The Case against Literary (and Software) Patents

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Imagine the outcry if the courts were to legalize patents onEnglish prose. Suddenly, you could get a "literary patent" onnovels employing a particular kind of plot twist, on news storiesusing a particular interview technique, or on legal briefs using aparticular style of argumentation. Publishing books, papers, orarticles would expose authors to potential liability for patentinfringement. To protect themselves, writers would be forced tosend their work to a patent lawyer before publication and tore-write passages found to be infringing a literary patent.

Most writers would regard this as an outrageous attack on theirfreedom. Some people might argue that such patents would promoteinnovation in the production of literary techniques, but mostwriters would find that beside the point. It's simply anintolerable burden to expect writers to become experts on thepatent system, or to hire someone who is, before communicatingtheir thoughts in written form.

Over the last 15 years, computer programmers have increasinglyfaced a similar predicament. We use programming languages toexpress mathematical concepts in much the same way that authors usethe English language to express other types of ideas.Unfortunately, the recent proliferation of patents on software hasmade the development and use of software legally hazardous. That'swhy many of us are hoping the Supreme Court definitively rules outpatents on software when it hears thecase of Bilski v. Doll this coming term.

Patent protection was first extended to software in the 1980s,and the practice accelerated in the 1990s. As a result, it is nowdifficult to create any significant software without infringing apatent. With tens ofthousands of software patents granted every year, and noeffective indexing method for software patents, there is nocost-effective way to determine which patents cover any piece ofsoftware.

Stanford law professor Mark Lemley has documentedthe unsurprising result: most firms in the IT industry have simplygiven up trying to avoid patent infringement. Instead, larger firmsstockpile patents to use as ammunition when they are inevitablysued for infringement. They also sign broad cross-licensingagreements with other large firms promising not to sue one another.This has prevented patents from bringing the software industry to astandstill, but it's hard to see how the practice promotesinnovation.

Even worse, software patents tilt the playing field againstsmaller and more innovative software firms. Most small firmsdevelop their technology independently of their larger competitors,but this isn't enough to prevent liability; incumbents have so manybroad software patents that it's impossible to enter many softwaremarkets without infringing some of them. Small firms don't have thelarge patent arsenals they need to negotiate for cross-licensingagreements with their rivals. As a consequence, incumbents canusetheir patent portfolios to drive smaller competitors out of business.Other small firms are forced to pay stiff licensing fees as a costof entering the software industry. The result is to limitcompetition rather than promote innovation.

The Supreme Court has been taking steps to rein in the patentbar in recent decisions such as KSR v.Teleflex. But the Court hasn't directly addressed thepatentability of software since 1981, when it ruled (as it had on two previous occasions) that software isineligible for patent protection. In the intervening years, theUnited States Court of Appeals for the Federal Circuit, which hearsall patent appeals, has seemed to stray far from that principle.But the Supremes have not reviewed any of its key decisions.

The patent at issue in Bilski is not a software patent;it is a "business method" patent that claims a strategy for hedgingagainst financial risk. But the case is being closely watched forits effects on the software patent issue. Patented business methodsare often implemented in software; for example, a key decision onthe patentability of software, State Street Bank v. Signature Financial Group, involved asoftware-implemented business method. And the standard articulatedby the Federal Circuit in Bilski, known as the "machine-or-transformationtest" has been used by the Patent Office in recent months to invalidateseveral software patents. The Supreme Court could ratify theFederal Circuit's mildly restrictive standard, or it couldarticulate its own standard that is either more or less restrictiveof patents on software.

Reiterating that software cannot be patented would be a dramaticstep, but it would be the right one. Supporters of software patentsinsist that barring software patents would be throwing the baby outwith the bathwater. But it's not clear there was a baby in there tobegin with. Empirical research suggests that software patents are dramatically less effectiveat promoting innovation than other categories of patents, producingmore litigation and smaller revenues for innovators.

Software developers already enjoy strong copyright protectionsfor their work, rendering patent protection largely redundant.Copyrights have several key advantages. The process for obtainingthem is much simpler, as are the rules for determining wheninfringement has occurred. Most important, copyright law, unlikepatent law, allows independent invention as a defense toinfringement claims.

The writing of software, like writing in English, is a creativeactivity practiced on a vastly wider scale than other activitiescommonly afforded patent protection. Small businesses and nonprofitorganizations far removed from the traditional software industryhave IT departments producing potentially infringing software. TheBrookings Institution's Ben Klemens has documentedthat this is not a theoretical problem. Entities as diverse as theGreen Bay Packers, Oprah Winfrey, Kraft Foods, and J. Crew havebeen sued for developing or using ordinary business software.

Regulations that work well when applied to a handful of large,capital-intensive firms can become an intolerable burden whenapplied to millions of small organizations and individuals. It'snot reasonable to expect hundreds of thousands of small businessesto vet the software they produce for patent infringement, any morethan it would be fair for them to face liability for publishing abrochure with an infringing turn of phrase.

The high overhead of the patent system demands that it belimited to relatively concentrated and capital-intensive industriesin which most participants have the means to comply with therequirements of patent law. Patents on English writing would notmeet this requirement. Neither do patents on software.