Software Patents: Encouraging Litigation or Innovation?

I’m struggling with my feelings about software patents. Although software patents might not seem directly related to your career as a SQL Server professional, software and technology are the bedrock of everything we do and that SQL Server is based on. The future direction of software and patents has the potential to have a profound affect your life and career. Every technology professional should be exploring this topic and forming your own opinions so that you can participate in shaping the future of this debate. (I encourage you to make those opinions known to your elected officials.) Aggressive use of software patents, often on questionable claims, is beginning to have a negative impact on the technology business. 

I’m a big fan of Seth Godin’s blog. A post he wrote earlier this week ("When ideas become powerful") is what finally prompted me to explore this topic. The following snippet caught my attention:

I have always been a strong supporter of intellectual property (IP) rights. In many ways, our technology-based economy couldn’t exist without strong IP protection to protect business investments. However, patents weren’t designed solely to protect the needs of the person who invented the “machine.” Instead, the concept of patents has always been to encourage and foster innovation.

More and more, I’m beginning to feel that the current patent system is becoming a hindrance to innovation rather than encouraging it. I’m not the only person who feels this way. Many leaders in the global technology community are beginning to express similar concerns.

Don’t laugh, but I fear that we might be headed toward some strange Orwellian future in which software startups simple cease to exist because all the “ideas” are patented in some manner. Could we ever run out of ideas? Well, no. I’ll admit that. But my Draconian future isn’t as impossible to envision as you might think.

You’re familiar with the Lodsys case, right? Google it. In short, a patent troll (yes, that’s what they are called) named Lodsys has a patent that it alleges covers some aspects of an app purchase within a mobile application store (e.g., the Apple and Android app stores). Many of the app developers are small and simply don’t have the resources to defend themselves properly. Lawsuits are expensive. Defending an incredibly basic patent suit can easily reach six figures, and seven figures isn’t out of the question. I picked on Lodsys because it’s very high profile, so you have probably heard of it. However, there are an ever increasing number of suits like this. The trend is increasing not decreasing. The massive patent portfolios that the major tech companies are acquiring only raise the stakes. You don’t really think Google is paying $12 billion for Motorola’s ever shrinking mobile phone business, do you? They want the patents.

Getting back to the concept of ‘running out of ideas’ that I raise above. The point is that we don’t really even need to have run out of ideas. We would simply need enough patents and a culture of litigation rather than innovation to take over the business world before it becomes common for small garage start-ups to get sued in lawsuits that would be too expensive for them to defend, even if they would otherwise be destined to win.

Does having a patent protect small software companies that did innovate? Not always. Let’s say you’re a small software company that just invented the next best thing since sliced bread and you end up with a patent. You’re protected, right? Not necessarily. Sure you can send a cease and desist letter to the offending party, but defending your patent against infringement can easily cost more than $1,000,000. Often, the only way for a small company to handle such a fight is to find a law firm to take the case on contingency, and that’s not always an easy thing to do.

The roots of our current patent system began to form when someone actually had to build something to get a patent for it. The concept of business process and software patents was largely unheard of until a few decades ago, and until recently they were somewhat rare.  Current patent law doesn’t understand or reflect the current reality and pace of technological innovation and a one-size-fits-all approach to managing patents no longer makes sense.

I’d need at least a few more pages of text to make my arguments as compelling as I’d like them to be. This is an incredibly complicated topic with no easy answers. But I have become convinced that the global patent system needs massive reform to better represent our modern world. I love IP. I’m a capitalist at heart and always will be, but I prefer to embrace innovation over litigation.

What do you think?