Tim Lee (Not Tim Berners-Lee!) on Software Patents

Matthew Yglesias sends us to:

A Patent Lie: Last month, the technology world was abuzz over an interview in Fortune magazine in which Bradford Smith, Microsoft’s general counsel, accused users and developers of various free software products of patent infringement and demanded royalties. Indeed, in recent years, Mr. Smith has argued that patents are essential to technological breakthroughs in software.

Microsoft sang a very different tune in 1991. In a memo to his senior executives, Bill Gates wrote, “If people had understood how patents would be granted when most of today’s ideas were invented, and had taken out patents, the industry would be at a complete standstill today.” Mr. Gates worried that “some large company will patent some obvious thing” and use the patent to “take as much of our profits as they want.”

Mr. Gates wrote his 1991 memo shortly after the courts began allowing patents on software in the 1980s. At the time Microsoft was a growing company challenging entrenched incumbents like I.B.M. and Novell. It had only eight patents to its name. Recognizing the threat to his company, Mr. Gates initiated an aggressive patenting program. Today Microsoft holds more than 6,000 patents.

It’s not surprising that Microsoft — now an entrenched incumbent — has had a change of heart. But Mr. Gates was right in 1991: patents are bad for the software industry. Nothing illustrates that better than the conflict between Verizon and Vonage.... The Gates memo predicted that a large company would “patent some obvious thing,” and that’s exactly what Verizon has done. Two of its patents cover the concept of translating phone numbers into Internet addresses. It is virtually impossible to create a consumer-friendly Internet telephone product without doing that. So if Verizon prevails on appeal, it will probably be able to drive Vonage out of business. Consumers will suffer from fewer choices and higher prices, and future competitors will be reluctant to enter markets dominated by patents.

But don’t software companies need patent protection? In fact, companies, especially those that are focused on innovation, don’t: software is already protected by copyright law, and there’s no reason any industry needs both types of protection. The rules of copyright are simpler and protection is available to everyone at very low cost. In contrast, the patent system is cumbersome and expensive. Applying for patents and conducting patent searches can cost tens of thousands of dollars. That is not a huge burden for large companies like Microsoft, but it can be a serious burden for the small start-up firms that produce some of the most important software innovations.

Yet, as the Vonage case demonstrates, participating in the patent system is not optional. Independent invention is not a defense to patent infringement, and large software companies now hold so many patents that it is almost impossible to create useful software without infringing some of them. Therefore, the only means of self-defense is the one Mr. Gates identified 16 years ago: stockpile patents to use as bargaining chips in litigation. Vonage didn’t do that, and it’s now paying a very high price.

Only patent lawyers benefit from this kind of arms race. And Microsoft’s own history contradicts Mr. Smith’s claim that patents are essential for technological breakthroughs: Microsoft produced lots of innovative software before it received its first software patent in 1988. As more and more lawsuits rock the industry, we should ask if software patents are stifling innovation. Bill Gates certainly thought so in 1991, even if he won’t admit it today.

Comments

[bigTom]

When given a technical problem to solve, software programmers are an innovative lot. Too often what was fairly onvious to them, sounds like a really creative idea to the patent office. Of course others that run into the same problem, are likely to come up with the same solution. If we had to do a patent search, and then negotiate the right to use our ideas, progress would crawl to a well crawl.

I supose M$ maybe thinks they are big enough, that they can be the only one left who can afford to innovate. I guess that is supposed to assure the continuance of their monopoly status.

[John Emerson]

Isaac Singer, the inventor of the sewing machine, was such only because his lawyer, Edward Clark, successfully defended his patents against Elias Howe.

[AP]

Isaac Singer was in no way inventor of the sewing machine. Pioneer of layaway plans, perhaps...

[Real Programmer]

"we should ask if software patents are stifling innovation. "

And we should also ask if the sky is blue. The real question concerns the political possibility of doing anything about it.

[ivan]

Patents creates monopolies and many, if not most economists, would argue that monopolies, especially if they are not the result of superior economic performance, but better performance in the courts, are bad things. Some howerver would say that patents only create monopolies that are temporary. But the economic reality, as the Verizon-Vonage case shows, is different. Competitors are driven out of the market, not because they are less innovative, but only because they are less well equipped legally, while patents also constitute a barrier to entry. So patents can, and in many cases do, hamper competition indefinitely. The economists are right: patents are bad.

[bigTom]

Unfortunately RealProgrammer has a point. Opposing patents is "unAmerican", and so will not fly politically. The best we can do is tinker with the system to try to limit the damage.

[Alex Tolley]

This is part of the expansion of the principle of IP. We have seen this in software, patenting living things, mathematical algorithms and business processes. Copyright isn't much help because it is being extended until it resembles physical property.
I've looked at some software patents and they are ridiculous. Most probably wouldn't hold up under challenge, but as a S/W engineer, I am aware that almost anything I code probably has infringements embedded in it. On the plus side, the attempt to enforce the patent on GIF files nearly killed this image format, and similar attempts to do so for jpeg has driven the development of PNG.
I think there are enough economic analyses to show that S/W patents are on balance negative, but I agree with Real Programmer, the issue is now how we reverse this. The EU has made some steps in life sciences which may eventually overturn gene patents. I don't expect to see much movement until powerful economic interests are nullified - that includes some industries, e.g. entertainment and some countries, e.g. the US. We can already see the effects on entertainment - Hollywood is forced to license more and more stuff to make a movie, which eventually will force them to rethink the copyright issue. In SW, patents are mainly bargaining chips, although a few cases, such as the recent RIM Blackberry example show how patents can undermine a company. SCO tried to undermine Linux and lost, and Microsoft is threatening similar action - which many expect it to lose too.

[RW]

As the system of economic rents -- and, perhaps more importantly, the ability to extend scope and enforce extortion of same -- grows ever stronger we may reach a point where the notion of productivity is simply turned on its head and, coincidentally, innovation becomes utterly stifled.

It seems arguable that we may already be very near that point WRT cutting edge technology which makes regions of the world where 'intellectual property rights' receive less 'respect' potentially more competitive.

As in so many things a balance needs to be struck somewhere but the current trend is not promising.

[real person from the real world]

Someone once said: We all stand on the shoulders of those that came before. Creativity and innovation travel many paths, some of which may include using something else that is out THERE already, to build upon. This brave new world of M$ buy to rent, will eventually become so restrictive, innovation will be stagnate or people will ignore the rules and move on.

[Neil B.]

So, are software patents worth less money now after the USSC decision about that?

[trevelyan]

Ahhh Ivan.... but if only economists were making this argument.

[James Wimberley]

real person: The "someone" who made the famous remark about standing on the shoulders of giants was Isaac Newton, one of the most innovatory thinkers who has ever lived. If Newton, an egocentric who bitterly disputed priority over the calculus with its simultaneous discoverer Leibniz, could show that much humility and realism, contemporary IP imperialists should pipe down.

[Slocum]

There is nothing special about software that makes it less suitable for patent protection. We don't need to eliminate software patents, but we DO need to have a much more robust 'obviousness' test, and the Supreme Court has taken an important step in that direction:

http://arstechnica.com/news.ars/post/20070430-supreme-court-ruling-makes-obvious-patents-harder-to-defend.html