Friends and relatives who are not in the technology industry always ask me if I’ve ever gotten a patent. For them, a patent has this sheen of accomplishment. They believe it means you invented something, that you are an innovator, that you’ve done something no one has done before. I give a little chuckle, tell them that yes, I have a few patents (I actually have 90 issued U.S. patents), but that it’s not really a big deal, and thank you for asking. In reality, I’m being polite. I don’t want to burst their bubble, nor do I want to launch into a long tirade. Because, the reality is, that patents — and in particular — software patents — are a plague upon the industry. They hamper innovation. They cost companies millions and millions of dollars in frivolous law suits. They waste time and energy from people who just want to build products. They are anathema to the Internet. Software patents are harmful.
Software patents have three key characteristics which have resulted in their harmfulness. They are vague in terms of what is actually invented. They can be passed along as property. You can sue for infringement without making the product to which the patent applies. Lets cover each in turn.
When the thing that is invented is a simple mechanical thing — like a swiss army knife, or a cardboard box which can be folded and unfolded — it’s relatively easy to imagine that you could write down what the invention is, and then later on, look at a different product and say “hey, that’s the same thing as the invention described in the document!”. But, when it comes to complex software, this becomes much much harder. Take, as a different example — a piece of software familiar to all of us — Microsoft Word. Microsoft Word has lots of different piece parts to it. If someone claims to have “invented” it — what would that mean? Does it mean that the copy would need to look exactly like Microsoft Word, pixel for pixel, in order to violate the patent? No — that wouldn’t make sense. It would enable a copycat to modify a few pixels and get away with it. Perhaps a patent on Microsoft Word would claim that any piece of software that allows users to enter text and edit it, would be in violation. That also doesn’t make sense — its too general. Microsoft Excel also allows people to enter text and edit it, so a patent defined in that way would mean that someone inventing a spreadsheet would be in violation of a patent on Microsoft Word, which is wrong. And thus, you have the core challenge. Software patents (and patents in general), are defined by claims. These claims are legalese words which try and articulate exactly what has been invented. They typically define a method for doing something, and that method is something that is implemented by the software. The only thing that matters is these claims. For some product to violate the patent, one has to only prove that the claims apply to the product in question. The problem is, over the years, the claims have gotten so vague and so distant from the software itself, that its almost impossible to even know what the invention actually is. As a result, you can look at the claims in different ways later on, and apply them to a totally different piece of software and argue that this different piece of software is covered by the patent.
Let me give you an example, from one of my own patents. Here is “claim 1” — meaning — the main thing that the patent is supposed to cover — for US patent 8,947.491:
A user terminal comprising: an input for receiving a video signal; a display for displaying to a user at the user terminal a video image derived from the video signal; a selection input for receiving from the user at the user terminal at least one effect for enhancing the video image derived from the video signal; and a rendering device for rendering on the display the video image derived from the video signal enhanced by modifying the video signal according to the selected effect, the user terminal being configured to receive an indication to apply the same selected effect to a sub-portion of an image displayed on the display, the rendering device being configured to render the same selected effect to the sub-portion of the image displayed on the display.
Confused? So am I. And I am the inventor of this patent. There is something in here about video, something about enhancing a video image and rendering it. You can see how a creative lawyer make take a patent like this, and say that it actually describes something like Snapchat. Or perhaps you might argue it describes Photoshop. And that’s the core problem. The claims are vague, and if read in creative ways, you can argue that they apply to things which, in reality, are very far afield from what the actual software program did in the first place.
In today’s world — patents are literally property. They can be bought. They can be sold. They can be traded. You can barter with them. Companies build up a portfolio of patents, which they generate by having their own employees invent things, or, they gain them through acquisition of other companies (in which case, their patent portfolio is part of what is being purchased). Companies looking to make a buck will also shop their patents around, offering to sell them to other companies.
Because patents are property and can be traded, they can (and do) end up in the hands of companies which don’t actually make the product which is described by the patent. The law says that this is fine — you don’t need to make that product to sue someone for patent infringement. I could see how that might have made sense a hundred years ago — some poor company filed a patent, a big bad guy competitor copied the product and put the little guy out of business. The little guy wants to sue. The little guy doesn’t make the product anymore (they’re out of business!). Clearly they should be able to get compensation. In reality, this is not what happens. Instead, it has given birth to the patent troll.
A patent troll refers to a company that doesn’t actually make any products at all. The only thing it does is to build up a portfolio of patents, which it acquires in the market through a variety of means. Then, it hires some creative lawyers, and tries to apply those patents to products made by software makers in the actual market. Most of the time, those products have nothing to do with the actual product which generated the patent in the first place. But, some creative reading and they figure out ways to say that the patents do apply. The troll then goes and sues those software makers for violating their patents. The official term for these types of companies are “Non-Practicing Entities” or NPEs. But, most of us in the industry call them trolls because it is a well deserved title.
In many ways, the business of being a patent troll is much like an illegal protection racket. The patent troll will sue many companies. Unfortunately, it is extremely costly to actually litigate these suits, and there is often a risk it might be lost in actual court. This might cost the defendant a lot. As a result, the patent troll will instead offer to settle for an amount which is less than the costs of litigating the case. The company being sued will just pay off the troll, and consider it part of the cost of doing business. In essence, the troll threatens the company, and demands cash to make the threat go away — just like protection money. Even if the amount is small, a troll can make a good amount of money by running this racket across many software vendors. For this reason, trolls tend to like patents which are really vague, really old, and apply to products which are now made by many different vendors, and ideally, made by vendors which are making enough money on them to be willing to pay the troll off.
Any company in the software business for a while, making a decent amount of money, will be sued by trolls at some point. It will cost them money to fight or pay off the troll — money that could have been spent on more productive things, like making more jobs or building better products. In essence, patent trolls are a “tax” on innovation, and this is why software patents actually hurt innovation rather than helping it.
Sometimes, companies are brave and they refuse to pay off the trolls. They’ll take the cases to court, hoping for a win. When a software maker wins against a troll, it sets a precedent and makes it difficult for the troll to win a future case against a different software maker. That destroys the business value of the patent to the troll and thus does the industry good. I salute these companies. Sadly they are few and far between.
Where do these trolls come from? Sometimes, they come from a company which did make a product, but then it failed in the market. Most of the time, this failure isn’t because someone else copied their product. Rather, it fails due to bad timing, or bad pricing, or bad marketing, or poor strategy, or any of the other many reasons why companies fail. The investors that put money into the company want some kind of return. If the company was large enough to have built a patent portfolio, the investors will begin to look at that portfolio as an asset that can generate returns. Consequently, failing companies begin turning into patent trolls — the last gasps of life from software gone bad. Other times, people form companies whose sole purpose is to acquire patents and then sue people for them. They never made a product, and never intend to. They just want to make money through creative lawsuits.
Real companies have developed a few techniques over the years to try and defend against these problems. The first line of defense is a defensive patent portfolio. Companies with enough money and time accumulate patent portfolios for their own products and technologies. They don’t intend to use them to stop people from copying their ideas (this almost never happens). Rather, they intend to use them to fight off lawsuits. Though many suits come from trolls, they also come from companies which also make products. If such a company sues another, the defending company can counter-sue back. With a big enough portfolio, the odds are decent that some creative interpretation will allow the defending company to assert that the attacker violates one of their patents. The goal of the counter-suit is to make the whole thing go away. This often works, and is the primary reason large companies accumulate patent portfolios.
It is expensive to file patents though, and so a more recent tactic that companies are taking to defend themselves is to publish inventions on a website. Once published, an invention cannot be patented by anyone else subsequently. If a troll should have a patent which is claiming something similar to the published invention, the patent can be overturned on grounds of “prior art” — meaning it had already been invented previously, and the website serves as proof. One such website is here (https://www.tdcommons.org/). I have an invention published there exactly for this reason. This is a relatively recent phenomena and doesn’t help with patents that are old. Since patents are valid for 17 years (way too long for software by the way), it will take a long time build up enough inventions on these websites to serve as strong defense.
Other companies are defending themselves by proactively buying patents off the market before they get into the hands of trolls. This is similar to what governments do with nuclear weapons — they find and acquire them before they fall into the hands of terrorists. These patents often come on the market through failing companies wishing to make a buck, and want to sell rather than sue. I also applaud companies that buy these patents, they do everyone a service by taking these weapons off of the market.
Now, perhaps there are cases here and there were one company filed a patent on something, and some other company genuinely stole the invention, and then the first company sues to get what is rightfully theirs and thus defend innovation. In my 25 years experience in this industry, I haven’t seen such a case. I have, however, seen countless lawsuits by patent trolls. In my experience, software patents are mostly used by trolls to make a buck, and they are a tax on innovation that every company must pay.
One easy solution is to outright forbid patents on software. I would be cool with that, but it might be a tough change to pull off. A more realistic solution is simple — only allow a company to sue if it actually makes the product about which the patent is claimed. That simple change would fend off most of the patent trolls and eliminate the trading of patents which is the source of much of our problem.
My friends — software patents are harmful to innovation, harmful to the Internet, and harmful to people. It’s time for change.