Software Patents Research Articles

Software Patents as a Barrier to Scientific Transparency: An Unexpected Consequence of Bayh-Dole

Computing has taken a central role in the practice of science. From the ability to capture data, methods, create simulations, and provide dissemination mechanisms, science has gone digital. In this paper we examine the interaction between the digitization of science and Intellectual Property Law, specifically the incentives created by the Bayh-Dole Act to patent inventions associated with university-based research. We show that the number of software patents granted to faculty researchers has more than doubled over the last ten years among top patenting universities and colleges. In a traditional scientific setting methods are usually openly shared in the methods section of a scientific publication, but due to increased levels of complexity and detail deep intellectual contributions to science are now being captured only in the software and codes that generate published computational results. In computational science reproducibility of results can typically only be effected with knowledge of the underlying code and data – the traditional methods section is insufficient for computational science. Because of the ability to patent software, incentives to patent academic code are potentially at odds with scientific norms of transparency and reproducibility.We collect a novel dataset to understand the rise in academic software patenting and its potential for occluding reproducible research – where the code and data underlying published results is openly shared. We implement a predictive model and find preliminary evidence that the increasing number of academic software patents is associated with increasing levels of industry collaboration (defined as at least one industry-based patent author) in patentable research, but there a weakly negative association with published articles (defined as those cited in the patent application). This extends a result in the literature to software patents: that patents arise more frequently from collaborations with industry, but does not confirm a second result, that positive reinforcement effect on publication by faculty who seek patents. From the perspective of reproducible computational research, this indicates that prior publications are either not be made if there is an intent to patent, or not be listed on the patent application. These findings indicate that the question of whether code needed to reproducible computational results is being patented and licensed is still an open one.

Startups and Patent Trolls

While patent assertion entities (PAEs or patent “trolls”) have received a lot of attention, little of it has focused on the distributional impacts of their demands. The impact of PAEs on startups is crucial, because startups contribute to job creation and innovation, making them potential targets and sources of patents. To assess the impact of trolls on startups, I analyzed a comprehensive database of patent litigations from 2006 to the present, conducted a non-random survey of 223 tech company startups, 79 of which had received a demand, and interviewed nearly twenty entities with relevant knowledge of startup patent issues.I find that although large companies tend to dominate patent headlines, most unique defendants to troll suits are small. Companies with less than $100M annual revenue represent at least 66% of unique defendants to troll suits and at least 55% of unique defendants in troll suits make $10M per year or less. Suing small companies appears distinguish PAEs from operating companies, who sued companies with less than $10M per year of revenue only 16% of the time, based on unique defendants. Of survey responses that had received a demand (N=79), a large percentage reported a “significant operational impact”: delayed hiring or achievement of another milestone, change in the product, a pivot in business strategy, shutting down a business line or the entire business, and/or lost valuation. The smaller the company, the more likely it was to report one or more significant operational impacts. To the extent patent demands tax innovation, then, they appear to do so regressively, with small companies targeted more as unique defendants, and paying more in time, money and operational impact, relative to their size, than large firms. 40% of survey respondents stated that they were being targeted because of their use of another’s or a widely available technology.Yet an operational change was not the only response to a demand: 22% of responders reported that, to resolve the demand, their primary response was to “do nothing,” while 35% fought the demand, and 18% settled it. Based on available information, costs were highest when fighting in court was the primary response (with average expenditures of $857K (N=7)); settling cost an average of $340K (n=12) and fighting out of court cost $168K (N=18), on average (Table 1). Small companies can also benefit from a robust market in patents, both as sellers and buyers. An estimated 50% of NPE patents come from companies with less than $200M in revenue. Patent sales can support the ongoing business, and 4% of survey responders said they had monetized their patents, and another 20% said that they had considered it. Yet while the conditions of a majority of sales is unknown, they often take place when the company is in distress or transition, as growing young companies often lack the inclination, time, or extra patents to monetize their intellectual property. When patents are sold under firesale conditions, investors, creditors, and patent focused companies share in the profits, reducing the direct returns to the inventive entity. Growing companies can also benefit from the patent marketplace as buyers, buying patents from the marketplace on-demand and overcoming some of the advantages of incumbents. What can be done to decrease the harms of patent assertion and increase the benefits of a robust patent market to small companies and startups? Focusing exclusively on the first question, I present new data that suggest that a number of the reforms put in place over the last year, including by the America Invents Act, are having a positive impact. Fewer defendants are being named in patent suits. The new post-grant review provisions will reduce the leverage of patent plaintiffs in some cases. However, some of these reforms are out of the reach of startups. Prior user rights benefit older companies against younger patents, but don’t help new start-ups. Startup companies are cash-poor, but challenging issued patents is expensive and time-consuming. Reforms to reduce the cost of litigation defense are laudable, and likely deter some suits from being brought in the first place, but don’t reach small companies against whom litigation is threatened, but not brought. Increasing the cost of software patents would limit the number of patents but would also disadvantage startups that patent, relative to large companies and PAEs with large budgets. The distributional impacts of reforms need to be kept in mind, and I suggest some alternative reforms for the consideration of the courts, Congress, and the market.

Do 'Fuzzy' Software Patent Boundaries Explain High Claim Construction Reversal Rates?

Bessen and Meurer (2008) theorize that a breakdown in notice of patent boundaries caused the patent litigation surge of the 1990s. They argue a prime source of this breakdown was the proliferation of software patents with particularly uncertain scope. In this paper I seek evidence that software patent scope is more uncertain by extending the empirical literature on claim construction reversal rates to determine whether the Federal Circuit has been more likely to find error in district court construction of software patents. Not only do I find that it has, since 2002 software patents account for forty percent of the difference between the Federal Circuit’s high claim construction reversal rate and its lower average reversal rate on all other patent issues. These results are cause for optimism because, in general, the application of existing claim construction law has been more predictable than many have feared. However, that optimism does not extend to software claim construction, which remains highly unpredictable.

Software Patents and the Return of Functional Claiming

Commentators have observed for years that patents do less good and cause more harm in the software industry than in other industries such as pharmaceuticals. They have pointed to a variety of problems and offered a variety of solutions. While there is some truth to each of these criticisms, the real problem with software patents lies elsewhere. Software patent lawyers are increasingly writing patent claims in broad functional terms. Put another way, patentees claim to own not a particular machine, or even a particular series of steps for achieving a goal, but the goal itself. The resulting overbroad patents overlap and create patent thickets. Patent law has faced this problem before. The Supreme Court ultimately rejected such broad functional claiming in the 1940s as inconsistent with the purposes of the patent statute. When Congress rewrote the Patent Act in 1952, it adopted a compromise position: patentees could write their claim language in functional terms, but when they did so the patent would not cover the goal itself, but only the particular means of implementing that goal described by the patentee and equivalents thereof. These “means-plus-function” claims permitted the patentee to use functional language to describe an element of their invention, but did not permit her to own the function itself however implemented. Most software patents today are written in functional terms. If courts would faithfully apply the 1952 Act, limiting those claims to the actual algorithms the patentees disclosed and their equivalents, they could prevent overclaiming by software patentees and solve much of the patent thicket problem that besets software innovation.

Initial thoughts on Mayo v. Prometheus and software patents

In the aftermath of an important decision by the Supreme Court of the United States, the first impressions on the significance of the Mayo Collaborative Services v. Prometheus Laboratories, Inc. over the software patents debate in the United States. An excerpt of the most relevant parts of the opinion is attached

Software Patenting: A Comparative Analysis of US and Indian it Market Leaders

Software patent is a ‘patent on any performance of a computer realised by means of a computer program’. A computer consists of various hardware components and self-contained software, which provide the entire shuttle with computerised monitoring and control. Currently, software patents are patentable in many countries, except in India. The World Intellectual Property Organization (WIPO) has defined the International Patent Classification (IPC) code for various technologies. According to the Eighth Edition of the IPC system, the IPC code for patents covered under the software patent is G06. Although India is very strong in software development and export, our Indian IT companies are not fully aware of where they stand on software intellectual property (IP) protection. Therefore, there is a need to conduct a study to identify a global patent landscape on software patents. An IP study has been conducted to examine the current global patent landscape of companies having software patents from years 2001 to 2011. Patents search was conducted in commercial value-added patent databases, using the IPC code as the main search criteria. Companies active in patents filing with respect to various technology areas were listed and correlated. The potential markets open to software patents have been found using family patent information. This study finds competitiveness of Indian IT companies with respect to global software companies having patents on software.

Finding the Point of Novelty in Software Patents

The issue of patentable subject matter eligibility is in considerable flux. In 2012, the Supreme Court set forth a confusing new framework for determining patent eligibility. The decision in Mayo v. Prometheus cast serious doubt on the continued viability of many software patents. Indeed, a split quickly emerged in the Federal Circuit. As a result, it was unclear whether adding computer limitations to an otherwise unpatentable concept somehow renders the concept patent eligible. In an attempt to settle this question, the Federal Circuit granted a petition to rehear CLS Bank Int’l en banc. But the judges could not find common ground and the decision contained seven separate opinions reflecting at least three distinct approaches. Thus, there remains a pressing need to find a common analytical framework for deciding software patent eligibility questions. There is a way out of current morass without departing from precedent. In Mayo, the Supreme Court implicitly revived long rejected point of novelty thinking. In earlier essay, I expanded on that approach and offered a general framework for making patentable subject matter eligibility determinations. This article applies this approach to software patents. Specifically, it explains that the key to determining whether a software patent covers eligible subject matter is assessing the strength of the connection between the patent’s point of novelty and physical devices found in the other claim limitations. This test serves to rein in harmful business method software patents without affecting more deserving industrial patents. Thus, the test is justified from both a doctrinal and policy perspective.

Business Method Patents Revisited: Recent Developments in the Protection of Computer Implemented Business Methods in the U.S. - Between the Promotion of Innovation and Protection of Investments?

Criticisms against business method patents (BMPs) are almost exclusively directed at the quality of BMPs. It is viewed that many BMPs amount to no more than patents on known brick and mortar commercial techniques merely performed through the computer or on the internet e-commerce platform thus obvious. Although recent economic findings seem to suggest that BMPs and even software patents play a very little role in actually promoting technological innovation in the sciences and the arts, these findings have not conclusively established whether BMPs in particular actually hinder innovation or act as bottlenecks to competition. This paper discusses the current state of affairs regarding U.S. BMPs and seeks to establish from a vantage of hindsight, whether previous calls to abolish business methods from the scope of patentable subject matter under § 101 of the U.S. Patent Act have any merit in light of recent developments.

Open Invention Network: A Defensive Patent Pool for Open Source Projects and Businesses

IntroductionThe threat of software patent suits impacts standards, dictates what software becomes part of GNU/Linux distributions, creates extra work, and makes the end-user's experience less than ideal, as will be shown in this article. In last month's issue of the TIM Review, Monica Goyal (2011) thoroughly examined some of the legislative ideas being discussed with regards

User innovation and knowledge sourcing: The case of financial software

According to user innovation literature, users can create important innovations and the novel functionalities embedded in those user innovations often become the sources of subsequent innovations by both other users and manufacturers. However, manufacturers are often hesitant in commercializing an innovation created by a single user due to the uncertainty around the market demands. We propose that such hesitancy will decrease when an increasing number of other users source knowledge elements from the focal user innovation and reproduce the novel functionality. Once the focal user innovation is commercialized by manufacturers, other users can purchase the novel functionality from the market rather than reproducing it in house. We propose that users capable of drawing on innovation resources are more likely to maintain in-house reproduction of the focal user innovation than users low on innovation resources. By using the Vector Autoregressive (VAR) model and Impulse Response Function (IRF) analysis method, we analyze knowledge sourcing activities from financial software patents data, and the findings provide empirical supports for our propositions.

Software Patents: Current Challenges and Future Solutions

IntroductionWe have lost sight of the true meaning and purpose of patents. Patents were created in order to encourage innovation, not kill it. They were meant to protect the inventor, not further strengthen those with power. Patents have instead been used for years now in the software industry as a blunt weapon to suppress innovation, kill competition, and generate undeserved

Software Patents: Current Challenges and Future Solutions

IntroductionWe have lost sight of the true meaning and purpose of patents. Patents were created in order to encourage innovation, not kill it. They were meant to protect the inventor, not further strengthen those with power. Patents have instead been used for years now in the software industry as a blunt weapon to suppress innovation, kill competition, and generate undeserved

Compatibility Of The Licensing Of Embedded Patents With Open Source Licensing Terms

For many years software patenting has been an area of considerable contention, particularly in relation to whether it can, or should, be able to co-exist with Free and Open Source licenses. This issue has gained substantial additional impetus with the publication by the European Commission of the European Interoperability Framework, version 2, which, amongst other objectives, seeks to promote a level playing field for Free and Open Source Software in European public services. However, interoperability will often require the software to interact with a Standard which contains unavoidable patents. The issues raised by this were of concern to a client of Andrew Katz 1 , The client sought the Opinion of Counsel on the matter and Andrew Katz prepared a brief setting out the client's concerns and, by way of illustration, providing the text of a cross-section of commonly-used Free and Open source Software Licences. The Opinion was issued jointly by Iain G. Mitchell QC and Stephen Mason, Barrister. The Client has now generously given permission for the Opinion to be published provided that the client's identity is not disclosed. What follows is a suitably edited version of that Opinion, which has been anonymised to respect the wishes of the client and which has been slightly shortened to allow for publication in the Review 1 Andrew Katz, Solicitor, of Moorcrofts, Solicitors, James House, Mere Park, Dedmere Road, Marlow, Bucks SL7 1FJ http://www.moorcrofts.com

Resolving conflicting interests: software patents versus open source

The issue of granting software patents in the United States has a created a rift between the open source community and patent owners. One of the contributing factors causing conflict between the open source community and patent owners is the read granting of software patent applications by the United States Patent and Trademark Office (USPTO). The increasing volume of software patent applications received by the USPTO has strained the patent system and consequently software patent applications are granted without close examination of whether they meet the requirements for a valid patent. The conflict between patent owners and the open source community is exacerbated when alleged patent infringement occurs for software products that circulate in the technology industry that should be open and free to use within the open source community. Subsequently, this issue is complicated when the alleged patent infringement occurs. The threat of litigation is a financial burden that is too great to bear by small and medium enterprises and by developers who unknowingly use software protected by a patent, which results in paying license fees and/royalties to avoid costly litigation. The granting of software patents without scrutiny of prior art by the USPTO is restricting innovation within the information technology sector and hindering developers, programmers, and technology innovators from creating and innovating new and emerging technologies. Further, the granting of software patents without close examination by patent examiners restricts and contradicts the ethos and philosophy behind a grant of patent.

The Private and Social Costs of Patent Trolls

In the past, non-practicing entities (NPEs) - firms that license patents without producing goods - have facilitated technology markets and increased rents for small inventors. Is this also true for today’s NPEs? Or are they “patent trolls” who opportunistically litigate over software patents with unpredictable boundaries? Using stock market event studies around patent lawsuit filings, we find that NPE lawsuits are associated with half a trillion dollars of lost wealth to defendants from 1990 through 2010, mostly from technology companies. Moreover, very little of this loss represents a transfer to small inventors. Instead, it implies reduced innovation incentives.

A Generation of Software Patents

This report examines changes in the patenting behavior of the software industry since the 1990s. It finds that most software firms still do not patent, most software patents are obtained by a few large firms in the software industry or in other industries, and the risk of litigation from software patents continues to increase dramatically. Given these findings, it is hard to conclude that software patents have provided a net social benefit in the software industry.

Political discourse networks and the conflict over software patents in Europe

AbstractIn 2005, the European Parliament rejected the directive ‘on the patentability of computer‐implemented inventions’, which had been drafted and supported by the European Commission, the Council and well‐organised industrial interests, with an overwhelming majority. In this unusual case, a coalition of opponents of software patents prevailed over a strong industry‐led coalition. In this article, an explanation is developed based on political discourse showing that two stable and distinct discourse coalitions can be identified and measured over time. The apparently weak coalition of software patent opponents shows typical properties of a hegemonic discourse coalition. It presents itself as being more coherent, employs a better‐integrated set of frames and dominates key economic arguments, while the proponents of software patents are not as well‐organised. This configuration of the discourse gave leeway for an alternative course of political action by the European Parliament. The notion of discourse coalitions and related structural features of the discourse are operationalised by drawing on social network analysis. More specifically, discourse network analysis is introduced as a new methodology for the study of policy debates. The approach is capable of measuring empirical discourses both statically and in a longitudinal way, and is compatible with the policy network approach.

Defining Software Patents: A Research Field Guide

What, exactly, distinguishes a patent on a software innovation from patents on other kinds of innovations? While the question may appear esoteric at first glance, it is the crucial first step in any empirical study of software patents. The policy debate over software patents - whether they should be allowed at all, what should qualify, and whether they are used to block or encourage innovation - has been raging for quite some time on both sides of the Atlantic. Meaningful contributions to this debate should be rooted in firm empirical analysis, as opposed to individual anecdotes. But supplying firm empirical analysis requires data on software patents, and thus the question posed above. In this paper, I examine the definitional choices made thus far by the emerging empirical literature on software patenting and explore the implications of those choices. The emphasis here is on how the definition selected can affect the conclusions made. I find that different definitions do lead to datasets with distinct characteristics. While no one definition emerges as clearly right, some methods appear better than others. Much more empirical research on software patenting is needed to improve patent reform efforts, and that research should begin by justifying the definition of software patent chosen.

Sources and characteristics of software patents in the European Union: Some empirical considerations

Software patenting is an increasingly important phenomenon in the European Union. Using a novel database of more than 30,000 software patents granted to both European and Non-European companies, we investigate the relevant factors explaining firm-level software patenting at the European Patent Office. We find that software patents are mainly applied for by American and Japanese firms, that they are characterised by a higher than average length of the granting procedure and that firms belonging to the software sector generally do not apply for them. Finally, results from non-linear panel data estimation reveal that patents are not deemed as useful appropriability instruments by software firms and that a “threat effect” by hardware firms is growing in importance. This last result is in line with recent developments in the literature relative to strategic patenting.

Software Patents and Open Source Models in Europe: Does the FOSS community need to worry about current attitudes at the EPO?

The growing popularity of free and open source software (hereinafter ‘FOSS’) and the equally significant growth in the number of software patents give rise to the question of whether both models can live in peace, side by side, or does the latter pose a threat to the former. The focal point of this paper is the scope of patent protection to software products in EPC countries, particularly in the light of of the FOSS development environment.. Software patents are of great interest to the FOSS community. Modern computer programs are complex. They are developed incrementally where each software generation builds upon the previous one. Avoiding an inefficient re-invention of the wheel, programmers are typically combining thousands of different programs and algorithms in an innovative manner in order to produce the requisite final product. Here is where software patents become relevant. If a large number of those fundamental building blocks are unusable due to patent protection, a type of a ‘tragedy of the anticommons’ emerges. Hence, developers that may reasonably rely on FOSS licenses to incorporate the licensed software into their programs may later on realize that their actions amount to patent infringement. Obviously, this might have a chilling effect on the development and adoption of FOSS products.