Software patent

Software patents and patents on computer-implemented inventions (CII) are a class of patents and one of many legal aspects of computing. There is intense debate as to what extent such patents should be granted, if any.

Practical effects of software patents

Patenting software has become popular. This is difficult to quantify but as an indication as of January 2005 Microsoft alone has 6,130 issued patents which are presumably mainly software patents (US PTO Search). Microsoft expects to file 3,000 new applications this year. IBM received 3,415 patents in 2003 but many of these do not relate to software.

Related Topics:
January 2005 - Microsoft - IBM

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Most large software companies have cross-licencing agreements in which each agrees not to sue the other over patent infringements. For example, Microsoft has agreements with IBM, Sun Microsystems, SAP, Hewlett-Packard, Siemens AG, Cisco and recently Autodesk (IDG News Service). Interestingly Microsoft agreed to share with Sun even though they are a direct competitor and with AutoDesk even though they have far fewer patents than Microsoft. It appears that large companies would prefer to avoid expensive and uncertain litigation rather than assert their own intellectual property rights. Indeed, being able to negotiate such agreements is a major reason that companies file "defensive" patents.

Related Topics:
Patent infringement - Microsoft - IBM - Sun Microsystems - SAP - Hewlett-Packard - Siemens AG - Cisco - Autodesk

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Some large companies have started to enforce patent rights. For example, in the early 1990s IBM started an aggressive licencing program which generated over $2 billion a few years later (Newsweek Article). Licences are often charged as a cost per unit sold or at a few percent of gross sales (not profit), and this license "tax" can become a major burden if several different organizations are claiming patent violations.

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A new line of business has emerged that mainly focusses on obtaining and enforcing software patent rights rather than building and marketing usable software systems. Some companies such as Intellectual Ventures have the backing of large corporations while others such as Acacia Technologies are independently enforcing patents. High prices have been paid for software patent portfolios, eg. Commerce One.

Related Topics:
Intellectual Ventures - Acacia Technologies - Commerce One

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Many free software / open source developers fear that software patents will prevent them creating software. Such projects generally have no defensive patent portfolio of their own, no mechanism to pay royalty fees, and have smaller budgets. This has affected several projects (FFII Effects of Patents). Several companies (eg. IBM) have licenced parts of their patent portfolio to open source products or more generally, particularly to encourage standards. However, this represents a tiny fraction of the total number of software patents that have been issued. It does not give the open source community a defensive patent portfolio which can be used to negotiate cross-licencing agreements. Novell seems to have gone further in committing to actively use its patent portfolio against other companies that might bring actions against certain open source products.

Related Topics:
Free software - Open source

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The "inventive step" requirement for software patents is viewed by some as being quite low. This allegedly makes it relatively easy to obtain a software patent. The quality of assessment also seems to be quite low, with well known prior art often ignored. This has resulted in some software patents being rejected upon re-examination, eg. the Microsoft FAT Patent.

Related Topics:
Inventive step - Prior art - FAT Patent

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In practice, software engineers rarely search patent databases and applications looking for new inventions that could benefit their projects. This is because of 1. the lack of inventive step in many software patents, 2. the obscure language with which software patents are described, and 3. the risk of being assessed for triple damages for knowingly infringing one (Federal Trade Commission). Many infringements are for independent inventions.

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There are several Economic Studies that assess whether software patents actually encourage or discourage innovation.

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