Patent Failure By Stephen Redd, English 101

In the spring of 2012, the Galaxy S3 Few argue that the existing became one of the most eagerly anticipated system is a healthy one, but deep controversies releases ever. Expected to ship in over how to improve the situation remain. One the summer of 2012, continuous parades of T.V. camp argues for the elimination of software commercials, geek bloggers, and YouTube on the premise that they do more harm reviewers foretold the imminent arrival of the than good, while another argues for reforms to new king of . Three months and 18 restore sanity and continue to encourage healthy million units later, the Samsung Galaxy S3 software innovation. Until the matter is settled, it bested Apple’s iPhone 4s to become the most is likely that costly and abusive patent popular smartphone on the planet (“Strategy infringement cases will continue to plague the Analytics”). Prior to release software industry. though, Apple Computer Corporation attempted to garrote Patents have a long Samsung and ensure the history and are a complex premature death of the topic comprised of , prophesized king of smartphones. judicial precedent, and international treaty. Apple’s attack against According to the Oxford Samsung alleged that the phone’s English Dictionary Online, software was composed of ideas a patent is “a from a to which Apple held the patents. government conferring for a The problem for many is that set period the sole right to these patents, and the make, use, or sell some claimed thereby, seem outright process or ; a right absurd. As an example, Apple conferred in this way.” Put patent 305 claims that Apple concisely, a patent is a invented the idea of rounding the government-approved corners of square icons (Smith). monopoly.

Apple is far from the only Article I of the U.S. company to litigate seemingly Constitution obliges the inane software patents. In 1999, government to grant patents Amazon.com won the infamous by proclaiming they one-click case, preventing rival “promote the Progress of Barnesandnobel.com from selling Science and useful Arts, by books through their web site via a Figure 1 Apple phone/Wikimedia Commons securing for limited Times single click payment method to Authors and Inventors (Hansell). In 1994, E-Data Corp. attempted to the exclusive Right to their respective Writings claim over the entire World Wide and Discoveries” (Sec. 8, Cl. 8). The Web through a patent granted six years prior to of 1790 placed the initial burden for patent the invention of the Web (“Everlasting oversight onto the shoulders of the Secretary of Software” 1455). Thousands of similar cases War, Secretary of State, and the Attorney over the years feature one company bludgeoning General. By 1836, the task had grown so another with incremental, trivial, or obvious onerous as to prompt the establishment of an claims. official Office of Patents. Since then, numerous

ELF 2013 (Vol. 5) 3 additional restructurings culminated in today’s without the need for specific physical U.S. Patent and Trademark Office, and the rules characteristics or outcomes (Nieh 303). by which it operates (“A Brief History”). Software patents have always been a The issue of what should be patentable, and contentious subject, raising many concerns for how long, has always been thorny; however, across the industry. Is software an invention the justification for patents is rather simple. deserving of patent protections, or does the Invention is time consuming and risky. An nature of software render it ineligible? Are may labor for years only to fail, or a patents a useful means of incentivizing software rival inventor may beat him to market. Patents innovation? Does the industry benefit from encourage inventors to brave such risks by patents, or has patent litigation resulted in more guaranteeing a limited monopoly over successful damage than good? These issues are growing in inventions, during which time inventors can importance every year, but definitive answers recoup their costs and earn a profit (Bessen and remain elusive. Maskin 2). Since inventions are of immense public value, patents also ensure public Opponents of software patents have long disclosure, thus preventing advanced knowledge contended that the nature of software makes a from following jealous inventors to their graves poor subject for patent protection. Traditional (Nieh 307-308). patents include a “functional claim” describing what result to be achieved, as well as a “method Traditional patents operate under complex claim” detailing how the invention achieves that rules, but patent applications must fully describe result (“Everlasting Software” 1457-1460). In the intended functionality, as well as the means reviewing patent claims, the Federal Circuit by which the functionality is achieved. For decides validity based on the claims made in the physical devices, this amounts to a detailed filing. Concentrating on the functional claim of description of the idea, as well as the physical the invention’s achievement comprises the characteristics of the device implementing the “written description requirement” doctrine, idea (“Everlasting Software” 1457). The Patent where a focus on the method claim is Act of 1952 codified the modern requirements of “enablement doctrine” (Merges 1648-1652). a valid patent under U.S. Law. It established a list of the specific categories of invention For patent disputes, both functional and considered patentable and formalized the method claims play a role. With physical requirements that the invention be novel, non- devices, enablement doctrine has been obvious, and useful (35 USC 101, 2007). dominant; the result being that infringement cases are decided by the merits of the method The 1952 Patent Act does not explicitly name claim. This is important because the method software as patentable. In 1981, the Supreme claim of physical patents specifies numerous Court ruled on the case of Diamond v. Diehr, physical characteristics and behaviors. A concluding that software does fall under the subsequent invention, having a similar statutory label of a “process.” This early case functional claim to the first, can avoid infringing centered on software as a mere component in a by achieving the same result in a different way; larger invention with physical results, the both having the same functional claim but molding of rubber. While the case made differing in the method by which the function is software patentable, it did so only in a narrow accomplished. This allows new, and hopefully set of circumstances. Software patents as we better, versions of prior inventions to develop, know them today only became possible in 1998 without infringing prior patents (“Everlasting when the Federal Circuit Court ruled in the case Software” 1457-1458). of State Street Bank & Trust Co. v. Signature Fin. Group. This case set the modern precedent With software, incremental innovation under which software became fully patentable without infringing prior patents becomes troublesome. Software has no physical

ELF 2013 (Vol. 5) 4 characteristics, and so the functional claim is software. Patents also require that the functional essentially the entire claim. Any method claim claim be novel, and non-obvious. If all software in a software patent tends to be highly generic is an incremental advance over previous and vague. This has resulted in the Federal developments, then it follows that all software is Circuit largely abandoning enablement doctrine an obvious invention, lacks , and is in favor of written description requirement when therefore not patentable (Nieh 319-320). deciding infringement cases for software patents. Since As interesting as the software patents are claimed arguments may by functionality alone, they be, the 1998 State Street encompass a much wider decision by the Federal Circuit range of invention than is temporarily settled the matter typical for physical patents. by proclaiming that software Software will always infringe is patentable under current if it achieves similar law. The discussion over the functionality regardless of how last decade has shifted from that functionality may be whether software can be physically implemented patented, to whether it should (“Everlasting Software” 1464- be. Today’s critics ask 1466). The functional basis for whether software patents do software patents also results in spur innovation, encourage a broader scope of claims than new entrants to the market, for physical patents. This often and protect R&D investments allows software patents to (Merges 1628-1629). apply to seemingly unrelated software inventions, even ones As with general the original inventor could not patentability, the arguments have anticipated (“Everlasting around the usefulness of Software” 1459-1460). software patents also rest largely on an examination of Proponents of software the nature of software. In an patents acknowledge the M.I.T. working paper, James unusual breadth of software Figure 2 Samsung Phone/Wikimedia Commons Bessen and Eric Maskin patents and the abuse that explain that software sometimes follows, but assert that the broad innovation is not just incremental, but also scope is simply a by-product of necessarily complimentary in nature: generic and vague method claims. Simple reforms could narrow the scope by either This is because these are industries in which returning to a balanced version of enablement innovation is both sequential and doctrine, or through modification to the complementary. By “sequential,” we mean application process that narrow the scope of that each successive invention builds on the functional claims (Merges 1654-1657). preceding one—in the way that Windows built on DOS. And by “complementary,” we mean that each potential innovator takes a Opponents of software patents hypothesize somewhat different research line and that overly broad claims are the unavoidable thereby enhances the overall probability that result of an inherent incompatibility between a particular goal is reached within a given software and the patent system. Software is, by time. Undoubtedly, the many different nature, incrementally constructed. Each software approaches taken to voice recognition project builds on earlier software efforts. For software, for example, hastened the this reason, opponents claim that patent availability of commercially viable protections are untenable when applied to packages. (2-3)

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The sequential and complementary view of budgets (Neih 310). The licensing of patents has software development argues that patent not served to promote the responsible sharing of protections interfere with the natural process of ideas, but has instead become a necessary means innovation, which occurs through imitation. of defend against patent litigation, or the threat Imitation among software developers of such. This cold war strategy drains money encourages parallel innovation along different from software development and diverts it into paths, which in turn accelerates the pace of unproductive legal maneuverings. A 2003 report innovation. As a result, they argue, patents limit by the U.S. Federal Trade Commission remarks the necessary free flow of ideas and prevent on this trend toward increased patent spending: complimentary imitation, the result of which is lost opportunities and a slower pace of advance Moreover, as more and more patents issue (Bessen and Maskin 3-4). on incremental inventions, firms seek more and more patents to have enough bargaining Proponents of software patents argue that chips to obtain access to others’ overlapping there is no evidence that patents have patents. One panelist asserted that the time and money his software company spends on significantly slowed the pace of invention, nor creating and filing these so-called defensive have they prevented the efficient sharing of patents, which “have no . . . innovative value ideas. Software patents are often licensed in and of themselves,” could have been between competing companies, allowing non- better spent on developing new infringing complimentary development to technologies. (. Federal Trade continue (Bessen and Maskin 3). Others claim Commission 6-7) that technological advances and financial investment have been the primary source of Building defensive patent portfolios drains software innovation and industry growth, while budgets at a controllable rate, but patent patents have not played a significant role abolitionists are just as concerned about the less (Merges1641-1642). predictable costs and risks associated with patents that do go into litigation. In the New Opinions as to the financial effects of York Law School Law Review, Andrew Neih software patents are another hotly contested writes that, “software patents have a 4.6% aspect of the software patent dispute. Publishing likelihood of being involved in a lawsuit, the in the Texas Law Review, Robert Merges second highest among all categories of provides statistics that show healthy growth for technological patents” (312). Software patent software R&D and venture funding over the litigation is also increasing, up from 5% of the years. In 1986, software development claimed total number of patent suits filed in 1984 to 26% only 1% of the R&D budgets at major software of all patent suits filed in 2002. The high companies. By the year 2000, software spending probability of litigation forces less spending on rose to 10% of total R&D expenses (1635). software development, and discourages venture Merges’s data also shows that venture investment in new software projects (Neih 314- investment in software startups has flourished. 315). In 1995, 210 startups received 553 million in venture capital. By 2005, 238 startups claimed Patent supporters claim that litigation is an 1.1 billion in funding (1639-1640). expected, and proper, result of patent protections granted to software inventions. The purpose of a Software patent abolitionists argue that the patent is to provide legal protection; therefore, it growth of the software industry and of software is reasonable to expect that litigation will occur R&D spending occurred despite patents, not whenever a patentees needs to defend their because of them. When looking at R&D . With software patents spending within companies, instead of across the becoming an accepted norm during the late 90s, industry, the trend during the 1990s showed that it is reasonable that the number of patent claims companies were diverting funds into the creation has risen along with the number of filings. of large patent portfolios at the expense of R&D Patent supporters acknowledge the many high-

ELF 2013 (Vol. 5) 6 profile cases of patent abuse, but caution that ’s woes are just the tip of a very large patents work well in more cases, though the and ugly iceberg. Similar patent disputes have successes do not enjoy the same level of erupted all over the industry, especially in the publicity. The evidence does not show that the emerging tablet and smartphone markets where litigiousness of some software companies offsets innovation is critical and competition is fierce. the positive incentives and protections that software patents provide (“Everlasting Patent advocates and abolitionists continue to Software” 1474-1475). disagree on solutions, but recent legal events have renewed the hopes of both camps. The The issues around software patents have 2010 ruling of the Supreme Court in the case of come to the public’s notice more frequently in Bilski v. Kappos has bolstered the anti-patent recent years. Recent infringement cases against movement’s viewpoint. In this complex case, the Google make a prime example. Google, having court called into question the validity of business entered the software market relatively recently, process patents, which closely mirror the legal has a smaller patent portfolio than most of its theory behind software patents. While the case established competitors. Google has become a was too narrow as to invalidate software patents popular target of patent suits from established outright, the ruling did express the Supreme software giants such as Apple, Oracle, and Court’s doubts as to the validity of functional . Oracle sued for patents related to process patents. The Bilski case fails to settle the Oracle’s Java programming language (Brodkin). matter of software patents, but it does imply Microsoft has been licensing patents to phone that, in future cases, the court may declare manufacturers who use Google’s Android software non-patentable (Neih 323-326). operating system and filing suits against any who refuse to license. Microsoft now earns more Those who prefer a reformed software patent profit from the sales of Android-based system had some of their desires granted through smartphones then Google, despite the fact that passage of the America Invests Act of 2011. Microsoft contributed nothing to the This legislation enacted numerous reforms to the development of the Android operating system current patent system, several aimed at curtailing (McDougall). Apple has also been suing Google the rising abuses seen in the software industry. along with almost every manufacturer of The new law seems to have fallen short in many smartphones using use Google’s software critical ways, but it does make progress toward (Barrett). real patent reform. Two of the most important changes are that prior-user rights can be a viable The pressure on Google from patent suits defense in infringement cases, and non- grew so great, that in August 2011 Google practicing entities (NPEs), which hold patents shelled out $12.5 billion to acquire Motorola. but do not sell goods or services based on the The entire motivation for the deal was to acquire patents, are required to file separate suites rather Motorola’s extensive patent portfolio in hopes of than targeting multiple companies in a single defending itself against competitors who prefer case. Reformers are not fully appeased by the to compete in court, rather than the market final bill, but the enactment of such legislation (Thomas). In the meantime, Apple continues to shows that Congress is at least aware of the need win injunctions that have prevented the sales of for significant reform (“Patently Inadequate” 18- several smartphones made by HTC and 20). Samsung, while Microsoft continues to extort license fees from most smartphone Unless Congress significantly reforms manufacturers. Google finally won its lengthy software patent law or the Supreme Court case against Oracle in the spring of 2012, but the abolishes them entirely, the will court victory came at enormous expense likely continue to accelerate. Currently, the most (Mullin). visible disputes have been between industry titans with enough resources to fight protracted patent battles and amass the necessary defensive

ELF 2013 (Vol. 5) 7 portfolios to survive. Left unchecked though, the Mullin, Joe. “Oracle v. Google: no patent patent war will spread to smaller companies and infringement found.” Ars Technica. Ars compromise innovation for more popular Technica, 23 May 2012. Web. 15 Nov consumer products. Small shops will find 2012. themselves nuked out of existence by Nieh, Andrew. “Software Wars: The Patent established players wielding their mighty Menace.” New York Law School Law arsenals of patents, while real software Review 55.1 (2010): 295-330. Academic innovation stagnates in favor of lawyers’ salaries Search Premier. Web. 4 Nov. 2012. and spiraling litigation costs. Software patents, as they stand today, only incentivize inventive “patent.” Oxford English Dictionary Online. ways to file overly broad patent claims. Oxford University Press, Sept. 2012. Web. 13 November 2012. “Patently Inadequate.” Communications of the Works Cited ACM 55.7 (2012): 18-20. Academic Search Premier. Web. 4 Nov. 2012. “A Brief History of the Patent Law of the United States.” Ladas & Parry, LLC. Ladas & Smith, Kevin. “Apple versus Samsung.” Parry, LLC., 17 July 2009. Web. 11 Nov. Business Insider. Business Insider, Inc., 28 2012. Aug. 2012. Web. 4 Nov. 2012. Barrett, Paul M. “Apple vs. Samsung: The “Strategy Analytics: Samsung Galaxy S3 Longer View.” Businessweek. Bloomberg Becomes World’s Best-Selling Smartphone L.P., 30 Aug 2012. Web. 17 Nov 2012. Model in Q3 2012.” MarketWatch. Business Wire, 8 Nov. 2012. Web. 12 Nov. 2012. Bessen, James, and Eric Maskin. “Sequential Innovation, Patents, and Imitation.” Thomas, Owen. “Why Google Really Bought Research on Innovation. Research on Motorola.” Business Insider. Business Innovation, Nov. 1999. Web. 9 Nov. 2012. Insider, Inc., 5 Nov. 2012. Web. 16 Nov 2012. Brodkin, Jon. “Oracle’s IP War against Google Finally Going to Trial: What’s at Stake.” Ars United States. Federal Trade Commission. To Technica. Ars Technica, 15 Apr 2012. Web. Promote Innovation: The Proper Balance of 15 Nov 2012. Competition and Patent Law and Policy. Washington: GPO, Oct. 2003. Print. “Everlasting Software.” Harvard Law Review 125.6 (2012): 1454-1475. Academic 35 USC Sec. 101. 2007. Print. Search Premier. Web. 3 Nov. 2012. U.S. Constitution. Art. I, Sec. 8, cl. 8. Print. Hansell, Saul. “Amazon Wins Court Ruling to Protect Patent on Order System.” The New York Times. The New York Times Company, 3 Dec. 1999. Web. 27 Oct. 2012. McDougall, Paul. “Microsoft Inks More Android Licensing Deals.” InformationWeek. UBM LLC., 8 Nov 2012. Web. 10 Nov 2012. Merges, Robert P. “Software and Patent Scope: A Report from the Middle Innings.” Texas Law Review 85.7 (2007): 1627- 1676. Academic Search Premier. Web. 4 Nov. 2012.

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