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Software Patents: Are they throttling software innovation?

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Patents definition, as Wikipedia explains it:

Patents are intended to promote innovation by encouraging the timely disclosure of how to make and use inventions and by protecting investments made to commercialize inventions.

softwarepatent

Now lets have a look at some of recent patent related events that stroked software industry:

Many iPhone app developers withdrew their apps from US app stores, in light of receiving patent infringement notices from a firm named Lodsys, which claims to have patent for in-app billing.

Oracle sued Google claiming Android infringes Java technology patents (which Oracle got after acquiring Sun Microsystems) and asking for 2.6 billion dollars as compensation.

Kootol Software Limited, a Mumbai based software firm has sent patent infringement legal notices to 32 companies including Facebook, Twitter, Apple as it has patent over real-time messaging.

Paul Allen’s firm sues 11 firms including Apple, Facebook, Netflix for violating its patents in 3 specific areas: attracting user’s peripheral attention, alerting users for items of current interest & using a browser to navigate through information.

There are few things that are clear from above examples.

Firstly, current patent system puts the small / medium sized developers in a vulnerable situation as they don’t have enough financial muscle to fight it out in law courts.

Secondly, as the patents are allowed to be bought / sold in open markets, they are costly and often bought by cash rich big corporations. Hence small / medium size companies are forced to either infringe patents or stay away from developing related products.

Thirdly, there is very little cost to send legal notices, but very huge costs to defend them resulting in emergence of patent trolls.

In order to preserve the openness, innovativeness and low-entry barriers of software industry, more sensitivity and thought should be put in handling of patent system. Some of the steps that I believe can help in improving current system are:

1) Non-Obviousness clause in granting patents mention that invention should be sufficiently inventive in order to be granted a Patent. Hence granting patents to latest drug of a pharmaceutical company where it has spent years and millions of dollars in research makes perfect sense, but granting patents to software ideas that can be thought in a day and implemented in 2 days don’t protects innovation but suppress it. Therefore obvious issues in ‘Non-Obviousness’ clause regarding software patents should be corrected.

2) There should be some kind of control in open sale of patent rights. What happens in many cases is that firm that filed the patents doesn’t properly implement the idea (ex: Nortel Networks) but makes good money by selling those patents to big corporations, who in turn generate huge incomes out of these patents from other innovators instead of applying innovation themselves (Eg: Microsoft getting 5$ for sale of each phone by HTC).

3) When some company sues another company for patent infringement and loses the case, it should be analyzed whether it was a case of patent trolling or not, if yes, suing company should be heavily punished for causing wastage of resources & time.

4) Software Industry is pretty fast moving industry with high rate of product releases. Considering that it takes minimum 18 months to evaluate whether company gets the patent or not, it’s unfair for competitive companies which already have released products to suddenly realise that they can be now sued for their released products. Time between patent application and patent grant should be considerably decreased atleast in case of software industry.

In recent years, Software industry has shown tremendous examples of high paced innovation and growth. It’s an industry with great participation from various entities like big companies, independent developers and open-source people. There are very low entry level barriers and healthy competition. We should all wish that patent system is modified in favour to foster such environment rather than destroying it.

Would love to hear reader’s thought on this !

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"Software Patents: Are they throttling software innovation?", 5 out of 5 based on 1 ratings.
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  2. Abhishek Pandurangi says

    Hi Sachin,

    What you've written is not wrong, but it's only one side of the coin. Let me present to you the other side of it. say for examples, you develop a very unique software and you upload it on your site/blog/wherever maybe free or maybe for payment of money. Since you are an individual or an SME (the parties who you think are bullied because of patents) you can't launch it at a large scale as Microsoft, Apple or Oracle could do. You are earning your bread, until one day you suddenly find out that Microsoft or any big company is selling the same product as that of yours. You are baffled. What to do? It is here that patents would have helped you blow the whistle and stop the biggies.

    2nd point about free market for sale. So imagine in the 1st scenario you had patented the invention. Now you can't make the product available to 1 lakh users a day because that requires servers, info security infrastructure etc. So there are 1 lakh users who want to use your software, but can't because you're an SME with low infrastructure capital. So Microsoft who has the infrastructure, but can't use your invention because you've patented it will approach you for a license. So he licenses your technology, makes 50$ profit at every sale, gives you 5$ at every sale and all the 1 lakh users get to use the software. Isn't this beneficial to all the three parties, you, microsoft and the users?

    The patent system is there to be used by both companies as well as individuals. Just because companies are using it more smartly than individuals (because individuals have already presumed that patents are their enemies), it is not the fault of the patent system.

    In fact I, as a patent consultant have guided many individual inventors to effectively use patent laws against companies. We are infact trying to license out one of our client's patent pending invention to Facebook for royalty.

    Isn't the individual benefiting here?

    Would like to know your views on this.

    Abhishek Pandurangi,
    http://www.closer2patents.com

    1. Sachin Sharma says

      Hello Abhishek,

      Well I apologize if the post sounded anti-patents, but it was not supposed to be. Post actually intends to bring into light some flaws in current software patenting system and discusses ways to correct it.

      Patent can be very helpful for small players as emphasized by your examples, but at the same time, they should be only granted when they are actually inventive!

      Regarding the"free market for sale" point, it was not about sale of patent licenses but about sale of patent ownerships.

      And yes, its nice to know that you are making positive use of patent laws by empowering individuals against big companies. Good luck!

      Sachin

  3. Saurabh Awasthi says

    Nicely written article! The underlying idea behind 'patent' does not seem apt when it comes to the software/IT/Internet industry, where investments (and even ROIs to some extent) to come up with a 'patentable' idea are pretty minimal compared to industries like pharma or other intricate tech-driven industries. The IT industry structure definitely demands some adjustments in the generic patent rules to keep up with the evolving scenario.

  4. Saurabh Awasthi says

    Nicely written article! The underlying idea behind 'patent' does not seem apt when it comes to the software/IT/Internet industry, where investments (and even ROIs to some extent) to come up with a 'patentable' idea are pretty minimal compared to industries like pharma or other intricate tech-driven industries. The IT industry structure definitely demands some adjustments in the generic patent rules to keep up with the evolving scenario.

  5. Saurabh Awasthi says

    Nicely written article! The underlying idea behind 'patent' does not seem apt when it comes to the software/IT/Internet industry, where investments (and even ROIs to some extent) to come up with a 'patentable' idea are pretty minimal compared to industries like pharma or other intricate tech-driven industries. The IT industry structure definitely demands some adjustments in the generic patent rules to keep up with the evolving scenario.

  6. Saurabh Awasthi says

    Nicely written article! The underlying idea behind 'patent' does not seem apt when it comes to the software/IT/Internet industry, where investments (and even ROIs to some extent) to come up with a 'patentable' idea are pretty minimal compared to industries like pharma or other intricate tech-driven industries. The IT industry structure definitely demands some adjustments in the generic patent rules to keep up with the evolving scenario.

  7. Saurabh Awasthi says

    Nicely written article! The underlying idea behind 'patent' does not seem apt when it comes to the software/IT/Internet industry, where investments (and even ROIs to some extent) to come up with a 'patentable' idea are pretty minimal compared to industries like pharma or other intricate tech-driven industries. The IT industry structure definitely demands some adjustments in the generic patent rules to keep up with the evolving scenario.

    1. Anurag Nigam says

      har baar tum apna bhi 1 para thok dete ho :)

    2. Saurabh Awasthi says

      Let's spare this page for meaningful conversation only and use fb, chat etc for such friendly comments :P

  8. Kartik Puttaiah says

    I agree with the thoughts on non-obviousness clause.

  9. ghosh says

    Very interesting article. Well thought out and well articulated. these are complicated issues and there needs to be a dialog at the policy making level.

  10. Ankit Ghiya says

    very well written.

  11. Ankit Ghiya says

    very well written.

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