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A Review Of Software Patent Issues

by Russell McOrmond[1]

This is a report offered for public peer review and feedback. Please send feedback to patent-report@flora.ca. This is an archived email address where the archives will be delivered to the client as part of the report, and where messages from these archives may be quoted in further reports in the future.

If you wish to contact the author privately about this report, please use the full contact information available at http://www.flora.ca/

This report will be published at http://www.flora.ca/patent2003/


This report was prepared in March 2003 by Russell McOrmond, further to a contract financed by the Information and Communications Technology Branch of Industry Canada.


The views expressed in this report are the author's and do not necessarily reflect those of Industry Canada. Nothing in this report implies or expresses a warranty of any kind.

Copyright (C) 2003 Russell McOrmond

Verbatim copying and distribution of this entire article is permitted in any medium, provided this notice is preserved.

Revision History

 2003-03-31   Version released for public peer review 
    Updates further to April 7 comments on draft report from Richard Stallman (Appendix 2) 
    Addition of Appendix 1, notes from Industry Canada meeting with Microsoft 
    Many updates to the sections "3.3.1 Statutory" and "3.3.2 Useful" to include additional references to ways in which software is different from manufactured goods. 
    Added Foreword 
    Simplified Executive summary 
 2003-06-27   Final deliverable to client 


It's worth noting that the people running SCO and their lawyers may not appreciate the power of software patents. In my experience, few people outside the profession understand the degree to which every program of any scope violates patents. The software industry today survives only through an unstated agreement not to stir things up too much. We must hope this lawsuit isn't the big stirring spoon.

Ian Lance Taylor, Linux Journal, June 19, 2003[75]

Executive Summary

Software patents were first introduced in the United States in 1981. Several other countries have followed suit, and this policy direction is promoted worldwide by the World Intellectual Property Organization (WIPO)

Patent protection was not available when the software industry emerged in the early 1970s. Much software development continues to occur outside patent protection regimes, including in the form of Free/Libre and Open Source Software (FLOSS)[3] which was seen by some as a solution to the "software crisis"[4].

Too often the techniques documented in successful patent applications in the U.S. cannot be considered useful, novel and unobvious. It has been suggested that 60% of software patents issued in the U.S. should be declared invalid[5].

In our review of the economic literature, we have found little support for the claim that software patents have a positive impact on innovation. Given technology development cycles for software, it seems obvious that the standard 20-year duration for patents is much too long for most if not all software innovations. Industry Canada should conduct its own studies on this theme and revise its patent policy.

1. Introduction

This report includes: a section on the current state of software patent policy, a list of outstanding issues and some suggestions for policy review.

1.1 Patent Policy

International and national patent laws use common criteria to restrict patentable subject matter:

  1. It must be statutory, in that the subject matter should qualify as an invention according to the patent law in a country, including not being mentioned in any exceptions.
  2. It must be useful, in that the invention should have industrial application. This is intended to exclude things such as perpetual motion machines.
  3. It must be novel, in that it was not already invented by someone else, or otherwise already part of the state of the art.
  4. It must be unobvious, in that the solution should not be obvious to someone skilled in the art.

While they use the same criteria, each country has its own guidelines to govern their application.

2. Software Patent Policies In Different Legal Jurisdictions

The European Union and the United States are the two jurisdictions with the most active discussions on patent policy.

2.1 The United States

United States Code, Title 35[7] defines patents, and Chapter 10 defines the patentability of inventions[8]. There is no list of exceptions as part of the definition of patents ; instead, case history is used to determine if a patent is statutory subject matter under Section 101 of Chapter 10[9]. The courts have expanded statutory subject matter over time.

Prior to 1981, the United States Patent and Trademark Office (USPTO) routinely denied software patents[10]. In both Gottschalk v. Benson[11] and Parker v. Flook[12] the Supreme Court had suggested that "difficult questions of policy concerning the kinds of programs that may be appropriate for patent protection and the form and duration of such protection can be answered by Congress"[12].

In 1981, further to the Diamond v. Diehr[2] case, the majority opinion of the court was that software which was used to control a physical process was patentable.

On the other hand, when a claim containing a mathematical formula implements or applies that formula in a structure or process which, when considered as a whole, is performing a function which the patent laws were designed to protect (e.g., transforming or reducing an article to a different state or thing), then the claim satisfies the requirements of 101. Because we do not view respondents' claims as an attempt to patent a mathematical formula, but rather to be drawn to an industrial process <450 U.S. 193> for the molding of rubber products, we affirm the judgment of the Court of Customs and Patent Appeals.15 <209 USPQ 11>

The ruling included an interpretation of the Committee Reports accompanying the 1952 Patent Act suggesting that the United States Congress intended statutory subject matter to "include anything under the sun that is made by man."[2]

In July 1998 the United States Court of Appeals for the Federal Circuit extended patentability to business method-related software in State Street Bank & Trust Co. v. Signature Financial Group[13]. In its ruling the Supreme Court has identified three categories of subject matter that are unpatentable, namely "laws of nature, natural phenomena, and abstract ideas.", and went into detailed discussion about the "Mathematical Algorithm" exception. This included an extremely narrow interpretation of Gottschalk v. Benson and Parker v. Flook.

The US Patent and Trademark Office (USPTO) held hearings on patent policy in 1994[14]. Congress has not yet addressed this highly controversial topic.

2.2 The European Union

The European Patent Convention article 52[15] excludes programs for computers, as reflected in the Examination Guidelines of 1978[16]. A more liberal set of patentability rules were developed by the European Patent Office (EPO)[17] after the publication of the revised Examination Guidelines in 1985[18]. The EPO has been interpreting the exclusion list in such a way that many software patents have been granted[17].

On March 4, 2003, the Competitiveness Council of Ministers reached agreement on a common political approach concerning the proposed Community Patent.[19] This proposal was not supported by parts of the European software community[20], largely because of a lack of trust for the EPO and their revised guidelines that ignore article 52 exclusions.

An alternative proposal to the ongoing liberalization of patentability in Europe was offered by the Foundation for a Free Information Infrastructure[18] that would limit patentability to technical inventions (problem solutions involving forces of nature).

2.3 The World Intellectual Property Organization

The World Intellectual Property Organization (WIPO)[21] is a specialized agency of the United Nations that administers 23 international treaties dealing with different aspects of intellectual property protection[22]. There is an agreement on cooperation between WIPO and the WTO, specifically relating to the TRIPS (trade-related aspects of intellectual property rights) agreement[23].

As with the European Union, current work within the Standing Committee on the Law of Patents (SCP) is on the harmonization of existing Patent Law[24]. The United States has been very aggressive in this agency, including going as far as to threaten to walk out of negotiations if the WIPO patent treaty does not adopt their very liberal interpretation of patent policy with few (if any) limits to patentable subject matter[25].

2.4 Canada

The Canadian Patent Act does not specifically mention software inventions. Section 2 of the Act defines an invention as follows:

"invention" means any new and useful art, process, machine, manufacture or composition of matter, or any new and useful improvement in any art, process, machine, manufacture or composition of matter;[26]

Subsection 27(8) of the Act defines what is not patentable as "No patent shall be granted for any mere scientific principle or abstract theorem."

The Canadian Intellectual Property Office (CIPO)[27] sets guidelines for patentability for Canadian patent examiners, and has indicated that software is patentable in Canada. Authority on any question of patent law must be found in the Patent Act, the Patent Rules[28], and in decisions of the Courts interpreting them.

CIPO is drafting a new chapter for the Manual of Patent Office Practice[29] that includes guidelines for the review of software inventions. Unfortunately it was not published in time for review and comment in this report.

The League for Programming Freedom quotes Canadian agencies as having doubts in the 1970's about patent policy, including giving "serious consideration to the possibility of abandoning the continued maintenance of a patent system in any form"[30]. These quotes were from the Canadian Department of Consumer and Corporate Affairs which became part of Industry Canada in 1993[31], and the Economic Council of Canada which was disband the same year[32].

3. Overview Of Software Patent Issues

The topic of software patents is a controversial one amongst software developers. Ironically many of the reasons not to grant software patents are the same reasons that are given to grant them. This suggests that some public policy balance between competing interests is needed.

Consider the following from the BitLaw Internet site created by Daniel A. Tysver, a partner with the intellectual property law firm of Beck & Tysver[33].

The primary benefit of protecting computer software through the patent system is the strength of protection provided by the patent laws. An owner of a patent may prevent all others from making, using, or selling the patented invention. In connection with software, an issued patent may prevent others from utilizing a certain algorithm (such as the GIF image compression algorithm) without permission, or may prevent others from creating software programs that perform a function in a certain way (such as Compton's withdrawn patent that allegedly prevented all others from performing certain types of multimedia database queries).
In contrast, copyright law can only prevent the copying of a particular expression of an idea.

From this perspective a patent offers more value for existing investment than copyright.

Contrast the above perspective with the view of the League for Programming Freedom which self-defines as "an organization that opposes software patents and user interface copyrights."[34]

Few programmers and entrepreneurs believe that patents are necessary for their profession. Instead, the impetus for patents on algorithms and techniques comes from two outside sources: managers of large companies, who see patents as a means for triumphing over their competitors without having to develop superior products, and patent attorneys, who see the potential for greatly expanding their business.
Today, most patenting by companies is done to have something to trade or as a defense against other patent-infringement suits. Attorneys advise that patenting software may strengthen competitive position. Although this approach will work for large companies such as Microsoft, Apple, and IBM, small and even mid-sized companies can't play in their league. A future startup will be forced to pay whatever price the giants choose to impose[35].

Rather than focusing on maximizing the rewards for previously authored software, those opposed to software patenting are more concerned with future software development.

The issue is scope of protection. Is software granted enough protection when the expression of the single program is protected by copyright? Is there justification to increase the scope to include classes of compatible programs through copyright on software interfaces? Is there justification to protect certain algorithms or functionality with patents?

In some countries software is eligible for both copyright and patent protection. In addition, through interface copyright protection can be used to protect monopolies on user interfaces, application program interfaces (APIs), as well as interfaces between software and hardware.

The European Union suggests that copyright on the single program is enough. It rejects interface copyright in its 1991 Directive on the legal protection of computer programs.[36] The directive justifies exempting interfaces from copyright in order to promote standardization. A similar exemption is included in the case of software patents in Article 52[15] of the European Patent Convention.

Economic and market analysis is needed as there is a cost to over-protection as well as to under-protection of software. The analysis needs to revisit the purpose of the policy and ensure that public policy goals are being met with each type of work or invention protected by copyright or patent policy. Providing economic and market analysis is outside the scope of this report.

In his paper, "The New Case for Abolishing Software Patent", Tim Wu suggests that the scope of protection should be limited to the expression of a single program and not to other works.

Recent experience with software patent has also made clear the advantage of copyright as a starting point for government protection of software, whatever the level of protection you think appropriate. Claim scope is the central economic issue in intellectual property protection; and clarity in the definition the scope of granted monopolies operates to the benefit of all. The uncertainty that surrounds the scope of patent software claims has, in the industry, made software patent into something of a federal lottery, indiscriminately distributing rights of unpredictable value. The nominal entry fee makes it irrational not to enter, but few companies could ever plan a business around it[37].

Interest in the patent system is becoming mainstream. Patent policy is being critiqued by America's consumer watchdog and past presidential candidate Ralph Nader in recent media interviews[38], and has been the subject of consumer boycott[39].

3.1 Software Innovation Without Patent Protection

Free Software[40], and the closely related Open Source[41] software, illustrate that innovation can occur outside software patent regimes. Richard Stallman, founder of the Free Software Foundation, suggests that the entire software industry demonstrates innovation without patent protection[77]. As a software developer who only distributes software as Free Software, I felt it appropriate to include a section with this focus.

Free Software has its beginnings in the early 1970's. Free Software can be seen because of the co-dependency that this development model has with the Internet.

An understanding of Free Software dynamics helps to understand market network effects in an Internet connected world[42]. While the recent rapid growth of Free Software can be attributed to the co-dependent growth of the Internet, Free Software predates this growth[43].

The definition of Free Software[40] includes:

* The freedom to run the program, for any purpose (freedom 0).

* The freedom to study how the program works, and adapt it to your needs (freedom 1). Access to the source code is a precondition for this.

* The freedom to redistribute copies so you can help your neighbor (freedom 2).

* The freedom to improve the program, and release your improvements to the public, so that the whole community benefits (freedom 3). Access to the source code is a precondition for this.

A program is free software if users have all of these freedoms. Thus, you should be free to redistribute copies, either with or without modifications, either gratis or charging a fee for distribution, to anyone anywhere. Being free to do these things means (among other things) that you do not have to ask or pay for permission.

This means that a Free Software developer cannot honour both the Free Software criteria, as well as a software patent license, except in the case of a royalty free patent license.

Section 7, Paragraph 1 of the GNU General Public License[44] specifically clarifies the situation:

If, as a consequence of a court judgment or allegation of patent infringement or for any other reason (not limited to patent issues), conditions are imposed on you (whether by court order, agreement or otherwise) that contradict the conditions of this License, they do not excuse you from the conditions of this License. If you cannot distribute so as to satisfy simultaneously your obligations under this License and any other pertinent obligations, then as a consequence you may not distribute the Program at all. For example, if a patent license would not permit royalty-free redistribution of the Program by all those who receive copies directly or indirectly through you, then the only way you could satisfy both it and this License would be to refrain entirely from distribution of the Program.

The legal counsel for the Free Software Foundation, Eben Moglen, suggests that the patent license must not contain field of use restrictions, since "everyone has to be allowed to take free code from one place and use it in another, or build on it, so long as she is willing to share and share alike."[45] Field of use restrictions were further discussed in the FSF submission to the proposed W3 Consortium "Royalty-Free" Patent Policy[46].

Beyond legal issues, Free Software offers policy makers alternative incentive models for software development. Free Software relies on copyright policy to enforce licenses which define software as Free Software, but do not rely on royalties of any type. Free Software developers write software to meet their own or customers needs, and operate more as a services industry than product-based manufacturing[47]. These developers consider the value of having existing software available to them to freely modify to suite new needs as incentive enough to join this 'copyright pool'[48].

The movement away from traditional centralized software development models similar to those used in manufacturing can be seen as a deliberate move on the part of the Free Software development community, and is their answer to what was seen as a "software crisis"[4]. Secrecy is given up in favor of transparency.

Patents are often described as a grant of a limited monopoly in exchange for an element of disclosure or public use. Free Software is an example of full disclosure of the software and source code with specific freedoms granted to all users of that software.

3.2 Software Patent Fair Use

Copyright law includes the concept of a fair use defense to address problems of market failure. In a recent Columbia Law Review article on the topic, Maureen A. O'Rourke suggests that a similar concept of fair use should exist for patents[49]. The focus of her analysis was on patents on interface standards. It would be informative to extend the analysis to Free Software and Internet standards. This should include evaluating whether excluding Free Software constitutes an abuse of exclusive rights according to the Canadian Patent Act[50].

3.3 Statutory, Useful, Novel And Unobvious

In order for something to be eligible for a patent, it needs to be statutory patentable subject matter, it must be useful (capable of industrial application), novel and be unobvious (involve an inventive step).

3.3.1 Statutory

Many countries have a limited number of exclusions, such as discoveries, scientific theories or mathematical methods. The European Patent Convention article 52[15] includes a much larger list of exclusions.

(a) discoveries, scientific theories and mathematical methods;
(b) aesthetic creations;
(c) schemes, rules and methods for performing mental acts, playing games or doing business, and programs for computers;
(d) presentations of information.

Most countries do not exclude computer software. Even the European Patent Office[17] has been interpreting the exclusion list in such a way that many software patents are being granted[51]. Unless new laws are passed in a country to specifically exclude software, and court cases are tried that confirm an interpretation of the law that suggests software is non-statutory subject matter, software developers should not assume that they are protected from the legal uncertainties of software patents.

Why put software on the list of exclusions for patents? This is tentamount to asking what is the purpose of a patent. Some suggest patents are a form of entitlement, where granting a monopoly on the use of a method is a moral right. The other more commonly referenced justification is one of creating adequate incentives for innovation.

Each type of subject matter exists within its own economic context. Some subject matter exist entirely in a manufacturing context, while other subject matter such as those captured by information process patents can exist both within and entirely outside a manufacturing context. It is inappropriate to assume that an analysis of patent policy for one type of subject matter applies to another type of subject matter.

In the past, software was always bundled with hardware as part of a complete solution. Patent policy suggested that the manufacturing processes used to create these bundled solutions should be patentable. When software began to be distributed unbundled from hardware, many patent offices decided to use the same criteria whether innovation was seen in the hardware or the software.

Hardware and software exist in entirely different economic contexts. While hardware is largely created in a manufacturing context, software creation occurs within all sectors of the economy. While a manufacturing processes may have high barriers to entry, software inventions can occur using computer equipment that is available in most homes and with a training level achievable by youth.

Where patent quality is fairly high with hardware, software patent quality is quite poor and research for prior art is much more problematic due to shear volume and the large non-industrial component of this creation.

3.3.2 Useful

The subject matter of a patent claim must be considered useful, or have industrial application, with one intent being to avoid inventions such as a perpetual motion machine[52]. The examination guidelines for computer-related inventions of the US Patent and Trademark Office indicates a vary narrow interpretation of this requirement, suggesting that software does qualify as useful as long as the claimed subject matter provides some "practical benefit" in the "technological arts."[53]

When trying to determine whether software has industrial application, you end up trying to determine the question: what is computer software. While both the fields of physics and mathematics claim computer software to be a branch of their art (one suggesting software is patentable, and the other suggesting software is not), it may be just as correct to consider software to be a branch of political science or linguistics.

In my own work with software related public policy, I tend to concentrate on software that governs Information and Communications Technology (ICT), automation of government policy, or electronic vote counting. In these classes of software there are clearly public policy implications to government granted private monopolies that far outweigh questions of economic incentives.

At a very simple level, computer software can be thought of as machine readable writing. It may be as inappropriate to make blanket statements about computer software as it is to make similar statements about human readable languages such as English. English can be used to describe both patentable and non-patentable processes, and the same should be understood of software. Just because English can be used to describe a patentable industrial process does not mean that English becomes patentable, nor should the fact that a computer program can be used to describe a patentable industrial process make computer software patentable.

The Foundation for a Free Information Infrastructure (FFII) suggests that patents should be limited to methods that "comprise the operation of equipment which serves to control forces of nature in an inventive way" and not "the mere operation of generic data processing equipment"[18]. This would allow hardware devices that contained software to be patentable, but not software that run on computers.

One of the key ways that software is different from traditionally patentable subject matter is that unlike industrial processes that are used to produce a product, software is both the method and the product. With industrial patents the monopoly is against other manufacturers using the same manufacturing process, but this is not the case with software when used outside of the manufacturing sector. This means that a patent on software can create a monopoly against a private citizen creating or using software, including techniques required to achieve interoperability with other existing software or using techniques which they independently devised.

It is important to question whether it is appropriate to extend economic policy into private homes that was originally intended to create temporary monopolies in the manufacturing sector.

The useful test should also ask the question, "useful for whom?" This test should be used to determine whether the temporary monopoly is useful to the potential patent holder, but more importantly whether the granting of the patent is useful as a matter of public policy.

Another way that some software is different from other traditionally patentable subject matter is that unlike a patent on a single industrial process to create a product, most useful application programs contain a very large number of processes which may be independently patented. Simple patent searches to determine whether independently created software infringes on existing patents is a near impossible task, with the only people not harmed being those who have existing patent portfolios to cross-license.

This becomes an insurmountable barrier to entry for entry for new software creators, and acts not as an incentive for new innovation but as a form of protectionism for incumbent businesses and business models.

3.3.3 Novel

Patent applications are intended to include references to both patent and non-patent prior art. Software patent applications reference minimal non-patent prior art, with half of all US software patents offering no non-patent prior art[54].

This is surprising given that software has been discussed, developed and published for longer than software patents have been granted. Non-patent prior art includes the large library of publicly viewable Free Software source code. While this large library should be used by both filers and examiners of patent claims, whether Internet publishing qualifies as prior art is still an open question[55].

It is expensive to invalidate a patent in court. This forces small business and volunteer software developers to honour invalid patents. The filing of prior art for existing patents should be free and cause an automatic reexamination and possible invalidation of the patent.

While software innovation cycles are short, sometimes a matter of months, the standard 20-year duration of software patents is problematic[56].

While a publication grace period may be appropriate for subjects with longer development time than software, software patentability should be immediately barred upon publication of prior art. Some countries already have no grace period for publication[57].

Software may need to be subjected to a "state of the art" test. A technique which may appear novel or unobvious at one point of time can turn out to be easily developed independently by a researcher without knowledge of the patent. Students in universities could be challenged in order to test if they would come up with similar solutions.

There is some precedent in trademark law where an existing trademark may become a generic term, no longer eligible for trademark protection.

In Canada, in the case of patent infringement disputes, it is assumed that the alleged infringer is using the patented method unless proof is offered to the contrary[58]. The burden of proof should be reversed so that it is the patent holder that must prove that an infringer is using the patented method.

3.3.4 Unobvious

Whether something is unobvious to someone skilled in the art appears to be a highly subjective test, and it appears that patent offices rarely, if ever, use this criterion. While patented inventions are to be documented such that someone skilled in the art can implement them, patent lawyers often use language that is not understood by persons skilled in the art.

A technique to adequately test obviousness that makes use of the skills of people outside patent offices is needed. Some variation of the "state of the art" test may be appropriate.

A commonly referenced example of an obvious patent is the Amazon 1-click method[60] which is an obvious derivative of existing shopping cart systems. The judge in the case against Barnes & Noble suggested a trivial work-around this patent, rendering the patent practically useless in its narrowness[61].

3.4 Software Patents As A Challenge For Standards Organizations

Software patents are a major problem for information technology standards organizations. A standard is most useful when the largest number of interoperable implementations exist and the standard gains utility through network effects. Patents on techniques used in standards can be used by their holders to effectively block prospective implementors of the standard.

Some software standards groups make use of Free Software reference implementations. The disclosure inherent in Free Software makes interoperability testing easier as it is possible for a third-party implementor to modify a copy of the reference implementation during testing.

The W3C[62] has been working on this issue since October 1999 when their Patent Policy Working Group was formed[63].

3.4.1 Patent Disclosure

Standards groups have had problems in the past where a proponent of a specific technique fails to disclose the fact that they are also a holder of a patent. Disclosure of the patent would happen only after the technique became part of a standard[6].

To deal with this issue, many standards groups have disclosure requirements. This is included in the W3C patent policy[64], and section 10[65] of RFC2026[66] which describes the Internet Standards Process for the IETF. The IETF also maintains a page on a website that includes all disclosed intellectual property notices[67] so that any such notices are available to all implementors.

3.4.2 RAND ("Reasonable and Non-Discriminatory") Licensing

An earlier W3C patent policy draft defined a RAND license to include licenses conditioned on payment of reasonable, non-discriminatory royalties or fees[68]. RAND licensing may be appropriate for hardware but may not be reasonable for software standards.

3.4.3 Royalty Free

Later versions of the W3C patent policy moved to a Royalty Free license policy[64]. Free Software developers are still waiting to confirm legal opinions on "field of use" restrictions such as included in subsection 3(3) of the current W3C patent policy[69].

4. Recommendations

The following offers suggestions for policy review.

Footnotes And Endnotes

[1] Russell McOrmond of FLORA Community Consulting http://www.flora.ca/ is an Open Systems Internet Consultant who specializes in Free/Libre and Open Source Software (FLOSS)[3]. He believes that FLOSS and the Internet are co-dependent disruptive technologies that will continue to radically increase innovation in ICT worldwide. He has been involved in the Free Software movement since 1992, and started FLORA Community Consulting as a sole-proprietorship in 1995 to focus on these innovative disruptive technologies.

Through offering services to the government (directly or via a reseller/client), and through personal interest in public policy, he has gained experience into the interactions between FLOSS, the Internet, and related government public policy.

Recent related public policy submissions include the 2001 copyright reform consultation http://www.flora.ca/copyright-2001.shtml and the Innovation Strategy in 2002 http://www.flora.ca/innovation-2002.shtml.

[2] Diamond, Commissioner of Patents and Trademarks v. Diehr and Lutton, United States Supreme Court, March 3, 1981 , 450 U.S. 175, 209 USPQ 1 http://digital-law-online.info/cases/209PQ1.htm

[3] Free/Libre and Open Source Software (FLOSS) is a term used in public policy circles to describe the important aspects of both Free Software[40] and Open Source Software[41]. See http://www.flora.ca/floss.shtml as an attempt to clarify the use of the term.

[4] SCO vs. IBM -- OSI position paper http://www.opensource.org/sco-vs-ibm.html (includes a history of Unix and open source, as well as a current status report of these relevant markets.

Instead of centralization in large programming teams, the Internet style used small distributed programming groups. Instead of process control and hierarchy, the Internet style used peer review and open standards. Most importantly, the Internet style abolished secrecy in favor of transparency and what came to be called "open source" code.

[5] Gregory Aharonian[71] wrote on an Internet mailing list that he believes that over 60% of the issues software patents issued by the United States patent office are invalid http://www.aful.org/wws/arc/patents/2003-01/msg00030.html. Individuals on all sides of the discussions of software patents tend to agree with the statistics that Gregory produces.

[6] Perspective: The patent threat to the Web By Bruce Perens, October 7, 2002, CNet News.com http://news.com.com/2010-1071-961018.html

This will prevent "patent farming," the practice among patent holders of deliberately embedding their patents in new standards as a revenue-generating strategy.

Bruce Perens has also been warning about this threat within the IETF[73] Intellectual Property Rights working group http://www.ietf.org/mail-archive/working-groups/ipr-wg/current/msg00204.html

See also: Dell case http://www.ftc.gov/opa/1996/9606/dell2.htm and Rambus case http://www.ftc.gov/opa/2002/06/rambus.htm. Rambus case has a number of news articles written about it http://x86.ddj.com/news/2001/news050601.htm

[7] United States Code, title 35: Patents http://caselaw.lp.findlaw.com/casecode/uscodes/35/toc.html

[8] United States Code, title 35, chapter 10: patentability of inventions http://caselaw.lp.findlaw.com/casecode/uscodes/35/parts/ii/chapters/10/toc.html

[9] United States Code, title 35, chapter 10, Section 101: Inventions patentable http://caselaw.lp.findlaw.com/casecode/uscodes/35/parts/ii/chapters/10/sections/section_101.html

Whoever invents or discovers any new and useful process, machine manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

(A patent can be an "invention or discovery", it must be "new and useful", and can be any one of 4 categories of patentable subject matter: "process, machine manufacture, or composition of matter")

[10] Supreme Court decisions cast considerable doubt over the patentability of software. Gottschalk v. Benson, 409 U.S. 63 (1972)[11]; Parker v. Flook, 437 U.S. 1584 (1978)[12].

[11] Gottschalk, Commissioner of Patents v. Benson et al., United States Supreme Court, November 20, 1972, 409 U.S. 63, 175 USPQ 673 http://digital-law-online.info/cases/175PQ673.htm

[12] Parker, Acting Commissioner of Patents and Trademarks v. Flook, U.S. Supreme Court, June 22, 1978, 437 U.S. 584, 198 USPQ 193 http://digital-law-online.info/cases/198PQ193.htm

[13] State Street Bank & Trust Co. v. Signature Financial Group Inc., U.S. Court of Appeals Federal Circuit, July 23, 1998, 149 F.3d 1368, 47 USPQ2d 1596 http://digital-law-online.info/cases/47PQ2D1596.htm

[14] Notice of Public Hearings and Request for Comments on Patent Protection for Software-Related Inventions http://www.uspto.gov/web/offices/com/hearings/software/notices/notice94.html , Chronological List of Speakers from Jan 26-27 http://www.uspto.gov/web/offices/com/hearings/software/sanjose/ and Feb 10-11 http://www.uspto.gov/web/offices/com/hearings/software/arlington/

[15] European Patent Convention - Article 52 - Patentable inventions http://www.european-patent-office.org/legal/epc/e/ar52.html

[16] Guidelines for Examination of the European Patent Office 1978-06-01 http://swpat.ffii.org/papers/epo-gl78/index.en.html

[17] European Patent Office http://www.european-patent-office.org/

[18] EU Software Patent Directive Amendment Proposals from the Foundation for a Free Information Infrastructure (FFII) Software Patent Work Group http://swpat.ffii.org/papers/eubsa-swpat0202/prop/index.en.html

[19] Results of the Competitiveness Council of Ministers, Brussels, 3rd March 2003 http://europa.eu.int/rapid/start/cgi/guesten.ksh?p_action.gettxt=gt&doc=MEMO/03/47|0|RAPID&lg=EN

[20] Eurolinux Position on the Community Patent http://eurolinux.ffii.org/news/cpat01B/index.en.html

[21] World Intellectual Property Organization http://www.wipo.int/

[22] About WIPO http://www.wipo.int/about-wipo/en/

[23] TRIPS (trade-related aspects of intellectual property rights) material on the WTO website. http://www.wto.org/english/tratop_e/trips_e/trips_e.htm

[24] Reports from WIPO committees including the Standing Committee on the Law of Patents (SCP) http://www.wipo.int/ipl/en/ipl-01.htm

[25] Information process patents in the U.S. and Europe: Policy avoidance and policy divergence by Brian Kahin http://www.firstmonday.dk/issues/issue8_3/kahin/ (In the introduction, which includes the following note:

Report, 7th Session, WIPO Standing Committee on Patent Law, Geneva, 6-10 May 2002, adopted 25 November 2002 as document SCP/7/8; see paragraphs 159-173, especially the exchange between the European and U.S. delegations at 170-171; http://www.wipo.org/scp/en/documents/session_7/


[26] Canadian Patent Act ( R.S. 1985, c. P-4 ) http://laws.justice.gc.ca/en/P-4/

[27] Canadian Intellectual Property Office (CIPO) http://cipo.gc.ca/

[28] Canadian Patent Rules (SOR/96-423) http://laws.justice.gc.ca/en/P-4/SOR-96-423/

[29] Manual of Patent Office Practice (CIPO) http://strategis.ic.gc.ca/sc_mrksv/cipo/patents/mopop/mopop-e.html

[30] Quotes on Software Patents http://lpf.ai.mit.edu/Patents/quotes.html which quotes:

Bruce C. McDonald, Canadian Bar Review, vol. XLVII, 1969, p. 145.
Report on Intellectual and Industrial Property, Economic Council of Canada, 1971.
Working Paper on Patent Law Revision, Canadian Department of Consumer and Corporate Affairs, 1976.

[31] Industry Canada Milestones 1993-2000 http://www.ic.gc.ca/cmb/welcomeic.nsf/ICPages/Milestones#introduction (which indicates that Industry Canada was formed in 1993 when the government brought together within a single organization the previous responsibilities of a number of organizations, including Consumer and Corporate Affairs Canada)

[32] Economic Council of Canada Act http://laws.justice.gc.ca/en/E-1/, Repealed, 1993, c. 1, s. 23

[33] Why Protect Software Through Patents http://www.bitlaw.com/software-patent/why-patent.html

[34] This phrase appears on the front page of the LPF website http://lpf.ai.mit.edu/

[35] Why Patents Are Bad for Software http://lpf.ai.mit.edu/Links/prep.ai.mit.edu/issues.article, Garfinkel, et al - 1991

[36] Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs http://europa.eu.int/smartapi/cgi/sga_doc?smartapi!celexapi!prod!CELEXnumdoc&lg=EN &numdoc=31991L0250&model=guicheti

[37] Tim Wu, "The New Case for Abolishing Software Patent" (File dated: Dec 15, 2000) http://www.innovationlaw.org/lawforum/pages/wu_case.pdf

[38] hot seat: Ralph Nader, Patent Buster http://www.wired.com/wired/archive/11.03/view.html?pg=3 ("The system protects two groups: software companies with weak products who use patents to harass competitors, and patent lawyers." ... "Name one genius inventor who has gotten rich from a software patent." ...)

[39] Site asking people to "Stop typing amazon.com. Start typing noamazon.com." http://www.noamazon.com/. See also: http://www.gnu.org/philosophy/amazon.html

[40] The term "Free Software" is defined by the Free Software Foundation (FSF) at http://www.fsf.org/philosophy/free-sw.html. Most importantly, "``Free software`` is a matter of liberty, not price. To understand the concept, you should think of ``free`` as in ``free speech,`` not as in ``free beer.``". See also "Open Source" [41] and FLOSS[3].

[41] The term "Open Source" is defined by the Open Source Initiative (OSI) at http://www.opensource.org/docs/definition_plain.html. Open source doesn't just mean access to the source code. The distribution terms of open-source software must comply with 10 criteria.

[42] The importance of Free Software to modern software development is outside the scope of this article, but can not be understated. It is hard to imagine the growth of the Internet without Free Software, nor can one imagine the growth of Free Software without the Internet. I am of the belief that Free Software and the Internet are two co-dependent transformative technologies that threaten to not only disrupt incumbent businesses, but also many incumbent business models.

[43] While the GNU Project was conceived in 1983, free software has a history from the early 1970's http://www.fsf.org/gnu/gnu-history.html. It is important to realize that free software pre-dates software patents in the United States by a decade (Diamond v. Diehr, 1981[2]).

[44] GNU General Public License (GNU GPL) http://www.fsf.org/copyleft/gpl.html. This license is one of the most popular Free Software licenses, and is used as the basis for other licenses.

[45] Eben Moglen, "Free Software Matters: Patently Controversial", 2001 http://moglen.law.columbia.edu/publications/lu-16.html (which notes that "We cannot just buy a patent license, because though free software isn't always free like free beer, it cannot exist at all unless it is free like free speech: everyone has to be allowed to take free code from one place and use it in another, or build on it, so long as she is willing to share and share alike.")

[46] FSF's Position on Proposed W3 Consortium "Royalty-Free" Patent Policy http://www.fsf.org/philosophy/w3c-patent.html

[47] In my submission in 2001 to the copyright reform consultation I asked the question whether recent interpretations of copyright helped create "a new economy, or a new product for the old economy?" http://www.flora.ca/copyright-2001.shtml#new-economy.

[48] Some of the reasons why a company may join a patent pool exists with Free Software. As an example, the price of entry into the GNU GPL[44] software pool is that any derivative works of the software must be distributed under the same licensing terms as the original. Unlike a patent pool, there is no mechanism to revoke software already licensed under the GPL and thus the GPL offers considerable market stability.

[49] Reference [70] at page 1205:

The preceding analysis identified five factors relevant to a fair use finding: (i) the nature of the advance represented by the infringement; (ii) the purpose of the infringing use; (iii) the nature and strength of the market failure that prevents a license from being concluded; (iv) the impact of the use on the patentee's incentives and overall social welfare; and (v) the nature of the patented work.

[50] Paragraph 65.(2)(d) of the Canadian Patent Act[26] reads:

if, by reason of the refusal of the patentee to grant a licence or licences on reasonable terms, the trade or industry of Canada or the trade of any person or class of persons trading in Canada, or the establishment of any new trade or industry in Canada, is prejudiced, and it is in the public interest that a licence or licences should be granted;

[51] Proposal for a Directive on the patentability of computer-implemented inventions - frequently asked questions http://europa.eu.int/comm/internal_market/en/indprop/comp/02-32.htm. "However, since the EPC came into force in 1978, more than 30,000 software-related patents have been granted, and a considerable body of case law on the subject has been built up by the appellate bodies of the European Patent Office (EPO) and the Member States' courts."

[52] The Utility Requirement in Patent Law http://www.lawnotes.com/patent/patblty/utility.html

[53] Examination Guidelines for Computer-Related Inventions http://www.uspto.gov/web/offices/com/hearings/software/analysis/computer.html

[54] Testimony from PTO hearing on Non-Obviousness, 7/20/94, Greg Aharonian http://www.eff.org/IP/pto_nonobviousness_hearing_072094.testimony

[55] WIPO Standing Committee on the Law of Patents (SCP)[24], Issues currently considered by the SCP, Disclosure of Technological Information on the Internet and its Impact on Patentability http://www.wipo.int/eng/document/scp_ce/index_4.htm (only deals with the question of harmonizing historical rules, rather than addressing the forward looking public policy question of whether Internet publishing should constitute "prior art", and/or define "whether such information has become state of the art, even if it was disclosed on the Internet for only a limited time".)

[56] Section 44 of the Canadian Patent Act[26] reads:

Subject to section 46, where an application for a patent is filed under this Act on or after October 1, 1989, the term limited for the duration of the patent is twenty years from the filing date.

[57] Publication of an Invention and Patent Filing Deadlines http://www.lawnotes.com/patent/deadline/publicat.html

[58] section 55.1 of the Canadian Patent Act[26] reads:

In an action for infringement of a patent granted for a process for obtaining a new product, any product that is the same as the new product shall, in the absence of proof to the contrary, be considered to have been produced by the patented process.

[59] Software patents ? Obstacles to software development http://www.cl.cam.ac.uk/~mgk25/stallman-patents.html (Transcript of a talk presented by Richard Stallman on 2002-03-25 at the University of Cambridge)

[60] United States Patent 5,960,411 "Method and system for placing a purchase order via a communications network"

[61] BustPatents.com list of invalid/withdrawn/pathetic software patents http://www.bustpatents.com/invalid.htm

[62] World Wide Web Consortium (W3C) http://www.w3.org/

[63] W3C Patent Policy Working Group http://www.w3.org/2001/ppwg/

[64] Royalty-Free Patent Policy http://www.w3.org/TR/patent-policy/ (This is a W3C working draft. Previous versions of this policy are linked via the Patent Policy Working Group website[63]. )

[65] Section 10 of RFC2026: INTELLECTUAL PROPERTY RIGHTS http://www.ietf.org/IESG/Section10.txt

[66] The Internet Standards Process -- Revision 3 http://www.ietf.org/rfc/rfc2026.txt

[67] IETF Page of Intellectual Property Rights Notices http://www.ietf.org/ipr.html

[68] W3C Patent Policy Framework, W3C Working Draft 16 August 2001, RAND http://www.w3.org/TR/2001/WD-patent-policy-20010816/#def-RAND

[69] Patent Policy Working Group, Royalty-Free Patent Policy, W3C Working Draft 14 November 2002 http://www.w3.org/TR/2002/WD-patent-policy-20021114/#sec-Requirements (Subsection 3(3) reads, "may be limited to implementations of the Recommendation, and to what is required by the Recommendation".)

[70] Maureen A. O'rourke, "Toward a doctrine of fair use in patent law", Columbia law review, volume 100, No. 5 (June 2000)

[71] Gregory Aharonian is a is a consultant to law firms and corporations, long term critic of the US patent office, and specializes in determining the invalidity or enforceability of issued patents. He hosts a website at http://www.bustpatents.com/ and publishes an Internet Patent News Service.

[72] Community Patent http://europa.eu.int/comm/internal_market/en/indprop/patent/

[73] Internet Engineering Task Force (IETF) http://www.ietf.org/

[74] The main page at http://swpat.ffii.org/ includes the following quote:

The patent system's history has been convincingly described as a victorious movement of lawyers against economists.

[75] Article on the Linux Journal Website titled "My Visit to SCO" http://www.linuxjournal.com/article.php?sid=6956, by Ian Lance Taylor

Appendix 1

[76] Email note from Claude Gagne of Industry Canada, ICT branch.


On June 5th, Microsoft's Brad Smith, when answering questions on software patents at the Rideau Club, argued that software patents are increasingly important as a result of new demands for access to source code (it's all because of open source!). In the early 90s, Microsoft was of a different opinion.

Brad did not believe that copyright protection is enough to protect software. He was in London when the European Union passed a law in 1991 to exempt software interfaces from copyright protection. He supported this approach, with the caveat that interoperability be strictly defined. The concern is that this definition can be stretched too much.

He felt that economic studies are required to determine what is optimal in terms of time-span and scope of software patents. Notwithstanding the results of such studies, and the fact that Microsoft is involved in 40 active patent lawsuits costing over $100 million a year in legal fees, he concluded in favor of strong patent protection regimes for software.

Microsoft does not support the new W3C royalty-free patent policy for standards.

Appendix 2

[77] Reply to March 31 draft of this report sent by Richard Stallman, edited to clean up formating (text to HTML).


Here are my comments on that page.

Software patents are a recent addition to patent policy, with the United States being the first country to formally recognize them in a 1981 Supreme Court ruling.

That is not quite true; the Supreme Court ruling in Diamond v Deihr did not directly address the question of whether to allow software patents. What it decided was that the presence of a computer as part of an otherwise patentable physical system (in that case, a system for curing rubber).

In the following year, the CAFC interpreted that decision, saying that software ideas could be patented. Pamela Samuelson wrote a long article arguing that interpretation was incorrect.

In a later section you mention both of these facts but without highlighting the conflict between them.

Patentable subject matter now includes

Please add "In the US"; as written, this appears to be a statement of a universal truth rather than of US policy.

Software in the form of Free/Libre and Open Source Software (FLOSS) is a clear demonstration that software innovation can flourish outside patent protection regimes for software.

This is a gross understatement--the entire software industry demonstrates that conclusion.

To cite only free software as the demonstration makes the case weak; it encourages the reader to suppose that non-free software developers benefit from patents. If the reader believes that, and if he thinks non-free software is legitimate and acceptable, he is likely to go on to conclude that the benefit of software patents is greater than the harm. After all, he thinks, only free software will suffer, and we can do without that.

A better argument to base on free software is that it (1) offers something that non-free software doesn't offer (control of the software by the users), and (2) is extremely vulnerable to software patents.

Free Software has its beginnings in the early 1970's, and was a response to attempts to centralize software innovation.

I explained last weekend about this.

It has been suggested that possibly 60% of issued software patents in the USA are invalid

Much larger percentages have been suggested too--for instance, by Greg Aharonian

More fundamentally, this is a weak line of argument because it does nothing to criticize such software patents as may actually be legally valid. A more telling attack is to show the consequences of cross-licensing, so that software patents fail to "protect" small companies from large competitors.

Have you read http://www.researchoninnovation.org/patent.pdf ? That is a very important paper, because it is the basis for an attack at the root of the support for software patents: the belief that they promote progress. So I suggest you at least skim it (I did not study all the math myself) and then work that into your paper.

Unless new laws are passed in a country to specifically exclude software, and court cases are tried that confirm an interpretation of the law, software is assumed to be patentable subject matter.

Assumed by whom? The passive voice conceals the identity of the actor, but here it is crucial.

If you are saying that software patents are valid in European countries merely because the EPO issues them, I think that is mistaken.

One point I don't see is that Microsoft can use software patents to establish an unlimited series of interlocking 20-year monopolies on the most important areas of computing. When one patent is 8 years away from expiring, Microsoft can patent some new wrinkle, then shift all the users (whether they like it or not) to new methods and formats that use the new wrinkle. This could be completed by 2 or 3 years before the expiration of the old patent. The US government has proved to be incapable of resolute application of antitrust law to Microsoft (they bought the president with campaign contributions).