When I researched Intellectual property in 2002 to find a suitable topic for my master’s thesis, the web was full with articles, comments and opinions on software patents. Most of them I found to lack proper significant scientific foundations and seemed to be more driven by pursuit of a more or less hidden agendas or plain religious beliefes. Given that I wanted to work on a sizeable problem for my thesis, I decided to leave software patents and decided to do some work on the European Database Directive.
Revisiting the literature more than four years later, things do not seem to have changed a lot. The big voices of cyberlaw (e.g. Lessig, Benkler, just to name two authors I read last week) acknowledge the importance of the topic and the concerns they have about freedom of innovation, but only to continue with their exegesis of current issues of copyright law. John Palfrey writes in his noteworthy blog entry on Aug 3 that “the cyberlaw community, myself included, has been so focused on copyright that we haven’t delved as deeply into patent (and trademark and trade secret, perhaps, too) as we might.” This lack of academic involvement may easily explain the lacking fact base, but might also reflect the perceived practical importance of software patents as opposed to the so far more theoretical threat it had on the development of open source software.
So what immediately caught my attention was John Palfrey’s claim that the VC community had recently discovered patent protection as a means of protecting their investment. This stroke me, because I hadn’t heard that before!
While in other sciences, namely chemistry and biology, using patents to get seed funding for start-up companies is common practice, VCs in the software business were very reluctant to get involved in this business. This observation is mostly based on my contacts with my former colleagues from Swiss Federal Institute in Zurich, who now mostly work as patent attorneys or licensing experts in biotech and pharma, but hardly ever deal with software. I would be very interested in getting to know more about this. Is there any reliable source of facts to back this claim? The quoted article in the Economist is mostly based on qualitative evidence and non-industry specific figures on licensing revenues.
How a well working patent system, also for software, could be working is well covered in Jim Moore’s idealistic essay “The software patent process can be your friend”. What is in theory a great idea (”disclose your ideas instead of keeping them secret and get rewarded with a limited state-guaranteed monopoly” that offers a “small company” protection from “the mercy of the market strength”) looks quite different in reality.
Jim explains that the expensive and resource intensive system is mainly a tool of large companies and fails to offer protection to small companies, which could need the patent protection to obtain venture capital. But that is only one of the objection against the current practice on software patents. Another much stronger argument is the limited insight contained in many software patents. Jim claims that “patent documents covering software are inherently open source, in contrast to the closed world of software trade secrets—where code is buried in compilation.”
But if you read a real patent application you will hardly ever find source code. A greate example are the current patent claims of IBM against Amazon over US patents 5,796,967, 5,442,771, 7,072,849, 5,446,891 and 5,319,542.
While I do not dare to judge if the “person skilled in the art” will find anything inventive in these disclosures, the MSc in Computer Sciences which I am is having some difficulties.
The empricial lack of reliance on patents by VCs to me was not only proof of the structural assymmetry between “the small” and “the big” in accessing the patent system, but also due to the fact that software patents were not used to protect innovation of new market entrants but to protect existing markets by putting up a thicket of defensive patents.
Is this now changing? It would be interesting to get more voices especially from the VC community, what kind of protection they require for seed funding in software and what roles software patents play in their go-to-market strategy.
Revisiting the literature more than four years later, things do not seem to have changed a lot. The big voices of cyberlaw (e.g. Lessig, Benkler, just to name two authors I read last week) acknowledge the importance of the topic and the concerns they have about freedom of innovation, but only to continue with their exegesis of current issues of copyright law. John Palfrey writes in his noteworthy blog entry on Aug 3 that “the cyberlaw community, myself included, has been so focused on copyright that we haven’t delved as deeply into patent (and trademark and trade secret, perhaps, too) as we might.” This lack of academic involvement may easily explain the lacking fact base, but might also reflect the perceived practical importance of software patents as opposed to the so far more theoretical threat it had on the development of open source software.
So what immediately caught my attention was John Palfrey’s claim that the VC community had recently discovered patent protection as a means of protecting their investment. This stroke me, because I hadn’t heard that before!
While in other sciences, namely chemistry and biology, using patents to get seed funding for start-up companies is common practice, VCs in the software business were very reluctant to get involved in this business. This observation is mostly based on my contacts with my former colleagues from Swiss Federal Institute in Zurich, who now mostly work as patent attorneys or licensing experts in biotech and pharma, but hardly ever deal with software. I would be very interested in getting to know more about this. Is there any reliable source of facts to back this claim? The quoted article in the Economist is mostly based on qualitative evidence and non-industry specific figures on licensing revenues.
How a well working patent system, also for software, could be working is well covered in Jim Moore’s idealistic essay “The software patent process can be your friend”. What is in theory a great idea (”disclose your ideas instead of keeping them secret and get rewarded with a limited state-guaranteed monopoly” that offers a “small company” protection from “the mercy of the market strength”) looks quite different in reality.
Jim explains that the expensive and resource intensive system is mainly a tool of large companies and fails to offer protection to small companies, which could need the patent protection to obtain venture capital. But that is only one of the objection against the current practice on software patents. Another much stronger argument is the limited insight contained in many software patents. Jim claims that “patent documents covering software are inherently open source, in contrast to the closed world of software trade secrets—where code is buried in compilation.”
But if you read a real patent application you will hardly ever find source code. A greate example are the current patent claims of IBM against Amazon over US patents 5,796,967, 5,442,771, 7,072,849, 5,446,891 and 5,319,542.
While I do not dare to judge if the “person skilled in the art” will find anything inventive in these disclosures, the MSc in Computer Sciences which I am is having some difficulties.
The empricial lack of reliance on patents by VCs to me was not only proof of the structural assymmetry between “the small” and “the big” in accessing the patent system, but also due to the fact that software patents were not used to protect innovation of new market entrants but to protect existing markets by putting up a thicket of defensive patents.
Is this now changing? It would be interesting to get more voices especially from the VC community, what kind of protection they require for seed funding in software and what roles software patents play in their go-to-market strategy.
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Wolf Richter is a doctoral student at the Oxford Internet Institute (OII). His main focus is the law and economics of intangible goods in the age of the social web
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