U.S. Patent and Trademark Office Director David Kappos spoke yesterday at the Center for American Progress on software patents, outlining the need for patents in protecting innovation, defending the Patent and Trademark Office’s handling of these patent cases, and describing the next steps and opportunities for public engagement. (Read his full remarks, as prepared, here.)
Kappos began his talk by outlining the significant role that intellectual property plays in the economy at large—40 million jobs created and $5 trillion injected into the economy, accounting for a 35 percent chunk of U.S. GDP. While the significant impact of intellectual property on the economy is indisputable, opinions differ on how to best protect intellectual property and what drives—or hinders—innovation, particularly in the realm of software.
A central question Kappos raised was whether software should be treated differently from hardware. He answered that question with a resounding “no.” Referencing GPS technology and the da Vinci Surgical System, he described innovations where software was highly integrated with hardware and defended programmers who need to protect their algorithms and access venture capital to help support their projects.
For most of history, conventional wisdom has been that software is more of an idea than device, and consequently should be protected by copyright rather than patent law. But in his remarks yesterday, Kappos challenged that notion, stating, “patents are issued for process and apparatus, which are determined to be novel and non-obvious. Patents are not granted for abstract ideas.”
In the question-and-answer session, he noted that the Supreme Court has struggled with software patents and cited their 2010 decision in Bilski v. Kappos. In the case, the Court affirmed the Federal Circuit decision invalidating Bilski’s patent–a claimed invention that explains how commodities buyers and sellers in the energy market can protect, or hedge, against the risk of price changes. The Court rejected the Bilski patent for being an “abstract idea,” not patentable under Section 101 of the Patent Act, and suggested that other tests be conducted to determine patentability.
Kappos gave a detailed accounting of how the Patent and Trademark Office is working to issue only high-quality patents for software through strengthening the obviousness standard, using crowdsourcing to solicit third-party submissions of prior art at Ask Patents, and providing extensive training to patent examiners—more than 1,700 hours worth in fiscal year 2012. He cited seven metrics his office has developed to measure patent quality, which he terms the “lexus of quality standards,” as well as 101 Guidelines and 112 Guidelines–referring to sections of the patent code—to provide further clarity on which inventions are patent eligible.
The obviousness standard and prior art issues—two critical factors in the evaluation of a patent application—have both posed thorny issues in the software realm.
One prominent example surrounded the patentability of a software technique known as “backing store.” Backing store was a technique developed in the 1980s to save the content of a partially hidden window in an off-screen memory so as to be quickly restored when the window that blocked it is removed from view.
As described in Patent Wars by science journalist and author Fred Warshofsky, this technique was considered so obvious that it was incorporated into a program called the X Windows System developed by scientists at the Massachusetts Institute of Technology, but was not the subject of a publication on its own. In the programmer’s manual published by these scientists, there was mention of turning the backing store on and off.
Unfortunately, AT&T did believe it patentable and the MIT programming manual—published one week after AT&T’s patent application was filed—was not considered prior art. The issuance of this patent threatened not only to thwart MIT’s use of the technique they developed but also the ability of computer companies and users who accepted the software from MIT under the assumption that it was free.
While software patents have come a long way since the backing store patent was issued in 1985, critics raise the same concerns with more recent patents like Amazon’s one-click ordering. After a patent office reexamination, the patent was confirmed in March 2010. Richard Stallman, founder of the Free Software Movement and author of the GNU operating system, opposed the patent and wrote that the one-click technology is “an important and obvious idea for e-commerce.”
But aside from the difficulty in verifying nonobviousness and prior art in the software industry, other opponents of software patenting have long argued against such protection on philosophical grounds. In a 1994 public hearing on the “Use of the Patent System to Protect Software-Related Inventions,” Douglas Brotz, then the principal scientist at Adobe Corporation, stated that “software per se should not be allowed patent protection.” He continued:
I take this position as the creator of software and as the beneficiary of the rewards that innovative software can bring in the marketplace. … [Adobe and I] take this position because it is the best policy for maintaining a healthy software industry, where innovation can prosper. …
I argue that software should not be patented, not because it is difficult to do so, but because it is wrong to do so.
The software marketplace requires constant innovation regardless of whether the computer programs can be patented or not. Indeed, the fundamental computer programs and concepts on which the entire industry is based were conceived in an era when software was considered to be unpatentable.
For example, when we at Adobe founded a company on the concept of software to revolutionize the world of printing, we believed that there was no possibility of patenting our work. That belief didn’t stop us from creating that software, nor did it deter the savvy venture capitalists who helped us with the early investment. We have done very well despite our having no patents on our original work.
On the other hand, the emergence in recent years of patents on software has hurt Adobe and the industry. A “patent litigation tax” is one impediment to our financial health that our industry can ill-afford.
Resources that could have been used to further innovation have been diverted to the patent problem. Engineers and scientists such as myself who could have been creating new software instead are working on analyzing patents, applying for patents and preparing defenses. Revenues are being sunk into legal costs instead of into research and development. It is clear to me that the Constitutional mandate to promote progress in the useful arts is not served by the issuance of patents on software.
While Kappos and others may argue that these patents provide an incentive for innovation, it is important to observe how open source software—software freely shared and modified by the community at large—has thrived.
In The Knockoff Economy: How Imitation Sparks Innovation, published September 2012 by Oxford University Press, the authors note that open source software has led to roughly $60 billion in savings to consumers, according to the estimates of one consultant. The authors add:
After a quarter century of enormous growth, there’s no longer a serious question that the open source model works. Mozilla Firefox, the world’s second largest browser with over 150 million users, is open source. So is the Linux operating system, which is running on about 25 percent of all corporate servers. Over half of corporate servers run Apache, the open-source Web server software. And these are just a few of the many thousands of open-source projects.
Understandably, those who support open source software are concerned about the risks that software patents could present to the open source movement. In The Wealth of Networks, distinguished Harvard professor and author Yochai Benkler poses the problem:
From the perspective of the battle over the institutional ecology, free software and open-source development stand to lose the most from software patents. A patent holder may charge a firm that develops dependent software in order to capture rents. However, there is no obvious party to charge for free software development. … if working on a [particular design] problem requires a patent license, and if any new development must not only write new source code, but also avoid replicating a broad scope patent or else pay a large fee, then the conditions for free software development are thoroughly undermined.
Free software is responsible for some of the most basic and widely used innovations and utilities on the Internet today. Software more generally is heavily populated by service firms that do not functionally rely on exclusive rights, copyrights, or patents. Neither free software nor service-based software development need patents, and both, particularly free and open-source software, stand to be stifled significantly by widespread software patenting.
Both President Barack Obama and Kappos should be applauded for taking on the herculean task of reforming the patent system—a project neglected for the last 60 years. While China is expected to surpass the United States in the total number of patents held for the first time this year, it is still important for our process to be more discriminating, in order to allow innovation to thrive.
The Patent and Trademark Office will host a public roundtable on January 11, 2013, to take comments for setting up a system to improve the records on existing patents. Public Knowledge, a D.C.-based nonprofit working on patent issues, provides more information on the areas for reform here.
Christina DiPasquale is the Associate Director for Press Relations at the Center for American Progress.