The European Parliament and European Commission are in the midst of deciding whether software patents will be permitted in the EU. The Commission recently informed the Parliament that it would not redraft the proposed Computer Implemented Inventions Directive (CIID). The European Parliament must now decide if it will adopt the Directive as is, which would make software patentable in Europe.
The Parliament might alternatively reject or amend the Directive. In other words, whether or not software is patentable in Europe is up in the air, as it has been since 2002 when the Directive began its journey through the legislative corridors of the EU.While the ultimate outcome of this issue is unclear, there is no doubt that the advantages of software patents far outweigh their perceived disadvantages.
A Comparison with the United States
The debate in Europe is similar to the one that existed in the United States until about a decade ago. Up until the mid-1990s, it was not possible to patent software by itself in the United States. You could get a software-related patent only if you combined the software with hardware. This is similar to what exists in the EU today, albeit on a country-by-country basis.
The law changed in 1995 through a series of court decisions. As a result of these decisions, software became patentable in the United States, whether or not combined with hardware. Later that year, the U.S. Patent & Trademark Office issued the “Examination Guidelines for Computer-Related Inventions.” The guidelines standardized the procedure for obtaining software patents, and in so doing enhanced legal and commercial predictability of the software patent landscape in the United States.
To be sure, the legal change of making software patentable in the United States has presented challenges. But these challenges are comparable to those faced by other technologies and industries. On balance, the advantages of software patents far outweigh the disadvantages advocated by their critics.
Why Is Hardware Worthy of Patent Protection, But Software Is Not?
The reasons that compelled the United States to change its law and make software patentable are valid in Europe, as well. Considering the case from a technical point of view, why is hardware worthy of patent protection, but software is not? All else being equal, the same amount of technical brain power goes into making a software invention as a hardware invention.
Some critics argue that software is less patentable because it takes less time to write code than wire a circuit board. Even assuming that that is true (which is debatable), the patent laws reward innovation. They do not penalize efficiency of effort. From a technical point of view, there is no reason that hardware is patentable, but software is not.
Patents promote innovation. Patents give software companies more incentive to invest in R&D because they allow those companies to protect their inventions. Without patents, a company cannot effectively prevent competitors from incorporating its software inventions into competing products.
Copyright Provides Little Protection
Critics argue that software is adequately protected by copyright. This is not correct.Copyright protects expression, not functionality. Copyright would protect a company’s code, but not the code’s underlying functionality. Since functions can be coded a variety of different ways, copyright provides little protection of software inventions.Patents are necessary to protect the functions contained in software.
Of course, if those functions were invented and used in the past, they can’t be patented. Critics argue that software should not be patentable in Europe because the European Patent Office would do a bad job and issue bad software patents. That’s akin to throwing out the baby with the bath water. Making software patentable in Europe is the right idea. Getting the execution right may take some time, but it will happen.
In the United States, the Patent Office has addressed the execution issue by hiring more examiners, investing in better prior art search tools and resources, and tightening examination procedures. The fact that pending U.S. applications publish after 18 months (as in the rest of the world) also helps since it adds to the repository of prior art.
It’s an ongoing process, but that is no different from the challenges faced by other technologies. Arguing that software should not be patentable because the execution is not perfect is not valid, unless you’re advocating wholesale revision of the entire patent system.
Software Patents Help Small Companies
Critics argue that software patents favor large companies over small. This is not correct.There is no doubt that some large software companies have extensive patent portfolios. However, large companies enjoy many competitive advantages. It’s hard to say how much of their success is due to patents.
A small company has few competitive advantages. Paradoxically, what advantages it has are often tied to its small size and short history. Not burdened by the heavy inertial often associated with large companies, a small company can often out innovate its larger competitors. But how can a small company prevent its competitors from pilfering its software innovations, once they hit the market?
To be successful in the marketplace, and maintain and build upon that success, small companies need a barrier of entry. Something to prevent competitors from moving into their technological turf. Patents provide that edge. Patents level the playing field, and provide small companies with the time they need to become large companies.Patents also add value because they help small companies raise money. Angels and VCs often want to see that a small company has secured its inventions via patents before making an investment.
Software Patents, Open Source Can Co-Exist
Open-source leaders argue that all software inventions should be freely available to all, and thus oppose software patents. But how is it equitable that a party should be forced to dedicate its property to the public domain? Software may be intellectual property, but it is still property.
A company should be able to maintain ownership of its software, just as it should be able to maintain ownership of its building, and the land that the building stands on. A neighbor might prefer that ownership be swept away, so as to build on an unoccupied portion of the company’s land. But that view is shortsighted, because it puts the neighbor’s property at risk.
There is no doubt that the open-source movement has produced great quantities of superior software. The enormous brain share that results from open-source has produced highly efficient, effective and robust code.
It’s not that software patents are good, and open-source is bad, or vice versa. Instead, companies should have the right to elect one or the other. Prohibiting software patents means that companies cannot protect their inventions, and thus effectively forces everyone to open-source their software. The open-source leaders’ position against software patents seems antithetical to their philosophy of freedom.
The Quid Pro Quo of Software Patents
The opposition to software patents is short-sighted. True, allowing software to be patented will restrict use of the patented software. But that restriction is only about 20 years, a relatively short period in the scheme of things.
Patents have a quid pro quo that more than compensates for the short-term monopoly given to the patent owner. To get a patent, inventors must fully describe the invention. That information is publicly available, usually before the patent issues. While the public cannot use the patented software without the patent owner’s authorization, the public can study and build upon the inventors’ work. There are many examples of the follow-up inventions being much more innovative and valuable than the original idea.
From a long-term point of view, this quid pro quo is the key component of the patent system. It ensures technical advances are documented and preserved, and made available to others for their study and improvement.
As it moves towards its decision on this software patenting issue, one hopes that the European Parliament grant appropriate weight to the long-term, as well as short-term, implications of its decision.
Attorney Michael Q. Lee is a director in the Electronics Group at Stern Kessler Goldstein Fox. He may be reached at [email protected].