[ed. Two patent articles in one day (you might conclude that I've been sensitized to patent and copyright issues lately, and you would be right - see the Note and Interesting Article link on the sidebar). But, wow, this article is impressive. Great essay on the history, function and use of patents and how they affect intellectual property and technical innovation.]
by Nilay Patel
There is a fundamental problem with patents in the United States.
It is us.
By that I mean all of us: the companies and people who directly interact with the patent system, the media that reports on those interactions, the analysts and experts who inform the media, and finally the large, active, and vocal readership that we try and service with our reporting. As a group, we have accepted and let lie the lazy conventional wisdom that the patent system is broken beyond repair, a relic of a previous time that has been obsoleted by the rapid pace of technical innovation, particularly in software, and that it should perhaps be scrapped altogether.
In the past few months, this rhetoric has grown to a furious roar, as the patent system seems to be affecting more and more of the technology industry in a negative way: small mobile app developers have been targeted with spurious lawsuits from companies that make nothing, major players like Apple, HTC, and Samsung are locked in patent-related litigation, and a pair of multibillion-dollar patent auctions has sparked an unprecedented war of words between Microsoft and Google. The most passionate critics loudly argue that whatever benefits our current patent system might offer have now been exceeded by its costs; that resources that should otherwise go to the development of new ideas are instead being misspent on the overzealous protection of the old.
This line of thinking has been so forcefully and insistently repeated that it has become almost axiomatic, an intellectual and rhetorical cheat that is rarely (if ever) questioned. But it’s also wrong — painfully wrong, in ways that sabotage any real attempt at reform. Being loud and angry is a great way to get attention, but it’s a terrible way to actually get anything done — especially since most of the emphatic chest-pounding sounds like a slightly dumber version of an argument we’ve been having in this country since Thomas Jefferson was appointed the first head of the Patent Office.
So let’s start over, shall we? Let’s actually look at how the patent system works, where it’s specifically malfunctioning, and how we can fix it. Ready? Let’s go.
Let’s think about what that means in practice. Here’s US patent #6,285,999, which is Larry Page’s patent on PageRank, the core algorithm that powers Google search. Because getting a patent means Page had to fully disclose the technology, we can go right ahead and look at some of the math behind one of the most important and disruptive inventions in the history of the world.
(Remember, this isn’t what’s actually patented — it’s just the required specification that supports the patent claims.) Because getting a patent means accepting a time-limited monopoly on your invention, anyone will be able to use this specification to build their own search engine when the patent expires in 2018. In the meantime, you’re free to look at Google’s work and attempt to design around the specific claims in the patent. That’s an important way the patent system encourages innovation, actually: it forces inventors to build alternative ways to do things. You can bet Microsoft’s Bing team has spent hours studying the PageRank patent in an attempt to build something that works differently — and hopefully better.
Similarly, all those Apple multitouch patents are more than just attempts to prevent competitors from using a specific technology — they’re also detailed instructions for building that exact same technology in the future. Here’s a part of US patent #7,812,828, which Apple’s particularly fond of asserting in lawsuits: it lays out a system for tracking multiple finger and hand inputs on a multitouch surface and correctly filtering them. We’ve spent a lot of time wondering why Apple seems to build better trackpads and touchscreens than its competitors, but when all these patents expire those same competitors will be able to just go use Apple’s work.
(Again, this is just part of the specification — it’s not part of the actual patent claims.) I can go on and on, but you get the idea. Patents publicly disclose some of the most advanced work ever done by some of the most creative and resourceful people in history, and it’ll all be free for the taking in several years. Stop offering patent protection and there’s no more required disclosure — all this stuff stays locked up as trade secrets as long as it offers a competitive advantage, after which point it may well be forgotten.
Western civilization has dealt with fiercely secretive industries going to insane lengths to protect their proprietary advantages in the absence of patents before: craft guilds like the Masons maintained an air of mystery and prohibited teaching outsiders their trades, and medieval Venetian glassblowers were assassinated if they tried to leave the city to set up shop elsewhere. And you think Facebook and Google are going to extremes trying to prevent employee defections now.
Now, you can argue about the length of the patent grant, and about what specific inventions should be granted patent protection — these are all important and ongoing arguments. But the fundamental basis of the patent system is full disclosure from the inventor in exchange for an explicitly limited term of protection, and any effort to identify problems and reform the system has to respect the value both sides derive from that exchange.
The patent rules
It’s bad enough that the public policy justifications for patent law are often given short shrift by the pundit class, but the active ignorance displayed about our actual law is downright irresponsible — especially since it’s so easy to just go and look at Title 35 of the United States Code, where all the basics elements of patent law are laid out. Any talk of “changing the patent system” is ultimately talk about changing Title 35, and that means you’ve got to know what’s in there before you can reasonably evaluate any proposed changes.
Title 35 is enormous and comprehensive — it specifies everything from the structure of the Patent and Trademark Office to the contents of its yearly report to Congress — so we’re just going to focus on what can and cannot be patented. It all starts with 35 U.S.C § 101, which says that any “new or useful process, machine, manufacture, or composition of matter” can be patented. This language has been virtually unchanged since the Patent Act of 1793, allegedly written by Jefferson himself, and the courts have interpreted it to include “anything under the sun that is made by man” as patentable. “Made by man” is extremely important — you can’t patent an abstract idea, a law of nature, or a natural phenomenon. For our purposes, that pretty much means you can’t patent math, although things get trickier when you start talking about software, and the courts have struggled to find a middle path. We’ll come back to this.
Title 35 contains two additional limitations on patents that are also routinely the subject of furious and continual debate within the court system. 35 USC § 102 is commonly known as the prior art rule, which says you can’t get a patent on an invention that was known, used, or published anytime before the claimed invention date or more than year before the patent application was filed, and § 103 says you can’t get a patent on an improvement to an invention that would be “obvious” to anyone with ordinary skill in the field. Exactly what counts as “obvious” is at issue in nearly every single patent lawsuit, and the courts have trended towards a more expansive definition over time. The most important recent case is KSR vs. Teleflex, a unanimous 2007 Supreme Court decision in which the court said that “a person of ordinary skill is also a person of ordinary creativity” and lambasted the USPTO for not using common sense in determining what improvements to existing inventions were obvious.
In practical terms, all this means it’s now much harder to get a patent — you’ve got to prove that your invention wouldn’t be obvious to someone else trying to solve the same problem with the same tools. By the same token, it’s now that much easier to defend a patent lawsuit. But whatever, the system is fundamentally broken, let’s burn everything down.
The state of software patents, and how to fix them
If “the patent system is broken” is a lazy rhetorical cheat, then “software patents shouldn’t be allowed” is the most completely vacuous intellectual cop-out possible. The problem isn’t software patents — the problem is that software patents don’t actually exist.
What we keep calling “software patents” are just regular old patents; there is no special section of Title 35 that specifically delineates between hardware and software, or software and machinery, or software and anything else you might dream up. I don’t know when it became fashionable to pretend software patents were some funky and terrible new phenomenon, but it hasn’t always been this way: Y Combinator co-founder Paul Graham’s 2006 essay “Are Software Patents Evil?” remains one of the best holistic analyses of the software patent issue I’ve ever read, and it opens with “if you’re against software patents, you’re against patents in general.” It’s unfortunate that the conversation around the issue has taken such a frustratingly unsophisticated turn, especially since the USPTO and the Supreme Court have been talking about it in serious detail for nearly 50 years.
What might surprise you is that the USPTO has historically resisted efforts to patent software, only to have the courts chart a different course. The conflict itself is a simple one: software is ultimately just the automated expression of various algorithms and math, and you can’t patent math. To many, it then seems like a forgone conclusion that software patents shouldn’t exist — preventing other people from using math is solidly outside the boundaries of the patent system.
But look a little closer and it’s easy to see that the boundaries between “just math” and “patentable invention” are pretty fuzzy. Every invention is “just math” when it comes right down to it — traditional mechanical inventions are really just the physical embodiments of specific algorithms. Consider the TurboTap long-necked draft beer nozzle, which was developed by a University of Wisconsin student named Matthew Younkle and granted US patent #7,040,359 — it pours beer faster and with less foam because of its long shape and internal structure. (I’ve conducted extensive… testing.) Isn’t that just a clever application of fluid dynamics? Where do you draw the line between the math that enables the invention and the invention itself? These aren’t easy questions, and we’re just talking about a beer tap. Things get even fuzzier when it comes to software, which doesn’t have a physical component to comfort our sense of justice. It really is just a bunch of math.
But hold on: it turns out math is hard. Really hard. Hard enough that it takes extremely smart people lots of time and money to develop the math that drives software innovation, and that means the companies and organizations that fund those smart people want to protect their investments and inventions as thoroughly as possible. It’s not surprising, then, that the industry started to explore software-related patents almost immediately in the 60s and 70s, as computer research began to explode. The USPTO rejected many of these applications, which were then appealed to the courts, eventually resulting in a series of Supreme Court rulings nicknamed the “patent eligibility trilogy” that essentially said that while software alone can’t be patented, software combined with some sort of hardware is patent-eligible. Another couple years and a few court rulings later, and that required “hardware component” was watered down into nothing more than a data structure written into the physical memory of a computer, leading to an alarmingly stupid period where everyone was forced to pretend software magically transformed general purpose computing hardware into specialized patent-eligible machines.
In 1998 the Federal Circuit did away with the ridiculous software-is-just-hardware fiction by ruling in State Street Bank & Trust vs Signature Financial Group that software was patentable as long it yields a “useful, concrete, and tangible result.” As you might expect, this resulted in a flood of patents on software, and generally kicked off the software patent controversy in the public eye. Fast forward to more recent memory, and the Federal Circuit decided to backtrack in a 2008 case called In re Bilski, which reversed State Street and instead articulated something called the “machine-or-transformation” test as the sole standard for patentability. That case was ultimately overturned by the Supreme Court in 2010′s Bilski vs. Kappos: the Court not-so-helpfully said that while the machine-or-transformation is “a useful and important clue” in determining patentability, it’s not the only possible test.
Ask 10 patent attorneys where we stand after Bilski and you’ll get 10 different answers: while it’s generally agreed that software patents are still valid, it’s entirely possible we’re back to pretending that software is just hardware again. It’s also generally agreed that no matter what rules the courts and the USPTO issue, clever patent attorneys will be able to find a way to draft claims around them — that’s how we ended up pretending software was hardware in the first place.
Does that all seem super boring and insanely complicated to you? It should, because it is. Our court system is designed to resolve conflicts, not make laws, and trying to arrive at cohesive and consistent software patent guidelines through five decades of litigation is more or less like trying to build a skyscraper by throwing dirt at a tree. You can’t complain that the system is broken when we barely have a system.
The solution is simple, of course: we just have to add a real software patent section to Title 35. What would it look like? Well, we could try and define what a “software patent” actually is — that’s never really been done in a meaningful way. We could also directly address the relationship between software and “just math,” and try to find a balance between protecting the research and investment it takes to push the industry forward, while taking proper notice of the fact that there are some foundational principles of software development that are as fundamental as any other kind of math. We might also sharply limit the term of software patents to better reflect the pace of the industry and the lower fixed costs of software development – software costs less to create and distribute than physical goods, so it’s probably fair to give companies a shorter period of time to profit from their inventions. Amazon CEO Jeff Bezos wrote an open letter calling for patent reform in 2000 that covered most of these points and proposed a term of 3-5 years. Maybe it’s time we dusted that off.
Now, I’m not a software developer, mathematician, or patent expert, and I can’t tell you how to craft a perfect software patent law that will protect real innovation and exempt mathematical principles while maintaining or even lowering the overall costs of the system. But I can damn well tell you that it’s imperative that we actually try to deal with software for what it actually is, instead of pretending that it’s magic fairy dust that changes computers into specialized machines or throwing in the towel and giving up. Admitting you have a problem is the first step towards recovery.
Stopping patent trolls
As a recent episode of This American Life made clear, Intellectual Ventures is a shady, strange, thuggish corporation that buys up enormous amounts of patents in order to extort licensing fees across the industry, from major players like Apple to small app developers. What TAL did not say is that Intellectual Ventures is also a classic example of American business success.
Former Microsoft CTO Nathan Mhyrvold and his band of lawyers aren’t doing much more than applying “buy low, sell high” to patents, and it’s hard to fault them for it, just like you wouldn’t fault someone for buying up tons of cheap land in the hope that they’ll strike gold. What you would fault someone for is buying up tons of prime real estate in the center of town and setting up a strip mine — it’s an offensive and exploitative use of property that maximizes individual profit at a huge expense to society. That’s more or less what IV and other patent trolls are doing; they’re taxing companies that make real products by purchasing broad foundational patents and litigating instead of making real products themselves. Slowing down trolls boils down to tipping the balance; we’ve got to make the strip mine less profitable to run than a shopping mall.
Unfortunately, we can’t simply go in with guns blazing and make it illegal for inventors to sell patents to potential troll companies. Patents are property, after all, and tightly regulating the general sale of property isn’t exactly a move from the all-American playbook. If some inventor wants to sell a patent to Intellectual Ventures, we pretty much have to let them — it’s how they’re realizing value for their invention. And we can’t up and start invalidating patents just because of who owns them. (Again: America.)
We also can’t simply forbid entities that don’t “make anything” from asserting patent rights. Not only would that that veer into uncomfortably unconstitutional territory, it would also prevent institutions like universities and research firms from gaining any value from their patents. That PageRank patent is actually owned by Stanford, which funded Larry Page’s grad student research; when he and Sergey Brin left to start Google, they signed an exclusive license to the patent in exchange for 1.8 million shares of stock that Stanford later sold for $336 million. That’s a major success story — we want more of those.
That’s not to say aggressive patent aggregators like Intellectual Ventures or outright trolls like Lodsys aren’t a serious problem. The trick is finding a balanced solution that respects existing property rights and doesn’t interfere with well-functioning parts of the patent system. We’re going to have to be more creative.
One strategy would be to sharply limit the amount of damages a non-practicing entity can win in a patent lawsuit — that would encourage more effective and open licensing, since that would ultimately be more profitable than litigation. We could also implement a compulsory licensing scheme for patents, which countries like the UK, Germany, Australia, and Japan already have in place: patent holders are required to license patents at commercially viable rates if they don’t make products within a certain amount of time. (Here’s the Australian compulsory patent licensing law, for example.) That’s a huge and messy debate with a lot of consequences, though: Google’s whining about the impact of patents on Android seems pretty damn minor when you consider the biggest recent compulsory patent licensing debates have concerned cutting-edge pharmaceuticals like AIDS drugs.
A better solution might be to work compulsory licensing into that new software patent section of Title 35, and adopt a hybrid approach: give inventors free reign over their patents for a limited window of time, and then kick in a compulsory licensing scheme with strictly defined rates for the remainder of the patent term. That would allow inventors the right to maximize profit from the proprietary advantages of their inventions for a fixed period of time, while still compensating them over the complete term. It would also make springing lawsuits based on older patents at the end of their terms much less attractive, since there would be a clearly-defined cap on damages.
Again, I’m not a patent expert, and I’m not going to sit here and pretend I can write a perfect compulsory licensing scheme that balances everyone’s rights in a way that comports with the Constitution. But it’s not exactly hard to look at other countries with functional IP systems and fewer patent trolls and sketch the broad outlines of realistic potential solutions, and it’s incredibly important that we start having that conversation instead of throwing irrationally misguided temper tantrums.
Before Thomas Jefferson was appointed our first head of the Patent Office 1790, he argued passionately against patents — he once called them “embarrassments to the public,” and worried that “abuse of frivolous patents is likely to cause more inconvenience than is countervail by those really useful.” Sound familiar? But Jefferson took his job seriously, reviewing and even testing most applications himself, and by the end of his service he had become a strong proponent of patents, saying that the Patent Act of 1790 had “given a spring to invention beyond my conception.”
Jefferson’s initial skepticism about patents led him to insist that patented inventions be useful and non-obvious, the foundational rules of our system. Those rules might actually solve the software patent dilemma for us if we just wait long enough: the gold rush to patent all these fundamental software technologies means that they’ll all be public domain prior art in a few years, and any obvious improvements won’t be patentable. The pendulum swings both ways.
But I don’t think we should sit around waiting for the ghost of Thomas Jefferson to help us out, or for the Federal Circuit and Supreme Court to try and sneak new bodies of law into appellate court decisions. It’s time we channel our own skepticism about patents into a meaningful set of legislative reforms that reflects the reality of modern American technology innovation; a set of reforms that respects and protects the explosion of interest and investment in software development while respecting the unique qualities of software itself. We live in the most radically innovative time in human history — it’s time to grow up and stop acting like the patent problem is too hard to solve.
via:
There is a fundamental problem with patents in the United States.
It is us.
By that I mean all of us: the companies and people who directly interact with the patent system, the media that reports on those interactions, the analysts and experts who inform the media, and finally the large, active, and vocal readership that we try and service with our reporting. As a group, we have accepted and let lie the lazy conventional wisdom that the patent system is broken beyond repair, a relic of a previous time that has been obsoleted by the rapid pace of technical innovation, particularly in software, and that it should perhaps be scrapped altogether.
In the past few months, this rhetoric has grown to a furious roar, as the patent system seems to be affecting more and more of the technology industry in a negative way: small mobile app developers have been targeted with spurious lawsuits from companies that make nothing, major players like Apple, HTC, and Samsung are locked in patent-related litigation, and a pair of multibillion-dollar patent auctions has sparked an unprecedented war of words between Microsoft and Google. The most passionate critics loudly argue that whatever benefits our current patent system might offer have now been exceeded by its costs; that resources that should otherwise go to the development of new ideas are instead being misspent on the overzealous protection of the old.
This line of thinking has been so forcefully and insistently repeated that it has become almost axiomatic, an intellectual and rhetorical cheat that is rarely (if ever) questioned. But it’s also wrong — painfully wrong, in ways that sabotage any real attempt at reform. Being loud and angry is a great way to get attention, but it’s a terrible way to actually get anything done — especially since most of the emphatic chest-pounding sounds like a slightly dumber version of an argument we’ve been having in this country since Thomas Jefferson was appointed the first head of the Patent Office.
So let’s start over, shall we? Let’s actually look at how the patent system works, where it’s specifically malfunctioning, and how we can fix it. Ready? Let’s go.
The patent exchange
The core public policy behind the patent system is widely ignored, even though it’s extremely simple and really quite clever. Patents are more than just a simple incentive for people to develop new inventions — they’re actually an exchange between inventors and the public. In exchange for a time-limited monopoly on their inventions, inventors must fully disclose the invention itself in the patent specification, and agree to release their work into the public domain once their monopoly runs out. The rules for disclosure are laid out in 35 U.S.C. § 112, and they’re fairly strict: the specification must be detailed enough so that anyone with “ordinary skill in the art” of the invention can build the claimed technology, and they must also disclose the “best mode” of building the invention. Breaking the rules can have severe consequences, since a patent that doesn’t adequately disclose the claimed invention can be ruled invalid. And since patent specifications fall into the public domain once the patent expires, we get a huge and constantly-growing vault of fully-disclosed technology that anyone can use to build new products.Let’s think about what that means in practice. Here’s US patent #6,285,999, which is Larry Page’s patent on PageRank, the core algorithm that powers Google search. Because getting a patent means Page had to fully disclose the technology, we can go right ahead and look at some of the math behind one of the most important and disruptive inventions in the history of the world.
(Remember, this isn’t what’s actually patented — it’s just the required specification that supports the patent claims.) Because getting a patent means accepting a time-limited monopoly on your invention, anyone will be able to use this specification to build their own search engine when the patent expires in 2018. In the meantime, you’re free to look at Google’s work and attempt to design around the specific claims in the patent. That’s an important way the patent system encourages innovation, actually: it forces inventors to build alternative ways to do things. You can bet Microsoft’s Bing team has spent hours studying the PageRank patent in an attempt to build something that works differently — and hopefully better.
Similarly, all those Apple multitouch patents are more than just attempts to prevent competitors from using a specific technology — they’re also detailed instructions for building that exact same technology in the future. Here’s a part of US patent #7,812,828, which Apple’s particularly fond of asserting in lawsuits: it lays out a system for tracking multiple finger and hand inputs on a multitouch surface and correctly filtering them. We’ve spent a lot of time wondering why Apple seems to build better trackpads and touchscreens than its competitors, but when all these patents expire those same competitors will be able to just go use Apple’s work.
(Again, this is just part of the specification — it’s not part of the actual patent claims.) I can go on and on, but you get the idea. Patents publicly disclose some of the most advanced work ever done by some of the most creative and resourceful people in history, and it’ll all be free for the taking in several years. Stop offering patent protection and there’s no more required disclosure — all this stuff stays locked up as trade secrets as long as it offers a competitive advantage, after which point it may well be forgotten.
Patents publicly disclose some of the most advanced work ever done by some of the most creative and resourceful people in history, and it’ll all be free for the taking in several years.
Western civilization has dealt with fiercely secretive industries going to insane lengths to protect their proprietary advantages in the absence of patents before: craft guilds like the Masons maintained an air of mystery and prohibited teaching outsiders their trades, and medieval Venetian glassblowers were assassinated if they tried to leave the city to set up shop elsewhere. And you think Facebook and Google are going to extremes trying to prevent employee defections now.
Now, you can argue about the length of the patent grant, and about what specific inventions should be granted patent protection — these are all important and ongoing arguments. But the fundamental basis of the patent system is full disclosure from the inventor in exchange for an explicitly limited term of protection, and any effort to identify problems and reform the system has to respect the value both sides derive from that exchange.
The patent rules
It’s bad enough that the public policy justifications for patent law are often given short shrift by the pundit class, but the active ignorance displayed about our actual law is downright irresponsible — especially since it’s so easy to just go and look at Title 35 of the United States Code, where all the basics elements of patent law are laid out. Any talk of “changing the patent system” is ultimately talk about changing Title 35, and that means you’ve got to know what’s in there before you can reasonably evaluate any proposed changes.
Title 35 is enormous and comprehensive — it specifies everything from the structure of the Patent and Trademark Office to the contents of its yearly report to Congress — so we’re just going to focus on what can and cannot be patented. It all starts with 35 U.S.C § 101, which says that any “new or useful process, machine, manufacture, or composition of matter” can be patented. This language has been virtually unchanged since the Patent Act of 1793, allegedly written by Jefferson himself, and the courts have interpreted it to include “anything under the sun that is made by man” as patentable. “Made by man” is extremely important — you can’t patent an abstract idea, a law of nature, or a natural phenomenon. For our purposes, that pretty much means you can’t patent math, although things get trickier when you start talking about software, and the courts have struggled to find a middle path. We’ll come back to this.
Title 35 contains two additional limitations on patents that are also routinely the subject of furious and continual debate within the court system. 35 USC § 102 is commonly known as the prior art rule, which says you can’t get a patent on an invention that was known, used, or published anytime before the claimed invention date or more than year before the patent application was filed, and § 103 says you can’t get a patent on an improvement to an invention that would be “obvious” to anyone with ordinary skill in the field. Exactly what counts as “obvious” is at issue in nearly every single patent lawsuit, and the courts have trended towards a more expansive definition over time. The most important recent case is KSR vs. Teleflex, a unanimous 2007 Supreme Court decision in which the court said that “a person of ordinary skill is also a person of ordinary creativity” and lambasted the USPTO for not using common sense in determining what improvements to existing inventions were obvious.
In practical terms, all this means it’s now much harder to get a patent — you’ve got to prove that your invention wouldn’t be obvious to someone else trying to solve the same problem with the same tools. By the same token, it’s now that much easier to defend a patent lawsuit. But whatever, the system is fundamentally broken, let’s burn everything down.
The state of software patents, and how to fix them
If “the patent system is broken” is a lazy rhetorical cheat, then “software patents shouldn’t be allowed” is the most completely vacuous intellectual cop-out possible. The problem isn’t software patents — the problem is that software patents don’t actually exist.
What we keep calling “software patents” are just regular old patents; there is no special section of Title 35 that specifically delineates between hardware and software, or software and machinery, or software and anything else you might dream up. I don’t know when it became fashionable to pretend software patents were some funky and terrible new phenomenon, but it hasn’t always been this way: Y Combinator co-founder Paul Graham’s 2006 essay “Are Software Patents Evil?” remains one of the best holistic analyses of the software patent issue I’ve ever read, and it opens with “if you’re against software patents, you’re against patents in general.” It’s unfortunate that the conversation around the issue has taken such a frustratingly unsophisticated turn, especially since the USPTO and the Supreme Court have been talking about it in serious detail for nearly 50 years.
What might surprise you is that the USPTO has historically resisted efforts to patent software, only to have the courts chart a different course. The conflict itself is a simple one: software is ultimately just the automated expression of various algorithms and math, and you can’t patent math. To many, it then seems like a forgone conclusion that software patents shouldn’t exist — preventing other people from using math is solidly outside the boundaries of the patent system.
The problem isn’t software patents — the problem is that software patents don’t actually exist.
But look a little closer and it’s easy to see that the boundaries between “just math” and “patentable invention” are pretty fuzzy. Every invention is “just math” when it comes right down to it — traditional mechanical inventions are really just the physical embodiments of specific algorithms. Consider the TurboTap long-necked draft beer nozzle, which was developed by a University of Wisconsin student named Matthew Younkle and granted US patent #7,040,359 — it pours beer faster and with less foam because of its long shape and internal structure. (I’ve conducted extensive… testing.) Isn’t that just a clever application of fluid dynamics? Where do you draw the line between the math that enables the invention and the invention itself? These aren’t easy questions, and we’re just talking about a beer tap. Things get even fuzzier when it comes to software, which doesn’t have a physical component to comfort our sense of justice. It really is just a bunch of math.
But hold on: it turns out math is hard. Really hard. Hard enough that it takes extremely smart people lots of time and money to develop the math that drives software innovation, and that means the companies and organizations that fund those smart people want to protect their investments and inventions as thoroughly as possible. It’s not surprising, then, that the industry started to explore software-related patents almost immediately in the 60s and 70s, as computer research began to explode. The USPTO rejected many of these applications, which were then appealed to the courts, eventually resulting in a series of Supreme Court rulings nicknamed the “patent eligibility trilogy” that essentially said that while software alone can’t be patented, software combined with some sort of hardware is patent-eligible. Another couple years and a few court rulings later, and that required “hardware component” was watered down into nothing more than a data structure written into the physical memory of a computer, leading to an alarmingly stupid period where everyone was forced to pretend software magically transformed general purpose computing hardware into specialized patent-eligible machines.
In 1998 the Federal Circuit did away with the ridiculous software-is-just-hardware fiction by ruling in State Street Bank & Trust vs Signature Financial Group that software was patentable as long it yields a “useful, concrete, and tangible result.” As you might expect, this resulted in a flood of patents on software, and generally kicked off the software patent controversy in the public eye. Fast forward to more recent memory, and the Federal Circuit decided to backtrack in a 2008 case called In re Bilski, which reversed State Street and instead articulated something called the “machine-or-transformation” test as the sole standard for patentability. That case was ultimately overturned by the Supreme Court in 2010′s Bilski vs. Kappos: the Court not-so-helpfully said that while the machine-or-transformation is “a useful and important clue” in determining patentability, it’s not the only possible test.
Ask 10 patent attorneys where we stand after Bilski and you’ll get 10 different answers: while it’s generally agreed that software patents are still valid, it’s entirely possible we’re back to pretending that software is just hardware again. It’s also generally agreed that no matter what rules the courts and the USPTO issue, clever patent attorneys will be able to find a way to draft claims around them — that’s how we ended up pretending software was hardware in the first place.
Does that all seem super boring and insanely complicated to you? It should, because it is. Our court system is designed to resolve conflicts, not make laws, and trying to arrive at cohesive and consistent software patent guidelines through five decades of litigation is more or less like trying to build a skyscraper by throwing dirt at a tree. You can’t complain that the system is broken when we barely have a system.
Trying to arrive at cohesive and consistent software patent guidelines through five decades of litigation is more or less like trying to build a skyscraper by throwing dirt at a tree.
The solution is simple, of course: we just have to add a real software patent section to Title 35. What would it look like? Well, we could try and define what a “software patent” actually is — that’s never really been done in a meaningful way. We could also directly address the relationship between software and “just math,” and try to find a balance between protecting the research and investment it takes to push the industry forward, while taking proper notice of the fact that there are some foundational principles of software development that are as fundamental as any other kind of math. We might also sharply limit the term of software patents to better reflect the pace of the industry and the lower fixed costs of software development – software costs less to create and distribute than physical goods, so it’s probably fair to give companies a shorter period of time to profit from their inventions. Amazon CEO Jeff Bezos wrote an open letter calling for patent reform in 2000 that covered most of these points and proposed a term of 3-5 years. Maybe it’s time we dusted that off.
Now, I’m not a software developer, mathematician, or patent expert, and I can’t tell you how to craft a perfect software patent law that will protect real innovation and exempt mathematical principles while maintaining or even lowering the overall costs of the system. But I can damn well tell you that it’s imperative that we actually try to deal with software for what it actually is, instead of pretending that it’s magic fairy dust that changes computers into specialized machines or throwing in the towel and giving up. Admitting you have a problem is the first step towards recovery.
Stopping patent trolls
As a recent episode of This American Life made clear, Intellectual Ventures is a shady, strange, thuggish corporation that buys up enormous amounts of patents in order to extort licensing fees across the industry, from major players like Apple to small app developers. What TAL did not say is that Intellectual Ventures is also a classic example of American business success.
Former Microsoft CTO Nathan Mhyrvold and his band of lawyers aren’t doing much more than applying “buy low, sell high” to patents, and it’s hard to fault them for it, just like you wouldn’t fault someone for buying up tons of cheap land in the hope that they’ll strike gold. What you would fault someone for is buying up tons of prime real estate in the center of town and setting up a strip mine — it’s an offensive and exploitative use of property that maximizes individual profit at a huge expense to society. That’s more or less what IV and other patent trolls are doing; they’re taxing companies that make real products by purchasing broad foundational patents and litigating instead of making real products themselves. Slowing down trolls boils down to tipping the balance; we’ve got to make the strip mine less profitable to run than a shopping mall.
Unfortunately, we can’t simply go in with guns blazing and make it illegal for inventors to sell patents to potential troll companies. Patents are property, after all, and tightly regulating the general sale of property isn’t exactly a move from the all-American playbook. If some inventor wants to sell a patent to Intellectual Ventures, we pretty much have to let them — it’s how they’re realizing value for their invention. And we can’t up and start invalidating patents just because of who owns them. (Again: America.)
We also can’t simply forbid entities that don’t “make anything” from asserting patent rights. Not only would that that veer into uncomfortably unconstitutional territory, it would also prevent institutions like universities and research firms from gaining any value from their patents. That PageRank patent is actually owned by Stanford, which funded Larry Page’s grad student research; when he and Sergey Brin left to start Google, they signed an exclusive license to the patent in exchange for 1.8 million shares of stock that Stanford later sold for $336 million. That’s a major success story — we want more of those.
That’s not to say aggressive patent aggregators like Intellectual Ventures or outright trolls like Lodsys aren’t a serious problem. The trick is finding a balanced solution that respects existing property rights and doesn’t interfere with well-functioning parts of the patent system. We’re going to have to be more creative.
It’s not exactly hard to look at other countries with functional IP systems and fewer patent trolls and sketch the broad outlines of realistic potential solutions.
One strategy would be to sharply limit the amount of damages a non-practicing entity can win in a patent lawsuit — that would encourage more effective and open licensing, since that would ultimately be more profitable than litigation. We could also implement a compulsory licensing scheme for patents, which countries like the UK, Germany, Australia, and Japan already have in place: patent holders are required to license patents at commercially viable rates if they don’t make products within a certain amount of time. (Here’s the Australian compulsory patent licensing law, for example.) That’s a huge and messy debate with a lot of consequences, though: Google’s whining about the impact of patents on Android seems pretty damn minor when you consider the biggest recent compulsory patent licensing debates have concerned cutting-edge pharmaceuticals like AIDS drugs.
A better solution might be to work compulsory licensing into that new software patent section of Title 35, and adopt a hybrid approach: give inventors free reign over their patents for a limited window of time, and then kick in a compulsory licensing scheme with strictly defined rates for the remainder of the patent term. That would allow inventors the right to maximize profit from the proprietary advantages of their inventions for a fixed period of time, while still compensating them over the complete term. It would also make springing lawsuits based on older patents at the end of their terms much less attractive, since there would be a clearly-defined cap on damages.
Again, I’m not a patent expert, and I’m not going to sit here and pretend I can write a perfect compulsory licensing scheme that balances everyone’s rights in a way that comports with the Constitution. But it’s not exactly hard to look at other countries with functional IP systems and fewer patent trolls and sketch the broad outlines of realistic potential solutions, and it’s incredibly important that we start having that conversation instead of throwing irrationally misguided temper tantrums.
Wrap-up
Before Thomas Jefferson was appointed our first head of the Patent Office 1790, he argued passionately against patents — he once called them “embarrassments to the public,” and worried that “abuse of frivolous patents is likely to cause more inconvenience than is countervail by those really useful.” Sound familiar? But Jefferson took his job seriously, reviewing and even testing most applications himself, and by the end of his service he had become a strong proponent of patents, saying that the Patent Act of 1790 had “given a spring to invention beyond my conception.”
I don’t think we should sit around waiting for the ghost of Thomas Jefferson to help us out.
Jefferson’s initial skepticism about patents led him to insist that patented inventions be useful and non-obvious, the foundational rules of our system. Those rules might actually solve the software patent dilemma for us if we just wait long enough: the gold rush to patent all these fundamental software technologies means that they’ll all be public domain prior art in a few years, and any obvious improvements won’t be patentable. The pendulum swings both ways.
But I don’t think we should sit around waiting for the ghost of Thomas Jefferson to help us out, or for the Federal Circuit and Supreme Court to try and sneak new bodies of law into appellate court decisions. It’s time we channel our own skepticism about patents into a meaningful set of legislative reforms that reflects the reality of modern American technology innovation; a set of reforms that respects and protects the explosion of interest and investment in software development while respecting the unique qualities of software itself. We live in the most radically innovative time in human history — it’s time to grow up and stop acting like the patent problem is too hard to solve.
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