Software Patents: Monopolies For Ideas And Algorithms

Software Patents: Monopolies for Ideas and Algorithms By 60secs

Useful software is expensive to create, inexpensive to reverse engineer and has negligible costs for duplication. In other words, it is cheaper to copy software than to create it. Without sufficient legal intellectual property protections, commercial software would not be a viable business model, as few would voluntarily pay for software they could legally get for free. Software copyrights should be preserved as they protect finished works of software from unauthorized copying, while software patents should be repealed since they grant monopolies for algorithms and cause greater economic harm than benefit. Software copyright is effective in that it protects the rights of software creators without impeding the ability for others to write software. Software patents on the other hand, allow companies to monopolize algorithms, the basic building blocks of software. Every computer program then becomes a legal minefield, where programmers cannot determine whether the algorithms they are using infringes on the hundreds of thousands of existing software patents. In addition, software patents provide a weapon where companies can amass large patent portfolios and then sue competitors and smaller companies out of existence. Legal issues and costs are further compounded by the many software patents which have been granted for obvious inventions. For these reasons, software patents hamper innovation instead of encouraging it, and software patents should be abolished. Page 1 of 14

The United States Constitution is very clear on its rationale for granting intellectual property rights. The federal government is empowered to “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;” (U.S. Constitution, Article I, Section 8). Patents and Copyrights exist for the purpose of promoting the progress of science and art, not for inventor profit.

What is Copyright? A Copyright is a transferable monopoly granted to the creator of an artistic work. The copyright holder may then exclude others from creating derivative work based on the art, or reproducing, creating and displaying the protected art. The creator of any original creative work automatically has copyright for that work. One may easily register a copyright online with the U.S. Copyright office for $35 without the assistance of a lawyer. Copyright registration, while not required, is useful in preventing copyright infringement and in proving ownership. After the copyright duration has expired, the work enters the public domain, where any may copy the work or create derivative works without restriction. In 1790, U.S. copyright was for a period of 14 years. Since then it has been extended 14 times to the current duration of 70 years after the death of the author or 95 after publication for a corporate works. (Lessig, Lawrence. Keynote Oscon 2002)

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Given congress’ track record for extending copyright duration and large media corporations’ generous donations to congressional campaigns, it is probable that works from 1928 onward will have their copyrights perpetually extended. (1928 was Mickey Mouse’s first appearance in Steamboat Willie.) While pseudo-infinite copyright may be a concern for artistic endeavors, it is less relevant for the time sensitive field of software where unauthorized copying only has significant financial implications for the few years to decades. What is a Patent? A patent is a transferable monopoly granted by government to the creator of a unique and useful invention. Where copyright is automatically granted for arts and literature, obtaining patent for a machine or processes is complicated, expensive and time consuming. The patent holder must disclose how to replicate the invention and in return, is granted the “right to exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing the invention into the United States” (35 U.S. Code §154) Patents are granted by the United States Patent and Trademark Office (USPTO), and are valid for 20 years after their grant date. A patent application may be rejected or a granted patent may be revoked if either fails to completely meet patentability criteria that 1. It is useful, 2. No one else invented it earlier, 3. The patent is not trivial and would not be assumed by experts in that field (see 35 U.S. Code §101-103) In addition, the U.S. Supreme court has ruled in Gottschalk v Benson (1972) and Diamond v. Chakrabarty (1980) that Page 3 of 14

algorithms, laws of nature, physical phenomena and abstract ideas are not patentable. The most common way that patents are revoked is when someone documents “prior art” where someone else created the invention before the original patent applicant. Patents are usually prepared by an attorney specializing in patent law. For a software utility patent, an attorney first performs a search for around $1000 to see if the invention is original. The patent application then costs around $5000+ for a lawyer to prepare and submit, along with $495 in USPTO filing fees. The invention is then “patent pending” while USPTO examines the patentability of the invention for an indeterminate period often up to 4 years. If the application is approved, there is an issuing fee of $700 and another $3,785 in maintenance fees. Additional legal fees or challenges can escalate total costs to obtain and maintain a cost for a software patent to well over $10,000. (http://www.costhelper.com/cost/small-business/patent.html)

How Software Changed Patents Traditionally, the USPTO only granted patents for designs, machines and processes with physical results. However, in the 1981 Supreme Court case, Diamond v. Diehr, the court granted a patent for the use of computer software in curing rubber. Paul Graham, a well known programmer and venture capitalist describes the shift from patenting physical machines to virtual machines as thus: “In 1800, people could not see as readily as we can that a great many patents on mechanical objects were really patents on the Page 4 of 14

algorithms they embodied…. If you want to patent an algorithm, you have to frame it as a computer system executing that algorithm. Then it's mechanical; phew.” (Graham, Paul. “Are Software Patents Evil?”, Google Tech Talk March 2006). Since 1981, there has been an explosion of software patents. Many consider algorithms to be unpatentable abstract ideas, but the Supreme Court has ruled software is patentable if it is tied to a machine or has a tangible result. Patenting the process of using an algorithm and patenting the algorithm itself are functionally equivalent.

Copyright is the profit center for Software companies, not patents. Software copyright gives its owner complete control over who can legally copy or sell copies of software binaries and source code. Most software companies earn most of their revenue through licensing and distributing IBM Revenue 2007 (Millions USD)

complete software applications. Even IBM, with revenues of $98.8 billion and over

100,000 90,000 80,000 70,000

40,000 active patents, only earns around

60,000 50,000

$135 million per year through patent

40,000 30,000 20,000

licensing, while its software division earns

10,000 0

$12.9 billion.

Millions $

Gross

Software

Patent Licensing

98,000

12,900

135

(http://www.ibm.com/ibm/licensing/patents/) (http://www-03.ibm.com/press/us/en/pressrelease/24658.wss).

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(Wild, Joff. “More on the IBM $1 billion patent licensing urban legend.” IAM Magazine 27 March 2008)

Clearly, software and services are more valuable as a composite whole than as patented building blocks.

Why companies patent software: Copyright does not prevent anyone independently creating a program to perform similar actions. Someone can reverse engineer a binary and then, with moderate work, create a similar program which will not infringe on the program’s copyright. With a patent, a company can prevent anyone else from copying any of their new, non-obvious algorithms for use in a competing product. Obtaining a patent also helps shield companies from patent infringement lawsuits. Another favored business practice among large technology companies such as IBM, SUN and Microsoft is to cross-license some patents with each other without licensing fees. This allows the partnering companies to utilize best-of-bread patents from each other while minimizing patent infringement liability.

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And yes, companies do make money licensing software patents, so there is an incentive to create new algorithms and processes. However, this innovation incentive is strongly offset by the actions of companies known as a “patent trolls”. Reminiscent of the children’s stories where trolls who camp under bridges and waylay passengers for a toll to cross, their sole business plan is to obtain broad-ranging patents (often for technology they have not invented) and then sue large technology companies with deep pockets for patent infringement. The most public instance of this was when the patent holding company NTP, Inc. sued the makers of RIM, the makers of the Blackberry pda phones. NTP had several patents on wireless email. Even though NTP was able to demonstrate prior art with System for Automated Messages (SAM), RIM was forced to pay NTP $650 million to avoid a court ordering all Blackberry services shut down. Shortly after the settlement, NTP’s patents were invalidated. (LaFuze, William L. “Patent Trolls.” IP Litigator March-April 2007: p31) (Gibbs, Colin. “NTP Sets Its Sight on Carriers; Patent Holder Files Suit Against Big 4” RCR Wireless News Sept 17, 2007: p3)

How society benefits from Software Patents Each patent application is required to describe the invention in detail such that one proficient in the same field could recreate the invention. 18 months after filing, the details of each application are made public. Unfortunately, source code is not required for software patents, so they usually only contains a description in English that does not even rise to the level of pseudo-code. Page 7 of 14

However, open source can benefit from patents. Many companies, like Sun, take advantage of patent protections by opening the source to key technologies like their ZFS file system. Sun allows people to edit and learn from ZFS code, but requires a licensing fee to use it. Unfortunately, those licensing requirements make ZFS incompatible with licenses used by GPL projects like Linux. Still, without patent protections, many companies would choose to keep all their source code as a trade secret.

Disadvantages to society Algorithms are ideas. They are the building blocks of software. “The basic algorithmic ideas that people are now rushing to patent are so fundamental, the result threatens to be like what would happen if we allowed authors to have patents on individual words and concepts. Novelists or journalists would be unable to write stories unless their publishers had permission from the owners of the words. Algorithms are exactly as basic to software as words are to writers, because they are the fundamental building blocks needed to make interesting products.” (Knuth, Donald. “Letter to the Patent Office.” 1994) Software patents have turned into an arms race. Many patents are obtained for the sole purpose of preventing patent infringement lawsuits. If you’re the first to patent something, it’s harder for people to sue you for it. This encourages legal brinksmanship where all software companies need to employ a legal team both to defend themselves and to attack others. Software companies should be writing software not suing each other for

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doing their jobs. Software patents provide a weapon where companies can amass large patent portfolios and then sue competitors and smaller companies out of existence.

Difficult to write useful software without violating patents. Software is incremental in that it uses many algorithms which are refinements of earlier algorithms. With hundreds of thousands of active algorithm patents, it has becomes increasingly difficult to create any software without violating numerous patents.

Software Patents per Year from 1981-2007 45,000 40,000 35,000 30,000

“In other areas of intellectual property, we know by the

25,000 20,000 15,000

tangible product alone who owns Prozac and who owns Harry Potter. But intangible

10,000 5,000 0 1975

1980

1985

1990

1995

2000

2005

2010

S our c e: http:/ / c ommons.wikimedia.org/ wiki / Image:US _ granted_ sof tware_ patents.png obtained f rom US P TO websi te data

code is by its nature hard to draw boundaries around. The ‘measurement costs’ of software's boundaries—defining where one algorithm begins and another ends—are inescapably high. This point about measurement costs is borne out in practice. As anyone in the industry will tell you, and as Ronald Mann has documented, most programmers or firms cannot figure out whether they're infringing software patents or not and simply always assume they are. The point is simple: Property without discernable borders brings all the costs and none of the benefits. (Wu, Tim. Weapons of Business Destruction Slate Magazine. 6 February 2006) Page 9 of 14

Many software Patents have been issued which fail the obviousness test. Case in point: Amazon was granted a patent for 1-click checkout for an online shopping cart. (Patent 5,960,411 “Method and system for placing a purchase order via a communications network”) Barnes and Noble was sued by Amazon, and now licenses the patent so its users don’t endure a “Are you really sure you want to purchase this?” page. Microsoft was recently granted a patent for Page Up and Page Down. (Patent 7,415,666 "Method and system for navigating paginated content in page-based increments".) Of course, patents cut both ways. Eolas owns a patent for web browser plugins. (Patent 5,838,906, "Distributed hypermedia method for automatically invoking external application providing interaction and display of embedded objects within a hypermedia document") Eolas won a $521 million patent infringement lawsuit against Microsoft for their use of Active-X in Internet Explorer. (Kessler, Michelle “The 521-million-dollar man” USA TODAY 30 Sep. 2003) Tim Berners Lee, the creator of the world wide web, wrote a letter to the USPTO documenting concerning this patent: “Global standards have been the basis of assuring interoperability on the Web. A patent whose validity is demonstrably in doubt ought not be allowed to undo the years of work that have gone into building the Web…. The Web functions only on the strength of its common standards. The enormous expense and the more general threat the '906 patent poses to the Web community is completely unwarranted because the '906 patent is, we firmly believe, invalid in view of the prior art described in our filing Page 10 of 14

to the Patent Office under the authority of 35 U.S.C. Section 301.” (http://www.w3.org/2003/10/27-rogan.html) The EOLAS patent is still valid and serves to demonstrate the far-reaching effects a single patent can have, as all web browsers use plugins, and EOLAS may still sue other browser creators for patent infringement. Obvious patents cost companies money in terms of legal defense costs, patent validity challenge costs and penalties. Challenging even obvious patents with prior art can be expensive and time consuming. Compelling prior art can be difficult to find and harder to prove, as in the EOLAS case, where prior art existed but did not meet one judge’s strict interpretation. Often the first to file is the company with the patent, even though by rights it lies with the first to create. For example: in 1998 Bob Jacobsen released the first version of a free, open-source program Java Model Railroad Interface (JMRI). 3 days later, Matt Katzer applied for a patent for model railroad interfaces that directly mirrored JMRI’s functionality. Katzer then reverse engineered JMRI, copying large sections of code and sold copies of its own proprietary software, in violation of Jacobsen’s copyright and GPL license. Katzer then had the gall to sue Jacobsen in 2003 for patent infringement. The case is still in the courts, and Katzer’s patents have not be invalidated yet, even though the courts have found he violated Jacobsen’s copyright. Even though Jacobsen published his software years before Katzer had a working software product, he is still struggling to prove prior art to invalidate

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Katzer’s patent. (Perens, Bruce. “A Big Change for Open Source” Datamation. 2 October, 2008) Patently Ethical Issues One may consider this a social contract based on act utilitarianism, whereby the public sacrifices some rights to grant inventors and creators time-limited monopolies, and in return, the public receives a greater economic benefit from more useful inventions and art. Even the Supreme Court stated “The promotion of the progress of science and the useful arts is the main object of the patent system, and reward of inventors is secondary and merely a means to that end. (United States v. Masonite Corp., 316 U.S. 265 (1942)) Thus, intellectual property laws and their execution should be engineered to promote innovation and progress, while laws that hamper progress and innovation are in violation of the social contract and should be modified or repealed. Patents are also difficult to defend from a Kantian perspective, as companies are driven by a profit motive to obtain and enforce patents, and monopolies concentrate power and wealth for the few instead of the many. With software patents, corporate greed is perspicuous, while any sense of duty and obligation to society is conspicuously absent.

Future Impacts: Software patents are a clear and present danger to the viability of software companies and online businesses. The prevalence of patently self-evident patents and the preponderance of patent trolls imperils the profit prospective of programmers. “When I Page 12 of 14

think of the computer programs I require daily to get my own work done, I cannot help but realize that none of them would exist today if software patents had been prevalent in the 1960s and 1970s.... If present trends continue, the only recourse available to the majority of America's brilliant software developers will be to give up software or to emigrate. The U.S.A. will soon lose its dominant position.” (Knuth, Donald. “Letter to the Patent Office.” 1994) 20 years is an eternity in the technology sector. The increase in patent numbers and patented domains will only serve to increase the legal and financial burden on U.S. corporations. Legal Changes and Reforms The USPTO is desperately understaffed and under funded. The current backlog of patent applications is around 700,000 and is expected to grow to 1.3 million by 2011. Ironically, the pressure put on patent agents to clear their case load decreases retention and ends up increasing agent case load. For every 2 agents hired, 1 leaves. (Nazzaro, Robin M., “Hiring Efforts Are Not Sufficient to Reduce the Patent Application Backlog” Testimony Before the House Subcommittee on Intellectual Property ) Simply increasing the USPTO’s budget will not solve their problem. They are still very short on man hours. Some have suggested crowd-sourcing some of the patent approval process, particularly in finding prior art. Many software developers and competitors would love to invalidate patents that could threaten their business and would be willing to investigate prior art for the USPTO.

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It is also too easy to sue for patent infringement. Spurious lawsuits serve as harassment or blackmail and tie up the courts. The problem with all of any patent reform is it does not change the fundamental nature that software is hard, and understanding software patents is by extension also hard. The simplest and only effective approach to software patent reform is like Alexander the Great’s technique is untying the Gordian Knot: take out your sword and cut it in half. The simple solution is to end software patents.

Conclusion: Algorithms are ideas. Ideas are not patentable. Software algorithms should not be granted a special dispensation for this prohibition. There is no clear metric as to whether a given algorithm is non-obvious enough to merit a patent, such that patents are granted for trivial to implement algorithms often used industry-wide. Software patents encourage wasteful litigation over spurious claims that border on extortion. Software patents grant one company a monopoly over an idea or set of practices, and the resultant licensing fees discourage innovation based on those ideas. Software patents encourage litigation, not innovation, so they violate the social contract specified in the U.S. Constitution and should be invalidated.

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