does happen, it is no longer the real purpose of the patent system.

Patents are now tools for businesses to do business with each other, and to ensure their ability to stop new players from entering into a market, i.e. to preserve monopoly positions against all comers. Businesses build up patent portfolios as an offensive or defensive measure.

  • As offence you create (or more usually buy) patents and then search round all the products on sale looking for ones that violate (or appear to violate) your patent. You then threaten to sue the manufacturers of violating (or apparently violating) products unless they pay royalties. If they don't pay up you then actually do sue them if you think you can win - notice the patent holder may not actually believe they can win, they may just have been trying it on. Without the patent involved this sort of behaviour would be labelled extortion or demanding money with menaces and be a criminal offence, but with the patents it is a business process.
  • As defence you stockpile patents that others might find useful so that when an organization approaches you wanting to talk to you about some product or other, you have bargaining chips so you can cross licence patents you are interested in for zero cost enabling you to make products that otherwise you would not be able to because of the need to make royalty payments.

The only defence for a small organization against a patent is "prior art" or proof that the invention is obvious - large organization generally have patent portfolios and can find a patent the other party is interested in so can do a deal. Any legal action is hugely costly - this is the main barrier, unless you have deep pockets you cannot afford to enter into any legal action. Patents are tools for big organizations.

OK so that is the backdrop, why are software developers worried?

Let's use an extreme example. Say I took out a patent on the for loop being used to create the sum of values in a sequence:

var sum = 0.0 for ( item in sequence ) { sum += item }

As soon as I have my patent in a given jurisdiction, everyone who uses code such as this in that jurisdiction owes me royalties for every use - and remember this is true even if they didn't know that there was a patent granted in this.

So in a world with software patents what role is there for the independent developer of software? There isn't one. Large corporates would be the only people capable of developing any software because only large corporates have the resources to take a playable position in the patent wars. It's no wonder that the large corporates want software patents, they want to kill off free and open source software. The large corporates want a world in which they control all software.

Unless you are one of the monopolistic corporates desperate to remove all potential opposition, you should be against software patents.

Reports to date seem to indicate that "In Re Bilski" finds that the Bilski process patent is not allowed, but they have not offered an opinion on business processes in general and definitely not on software patents. So this is not a close, just the beginning of the next phase of activity.

_ I am not a lawyer, the above is not a legal opinion, just my understanding as a person involved in software development. _

Groklaw is also a good place to follow this sort of thing.


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