The Disputed Quality of Software Patents

We analyze the characteristics of the patents held by firms in the software industry. Unlike prior researchers, we rely on the examination of individual patents to determine which patents involve software inventions. This method of identifying the relevant patents is more laborious than the methods that previous scholars have used, but it produces a data set from which we can learn more about the role of patents in the software industry. In general, we find that patents the computer technology firms obtain on software inventions have more prior art references, claims, and forward citations than the patents that the same firms obtain on nonsoftware inventions. We also find that the patents that “pure” software firms (those producing only software) obtain on software inventions have more prior art references, claims, and forward citations than the software patents obtained by the firms that derive revenues from other product lines. Finally, we conclude that the patents of the largest firms are no better (or worse) than the patents of the smallest firms, belying the idea that large firms are plagued by challenges based on the worthless patents of their smaller competitors. The Article closes with a brief discussion of the implications of our empirical analysis. The findings undermine the strongest criticisms about the low quality of software patents. It is simply not accurate to say that software patents as a group have remarkably low numbers of prior art references and forward citations. Thus, these findings cut against technology-based patent reforms designed to make it more difficult to obtain software patents. On the other hand, the evidence that small firms are no less capable than large firms of producing quality patents undermines concerns that higher hurdles at the early stage of the patenting process would disadvantage smaller inventors

The Disputed Quality of Software Patents

We analyze the characteristics of the patents held by firms in the software industry. Unlike prior researchers, we rely on the examination of individual patents to determine which patents involve software inventions. This method of identifying the relevant patents is more laborious than the methods that previous scholars have used, but it produces a data set from which we can learn more about the role of patents in the software industry. In general, we find that patents the computer technology firms obtain on software inventions have more prior art references, claims, and forward citations than the patents that the same firms obtain on nonsoftware inventions. We also find that the patents that pure software firms (those producing only software) obtain on software inventions have more prior art references, claims, and forward citations than the software patents obtained by the firms that derive revenues from other product lines. Finally, we conclude that the patents of the largest firms are no better (or worse) than the patents of the smallest firms, belying the idea that large firms are plagued by challenges based on the worthless patents of their smaller competitors. The Article closes with a brief discussion of the implications of our empirical analysis. The findings undermine the strongest criticisms about the low quality of software patents. It is simply not accurate to say that software patents as a group have remarkably low numbers of prior art references and forward citations. Thus, these findings cut against technology-based patent reforms designed to make it more difficult to obtain software patents. On the other hand, the evidence that small firms are no less capable than large firms of producing quality patents undermines concerns that higher hurdles at the early stage of the patenting process would disadvantage smaller inventors

University Software Ownership and Litigation: A First Examination

Software patents and university-owned patents represent two of the most controversial intellectual property developments of the last twenty-five years. Despite this reality, and concerns that universities act as “patent trolls” when they assert software patents in litigation against successful commercializers, no scholar has systematically examined the ownership and litigation of university software patents. In this Article, we present the first such examination. Our empirical research reveals that software patents represent a significant and growing proportion of university patent holdings. Additionally, the most important determinant of the number of software patents a university owns is not its research and development (“R&D”) expenditures (whether computer science-related or otherwise) but, rather, its tendency to seek patents in other areas. In other words, universities appear to take a “one size fits all” approach to patenting their inventions. This one size fits all approach is problematic given the empirical evidence that software is likely to follow a different commercialization path than other types of invention. Thus, it is perhaps not surprising that we see a number of lawsuits in which university software patents have been used not for purposes of fostering commercialization, but instead, to extract rents in apparent holdup litigation. The Article concludes by examining whether this trend is likely to continue in the future, particularly given a 2006 Supreme Court decision that appears to diminish the holdup threat by recognizing the possibility of liability rules in patent suits, as well as recent case law that may call into question certain types of software patents

Not All Bad: An Historical Perspective on Software Patents

This Paper places the current debates about software patents in the historical context of patenting in the information technology industries. The first computer-program products were sold in the mid 1960s when software patents were not generally allowed; as a result, trade secrecy became endemic to the software industry. Software products were also protected by copyright, but in practice this offered little protection against most forms of appropriation by reverse engineering or cloning. By the early 1980s a series of landmark cases led to the acceptance of software patents. It is argued that this development was consistent with the patenting of algorithmic inventions that long predated the invention of the computer. In the 1990s, business method patents were accepted. Again, it is argued that this development was consistent with the virtualization of inventions that long predated the Internet. It is shown that patents offer similar benefits to the software industry as for other technological industries, as well as some old and new disadvantages. The Paper draws three main conclusions. First, from an historical viewpoint, software patents are not radically different from those of other technologies; the patent system has adapted to the particular demands of new technologies over time, and the software patent system is already making such adaptations. Second, patents are superior to the alternative IP regimens of trade secrecy and copyright, primarily because of the public benefits of disclosure. Third, patents offer the most economically efficient way of co-ordinating multiple R&D investments in major software technologies

Not All Bad: An Historical Perspective on Software Patents

This Paper places the current debates about software patents in the historical context of patenting in the information technology industries. The first computer-program products were sold in the mid 1960s when software patents were not generally allowed; as a result, trade secrecy became endemic to the software industry. Software products were also protected by copyright, but in practice this offered little protection against most forms of appropriation by reverse engineering or cloning. By the early 1980s a series of landmark cases led to the acceptance of software patents. It is argued that this development was consistent with the patenting of algorithmic inventions that long predated the invention of the computer. In the 1990s, business method patents were accepted. Again, it is argued that this development was consistent with the virtualization of inventions that long predated the Internet. It is shown that patents offer similar benefits to the software industry as for other technological industries, as well as some old and new disadvantages. The Paper draws three main conclusions. First, from an historical viewpoint, software patents are not radically different from those of other technologies; the patent system has adapted to the particular demands of new technologies over time, and the software patent system is already making such adaptations. Second, patents are superior to the alternative IP regimens of trade secrecy and copyright, primarily because of the public benefits of disclosure. Third, patents offer the most economically efficient way of co-ordinating multiple R&D investments in major software technologies

Research Tool Patents and Free-Libre Biotechnology: A Unified Perspective.

This paper proposes a unified conceptual framework to analyse the multiple role and consequences of patents in the case of biotechnology research tools. We argue that the knowledge/information and independent/complementary nature of research tools define heterogeneous frameworks in which the patent system plays different roles. In particular, using the analogy with the free-libre open source movement in software, we show that patents can promote open innovation by ensuring the freedom of some pieces of knowledge. A strong conclusion of the paper is therefore that, against common belief, an adequate use of the patent system may contribute to preserving freedom of access to upstream research tools within a framework that we call free-libre biotechnology.Intellectual property rights, sequential innovation, open source, life science, collective invention.

The uninvited guest: patents on Wall Street

For at least the past twenty-five years, financial services industries have been creating innovative products and services without the help of patents. The 1998 State Street Bank case changed all this, making patents freely available in these industries. Will patents help or hurt financial services innovation in the long run? This article sheds some light on this issue. ; Before the advent of patents, several “appropriability” mechanisms protected financial services innovation: “first mover” advantages, complementary or “cospecific” assets, and trade secrecy. Evidence suggests that, in the immediate post-patent era, financial firms’ first order of business was to protect these traditional appropriability practices. This attitude explains the early push to secure a “prior use rights” defense to protect established firms against patent claims by upstart outsiders. From a historical perspective, this reaction to the “patent threat” tracks that of other industries: in particular, nineteenth-century railroads and the software industry of the 1980s. ; In the end, the author argues, patents are not likely to cause any real and lasting problems. Although patents may increase the costs of interchanging innovative ideas, they may bring some unintended benefits as well—by fostering spin-offs and facilitating entry by start-ups, for example. Like random shocks in the natural world, the new patent regime provides a shakeup that could bring some good but unpredictable consequences.Patents ; Financial services industry

Why Patentable Subject Matter Matters for Software

Increasingly, courts weary from years of arguing about the scope of patentable subject matter for software patents seem ready to throw in the towel. Rather than continue efforts to craft a test for determining when a software invention graduates from an “abstract idea” or mere algorithm into a patentable invention, several recent Federal Circuit opinions dismissinely reject section 101 challenges as attacks that should have be made instead under sections 102, 103, and 112. This short essay criticizes this recent trend in patentable subject matter jurisprudence. Accused infringers look to section 101 for relief not because doing so is a convenient shortcut around more traditional checks on patentability, but rather precisely because traditional checks on patentability have proven to be woefully ineffective weapons against overbroad software patents