Patents are vitally important to protecting intellectual property. Plenty of creativity occurs within the technology industry, and without patents, executives say they could never justify spending fortunes on new products. And academics say that some aspects of the patent system, like protections for pharmaceuticals, often function smoothly.

However, many people argue that the nation’s patent rules, intended for a mechanical world, are inadequate in today’s digital marketplace. Unlike patents for new drug formulas, patents on software often effectively grant ownership of concepts, rather than tangible creations. Today, the patent office routinely approves patents that describe vague algorithms or business methods, like a software system for calculating online prices, without patent examiners demanding specifics about how those calculations occur or how the software operates.

As a result, some patents are so broad that they allow patent holders to claim sweeping ownership of seemingly unrelated products built by others. Often, companies are sued for violating patents they never knew existed or never dreamed might apply to their creations, at a cost shouldered by consumers in the form of higher prices and fewer choices.

US vs. EU

The extent to which software should be patented has been – and still is – a topic of intense debate. Nowadays, there is no harmonization across countries on this matter. As indicated in the quote above, the US Patent and Trademark Office broadly grants patents that may be referred to as software patents (and it has been doing so since at least the early 1970s). In contrast, the European Patent Office has adopted a more restrictive approach (see here):

The truth of the matter is this: Inventions that use computer programs to provide a business process – not a technical process – are not patentable.

A patent application for an Internet auction system was not granted because the system used conventional computer technology and computer networks – which meant it made no inventive technical contribution to the level of existing technology. Such a system may provide business advancement to its users, but that is not the type of advancement required by the EPO.

On the flip side, the problem of improving signal strengths between mobile phones is a technical problem, even if it is solved by modifications to the phone software rather than its hardware. Such an invention would obtain a patent, provided that the solution is also novel and inventive.

In this respect, the granting practice of the EPO differs significantly from that of the United States Patent and Trademark Office (USPTO), where patent protection for software is granted, even if it does not solve a technical problem.

Adjusting patent subject matter, length, and/or breadth?

The contrasting approaches of the USPTO and the EPO are in terms of “patentability” (or patent-eligible subject matter): what are the conditions for a software (or a “computer-implemented invention” in the European terminology) to be patentable? Two other, and potentially complementary, ways to tackle the issue would be to discuss the “patent length” and the “patent breadth” for software.

In terms of length, some scholars, among them Richard Posner (Federal appeals court judge and professor at at the University of Chicago Law School), recommend a shorter patent term for digital technologies. How long should software patents last? Although Posner does not propose an explicit length, others do. For instance, according to the Electronic Frontier Foundation,

A patent covering software should survive for a term of five years, beginning from the date the application is filed.

Other scholars suggest to reconsider the breadth of software patents. For instance, Mark Lemley suggests to limit software patents to their specific way of accomplishing a function. In his paper “Software Patents and the Return of Functional Claiming“, he claims that the real problem with software patents (in the US) is the following:

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.

As summarized by Eric Goldman in a Forbes article:

Prof. Lemley argued that many software patents use “functional claiming,” which is patenting a software function (basically, the problem that needs to be solved) rather than a specific way to implement that function (the innovator’s solution to the problem).  For example, currently we allow patent claims in the form “a computer programmed to achieve this result” or “a computer programmable/capable of achieve a result” (his research identified 11,000 patents using the “capable of” language).  Prof. Lemley argued that we should prevent functional claiming in software, allowing patents only on methods of achieving the function, not the function itself.

And you? What do you think? If you had to weigh the pros and cons of software patents, what patent duration and breadth (if any) would you recommend? To help you organize your thoughts, you can use the framework proposed by William Nordhaus in his book “Innovation, Growth, and Welfare” published in 1969  (see Belleflamme and Peitz, 2010, pp. 517-521 for a textbook presentation).

(This is an edited version of a post that I published on this blog in October 2012.)

From Wikipedia, the free encyclopedia

A few weeks ago (September 14, 2013), the blog American Thinker published quite a vocal piece, entitled “Copyright Strangulation”, condemning the current scope and length of the US copyright law. According to the author, Mike Konrad,

Copyright law in America gives individuals, and corporations, a paralyzing stranglehold on our culture. Though its proponents claim that it protects creativity, copyright law’s exaggerated length and scope actually chokes off artistic genius and chains our country to whims of few prima donnas who do not represent our culture at all. (…) The stifling effect is enormous. Movies and DVDs are released with altered sound tracks for fear of litigation. More often than realized, creative works are not released at all, because the copyright holder is not even known; and no one dares take the risk.

The following video expresses a similar opinion in a more visual way:

Copyrights have been repeatedly extended

Both pieces are certainly right on one count: copyright protection has been substantially lengthened over the years (see this graph for the US) .

In April 2009, the EU parliament approved an extension of the copyright term for music recordings from 50 years to 70 years (see the official press release). This decision followed a hot debate between the music industry, which campaigned for this extension as it would allow it to extend the flow of revenues derived from music recorded in the 1960s, and a wide array of opponents who were convinced that the measure was likely to damage European creative endeavor and innovation. The opponents’ voice was partly heard by the Parliament as it did not follow the initial proposal from the European Commission to increase the copyright term from 50 to 95 years but settled instead on 70 years.

“[i]t is highly unlikely that the economic benefits from copyright extension under the CTEA outweigh the costs”  (see the full analysis).

To justify this statement, the economists argued that the revenues earned during the additional 20 years of protection are so heavily discounted that they lose almost all value, while the extended protection of existing works generates immediate deadweight losses (which are even larger when taking the increased cost of creating new derivative work into account). Although the previous argumentation relies on very sound theoretical reasoning, it lacks solid empirical grounds. Stan Liebowitz (professor of economics at University of Texas at Dallas) stresses this point in the report that he prepared for the IFPI (International Federation of the Phonographic Industry) in 2007 and that was submitted to the European Commission:

“there are numerous economic grounds that can be adduced to support a request for extending the copyright on sound recordings. There are clear benefits that will arise from an increase in new creations and the proposed increase in copyright are large enough to lead to measurable increases in new production. While it is also true that there are increased costs, in the sense that copyright allows price to stay above the cost of reproduction, no one has measured the size of these costs to determine how large they are. Nor is there evidence that these costs lead to prices being above a competitive “zero profit” level since the costs of production need to be recouped in some manner. Even if there were some monopoly power, the removal of this inefficiency in the sound recording market would entail treating the creators of the sound recordings, whose talent would be the cause of the monopoly power, more harshly than the treatment given to the many owners of other unique assets with similar efficiency characteristics elsewhere in the economy.”

I thank a friendly blog (S.I.lex) devoted to IT and IP issues for drawing my attention to the above cartoon. It originates from a funny site where Mimi & Eunice discuss very serious issues of Intellectual Property.

Also worth to be underlined: the traditional ‘copyright notice’ (©, name, date) is replaced by a lovely:

♡ Copying is an act of love. Please copy.

Showing my love, I copy this cartoon for you… to think and respond to the question it raises. With nuances as always!

1. What are the various reasons behind this acquisition? To respond to this question, you might start here. In your response, you should focus on the legal aspects.

You will discover that intellectual property (IP) issues might partly explain Google’s largest ever acquisition.

2. What are the broader issues about the patent system that this acquisition might reveal? Please initiate the discussion about patents by reading the article “Patent Medicine” published in The Economist (20 August 2011). The Economist makes a link between Google’s bid and the basic discussion about whether IP, and in particular the patent system, has been stifling innovation rather than encouraging it.

3. The Economist is very negative about the US patent system. Could you briefly present the main criticisms contained in The Economist‘s article? Do you think those criticisms are justified? Do you have arguments to partly rebut the criticisms put forward in “Patent Medicine”?

A penny for your thoughts on this!

Dans les deux cas, l’ambition des modèles ouverts va bien au delà de la distribution gratuite de création de l’esprit – logiciels, textes images, musique etc… – aux consommateurs. Ces modèles s’inscrivent en effet dans un contexte de création cumulative, où les créations d’hier sont la matière première de celles de demain. Des communautés de créateurs sont ainsi en mesure de partager leurs contributions, pour les améliorer ou les recombiner afin de produire de nouvelles créations. Des logiciels libres comme Linux ou Firefox mobilisent ainsi des communautés de centaines, voire de milliers d’individus, dont les contribution vont du développement de lignes de code informatique à la simple détection de bugs à corriger.

Jusqu’à aujourd’hui, le développement des modèles ouverts a été étroitement associé à la protection par le droit d’auteur/copyright, qui protège les logiciels au même titre que les créations littéraires et artistiques. La multiplication des brevets logiciel, de même que plusieurs initiatives visant à « ouvrir » des brevets dans des domaines aussi variés que les biotechnologies ou les technologies vertes, ouvrent toutefois de nouveaux horizons. En voici quelques exemples :

-       Dans le cas des logiciels, l’extension au brevet des licences dites libres fait l’objet de débats récurrents dans les communautés de développeurs. Il s’agit en effet de s’assurer que des brevets logiciels ne puissent pas court-circuiter la libre diffusion des logiciels libres. Dans cette perspective, plusieurs grands groupes ont également lancé le « patent commons project » : ils s’engagent ainsi à geler leurs brevets liés à Linux, afin de protéger ce logiciel.

-       Une initiative similaire – le Green Patent Commons – a été lancé il y a peu dans le domaine des technologies vertes. Les entreprises apportent à ce fond une partie de leurs brevets, dont l’usage devient dès lors gratuit pour tous.

-       Les initiatives les plus avancées concernent toutefois le domaine des biotechnologies, domaine de la science où l’innovation cumulative est la règle. Le projet BioBricks du MIT vise ainsi à mettre en commun une banque de briques génétiques brevetées, qui pourront être réutilisées par tous pour développer, par exemple, de nouveaux OGM. D’autres initiatives, telles HapMap pour le séquençage du génome humain ou la Tropical Diseases Initiative s’inscrivent dans le même modèle. De même que pour certains logiciels libres, ces initiatives s’appuient fréquemment sur les clauses de licences pour que les inventions développées à partir des briques mises à disposition restent, au moins en partie, réutilisables pour la communauté des chercheurs.

Ces initiatives pourraient en théorie remodeler les modalités d’innovation dans les champs technologiques auxquels elles s’appliquent. Elles sont toutefois récentes, et il leur reste donc à faire leur preuve. Peut-on en effet transposer aisément les règles des modèles ouverts aux inventions brevetées ? Outre la prise en compte des spécificités juridiques de ce droit de propriété intellectuelle, cela nécessite de pouvoir créer des communautés de contributeurs trouvant leur intérêt non seulement dans l’accès aux technologies des autres, mais aussi au partage avec tous de leurs propres inventions. Cette condition est-t-elle réaliste ? Dans quels cas ?

“On the record, any top executive in the IT, consumer-electronics and telecoms industries today will profess that his firm is leading the way towards simplicity. But are those claims justified? In theory, says Ray Lane, a venture capitalist, the company best placed to deliver simplicity should be Microsoft. It controls virtually all of the world’s PCs and laptop computers (albeit smaller shares of mobile phones, hand-held and server computers), so if its software became simpler, everything else would too. The bitter irony, says Mr Lane, is that Microsoft is one of the least likely companies to make breakthroughs in simplification. “It cannot cannibalise itself,” says Mr Lane. “It faces the dilemma.”

The dilemma Mr Lane is alluding to is “The Innovator’s Dilemma” that Clayton Christensen describes in his book. The innovator’s dilemma refers to companies that succeed in one generation of innovation but whose success becomes then an obstacle for coping with the next wave of innovation. This observation lends credence to the idea that firms with more market power (monopolies in particular) have smaller incentives to innovate than firms facing a higher degree of competition. As Steve Jobs (Apple CEO) said in a Business Week interview back in 2004:

“what’s the point of focusing on making the product even better when the only company you can take business from is yourself?”

Should we infer from the previous quotes that there is a positive relationship between the degree of competition and the level of innovation or, in other words, that the more firms face competition, the more they tend to innovate? The answer is no: the relationship between competition and innovation is more complex than that.

From a theoretical point of view, there is a distinction to be made between the capacity to innovate and the incentives to innovate. In terms of capacity, large firms are generally better equipped than smaller ones to undertake R&D (they can benefit from economies of scale, they have better access to capital markets and they can cope more easily with the uncertainty associated to innovation). On the other hand, as illustrated by the quotes above, large firms may have lower incentives to innovate than smaller firms, basically because they have more to lose. These ideas have been formalized, respectively, by Joseph Schumpeter and Kenneth Arrow (for a nice review of their contribution and of subsequent theoretical developments, see ‘Creative Disruption’ by Douglas Clement).