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Why All Small Businesses Need Software Patents


Written by Gene Quinn
President & Founder of IPWatchdog, Inc.
Patent Attorney, Reg. No. 44,294
Zies, Widerman & Malek
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Posted: October 4, 2009 @ 11:46 am
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Over the last week a heated debate has been raging here on IPWatchdog.com regarding whether patents should exist at all. See Reality Check: Anti-Patent Patent Musings Simply Bizarre and Responding to Critics: My View on Patents & Innovation. I have offered a point by point debate where everyone answers the same question in 300 to 500 words, and as yet I have no takers, so you can decide yourself why that is.  Notwithstanding, this firestorm started when I questioned why any inventor or company would want a patent attorney representing them who has as his articulated position that 0 years of patent term is the most appropriate solution. If there are those out there who think a patent without any term or exclusive rights is best then they have the right to exercise their preference by simply ignoring patents altogether. Of course, when other companies do get patents and do use the rights and law to their benefit these same folks cry foul. Simply put, you cannot have your cake and eat it too! If you don’t like patents then don’t get them, but then also expect to be a target of all those in your industry who do get patents.

You see, this is the problem of the Patent Troll. The reason giant companies hate patent trolls is because they are not capable of being counter-sued. There is no deterrent effect because patent trolls do not make, use or sell anything, they just sue. So giant companies are targets in the same way that smaller companies without patents are targets of big companies with patents. No one should aspire to be a target. A simple truth is that a small business without patents might as well dress themselves up as a buck during hunting season complete with a bulls-eye pre-drawn. So here is the case for every business to get patents, particularly software patents. Ignore it if you like, but you do so at your own peril.

The first place we need to start is with the obvious.  Does anyone who is an individual inventor or who owns or invests in a small business or start-up business actually believe that big business is looking out for their best interest?  Of course not!  It is naive to an extraordinary level to believe that big business is altruistic.  It is also naive to believe that what big business wants to help them will help individuals or small businesses.  In fact, even if you do not understand why or how, if big business is in favor of something individuals and small businesses should at the very least be highly skeptical and start with the belief that the exact opposite is likely what individuals and small businesses should want.  This is not rocket science here, it is common sense.

Why do big businesses, particularly big businesses in the tech sector want patent reform so bad?  Why is it that big-tech wants to weaken the patent system, water down patent rights and make it various levels of difficult or impossible to achieve damages for patent infringement?  The way that those who are in the anti-patent movement throw around big-tech as examples of responsible business and point out that even those who rely on patents and have their businesses built on patents think the patent system is bad, needs fixing and the appropriate fix is to water down patent rights because patents harm innovation.  Now it is time for a reality check!  Does anyone think that this is why big-tech wants watered down patent rights?  For crying out loud everyone even peripherally involved with the innovation industry knows that big-tech simply cannot innovate.  Does the word MICROSOFT mean anything to anyone?  Does Microsoft innovate?  This is almost laughable.  Microsoft cannot even develop an operating system that is as good as the early 1980s version of the Apple operating system.  Big-tech does not innovate, they copy, which means they infringe.  They want weaker patent rights so that they don’t have to pay for infringing and copying, and that is the only reason.



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What do you suppose will happen when an individual, small business or start-up business comes up with an innovation that big-tech covets?  There is no mystery here, we do not have to assume, guess or engage in any prophesying, we know exactly what will happen because it is presently happening.  When big business, particular big-tech wants to use an innovation they simply use it, and do so without paying.  They then cry like children who miss their parents when they get sued by the rightful developer and owner of the patent rights.  They claim that everyone who is not them is a patent troll and simply trying to hold up innovation.  Yes, big-tech actually has the audacity to argue that those who invent first are holding them up from innovating.  How absurd!  Does anyone really believe that big-tech has the ability to innovate?  When have they innovated?  They rip off innovations or they buy-out companies who have formed around solid technology and innovation.  Big companies cannot and do not innovate, and that is why throughout US history the major technology companies have never been able to stay dominant.  They stagnate and falter, allowing smaller, more nimble and innovative companies to rise.

If big-tech is going to simply copy and rip off whatever they covet now when we have relatively strong patent rights what do you suppose they will do if and when patent reform happens and patent rights are weakened?  What do you suppose would happen if we simply did away with patents altogether, or did away with software patents, which is a real possibility?  That would mean that big-tech could simply put their copying ways into overdrive and make it impossible for any start-up company to gain traction.  A start-up company without exclusive rights simply cannot compete against themselves, which is exactly what would happen if they innovate and develop only to have big-tech steal their technology and put it into the marketplace against them.  Whether we like it or not, if Microsoft puts its name on a product it will dominate because of their marketing machine and monopoly status.  Without patents expect this to get worse.

Now, the one thing that the anti-patent crowd always points out is that software can be copyrighted and that provides plenty of rights.  This is simply a lie, false, disingenuous, misleading a misrepresentation, fraud or perhaps simply said by those who don’t know what they are talking about.  Anyone who says copyrights are a meaningful or acceptable form of protection for software does not know what they are talking about, or they have an agenda.  If you buy into this, accept it or follow this advice you will be the reason your business is destroyed.  Copyrights do not adequately protect software, and copyrights are not any kind of substitute for patents.  For crying out loud copyrights are not even a form of exclusive right thanks to all of the fair use exceptions and ability to literally and directly copy as long as you don’t copy to much.  How is that an exclusive right?  It isn’t.

Allow me to explain what copyrights do.  If you have a copyright in your software what you can prevent is another from copying and pasting the EXACT code that you used.  That is it, nothing more.  Now if you really understand software you realize that there are many ways to accomplish the same thing without ever literally cutting and pasting code.  A copyright in software does not prevent a competitor from looking at your product and copying the functionality with their own code.  It also does not prevent a competitor from reading your code to figure out what you did and then independently writing their own code to accomplish the same thing.  They can even cut and paste portions of the code you right and as long as it is not “to much” they can claim it is fair use and there is nothing you can do about it.  So copyrights are not any kind of meaningful protection for software, and anyone who argues otherwise is lying or misinformed.

We all know the simple, common sense economic rule that you get what you pay for.  If you pay for a Yugo don’t expect a Toyota, and if you pay $30 for a hotel room on Hotwire you probably shouldn’t expect to show up and have the hotel be the Island Hotel in Newport Beach, CA (which incidentally is probably my favorite hotel).  So why would anyone believe that you can pay $45 for a copyright that will allow you to prevent competitors from copying your work?  Who in their right mind would expect to be able to pay $45 for the quasi-exclusive rights obtained via a copyright and be able to securely and safely build an entire company on those rights?  You get what you pay for, and if you are paying $45 for exclusive rights then you might want to expect them to be rather meaningless.

There is nothing wrong with getting a copyright for software, and in fact you should.  The price is exceptionally low, so you can easily get value for the price.  If someone is dumb enough to cut and paste your code you have an idiot-proof case that will be easy, provide you with the ability to get up to $150,000 in damages even if there is no demonstrable harm and you can collect your attorneys fees if you win in court.  If you create custom software you should get a copyright on the software and have a carefully tailored services contract so that you are the owner of the intellectual property at least until you are paid.  If you are not paid you can make life miserable for the party that tries to stiff you, so for $45 do it!  Copyrights are a tool for a particular job and can be enormously beneficial in the correct situation, but believing they are as useful as a Swiss Army Knife is ridiculous.

You can hate patents, you can think they are evil, you can believe that zero years of patent term is appropriate, all of that is fine.  But if you have a software company and you are not getting software patents then you are being reckless and leaving your business open to complete and total devastation.  If you are investing in a company that has software assets and software patents are not being pursued your entire investment is at risk all for no good reason.  Since when does a philosophical objection make business sense or act as an acceptable excuse for doing the right thing?

In my view patents, including and perhaps specifically software patents, are the great equalizer and are necessary for small businesses.  Small businesses will be pushed around and ultimately destroyed by giant companies that do not innovate but have the means and ability to maintain their monopoly through size, market penetration and funding required to simply outlive and pound smaller adversaries.  I am not blind, I know the patent system is not what it could or should be, and I think a one-size-fits-all patent system has outlived its usefulness, assuming it ever was appropriate.  But that doesn’t change the business reality that patents are a tool, a means to an end and that end is survival.  So ignore what I say if you want, believe the anti-patent advocates and listen to them pound their chest claiming they “eviscerate” my arguments.  The truth is they are wrong, they are recommending folks cut their nose off to spite their face and they simply do not have your best interest in mind any more than big-tech does.  Do what you want, but the law is there for everyone to use to their advantage, so don’t be surprise when others do use it to their advantage and to the detriment of those who place what they believe should be the natural order of things ahead of business success.

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Posted in: Business, Copyright, Gene Quinn, IP News, IPWatchdog.com Articles, Patent Trolls, Patents, Software, Software Patent Basics

About the Author

is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.

 

 


21 comments
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  1. This is ridiculous. Patents are a threat. All those arguments falls when you look at why Microsoft is scared of Linux. The end of patent means also the end of product value, and increase the value of actual services. Without patents, Microsoft would not be able to charge a cent for his products and would go bankrupt at insane speed.

  2. “The reason giant companies hate patent trolls is because they are not capable of being counter-sued.”

    Exactly. Often times inventors and other small entities simply don’t have the cash or the infrastructure (e.g. universities) to commercialize their inventions and so licensing is their only recourse. Unfortunately, under current law if they approach a large infringer like Microsoft to take a license they will be sued for a declaratory judgement in some distant location which will put their patents on ice for several years in which time the small entity likely will go bankrupt. Big companies love that.

  3. “If you have a copyright in your software what you can prevent is another from copying and pasting the EXACT code that you used.”

    It’s more significant that you can prevent others from copying the binaries you generate from your source code, since most businesses aren’t going to let anyone see their source code regardless of IP rights.

    The most important question, which you don’t address, is this: are these very limited protections enough? Merely having copyright protection allows competitors to duplicate your software in many different ways, but that might not matter. The few protections provided by copyrights may be sufficient to allow business and innovation to flourish. If that’s true, then we get what we want, without having to pay the costs of the patent system.

    We have a saying in the software industry, “Ideas are cheap, execution is hard.” I’ve heard fiction authors express the same sentiment, in different words. Notice that it says “execution is hard,” not “execution is expensive.” Writing successful software takes a lot of time and skill, but not a lot of capital. Because of that, we have a situation where the initial financial investment is low, but the first-mover advantage is still significant. It may well be that this is enough to make software development worthwhile for businesses.

  4. Adam-

    If you think first to market is what matters then by all means go ahead and ignore patents. Then when your software is successful and larger entities rip it off without actually copying the source code and put you out of business then you get what you deserve, which is nothing.

    Pure and simple, copyrights are not enough. With a copyright you protect exact source code, nothing else.

    -Gene

  5. Gene-

    If my program is so simple, and the ideas in it so easy to duplicate, then no, I don’t deserve protection from the big companies, because I haven’t really contributed anything, I just beat everybody else to the punch on something that wasn’t to difficult to figure out in the first place.

    If I found a way to compress data to 10% of the size of the best available algorithms but didn’t release the source code, do you think other companies would be able to rip me off? Of course not, because if it was that easy, they would have done it already. The idea is that rare, truly innovative discoveries that will not likely be rediscovered for a very long time be disclosed in at most 20 years by offering the inventor a patent, which he presumably doesn’t need in the first place.

    The problem is, this never happens in software. To even bring up the point about competitors ripping anybody off shows how the current system is broken. For the idea to even be worthy of a patent it should be of sufficient quality that other people CAN’T figure out how to rip it off, and that a patent is needed to pry the information out of the Einsteins who invented it.

    If you are worried about competitors ripping you off, then you don’t deserve a patent in the first place.

  6. “If you think first to market is what matters then by all means go ahead and ignore patents.”

    I thought your article was about whether or not software patents are necessary or desirable in general. Whether or not they should be ignored in the current legal climate is a separate issue.

    “Pure and simple, copyrights are not enough.”

    Truth By Vigorous Assertion is not a convincing argument. You’re very clear that copyright protection is not sufficient for software businesses to thrive, but you have given no reason why that is the case. “Someone might copy your idea,” while true, doesn’t address the fact that I might be able to make money anyway. Someone might copy your idea for a novel, too, but not many people are suggesting we have literary patents.

  7. Adam-

    I have explained in detail in the article why copyrights are not enough protection. The fact that you do not want to believe what I say doesn’t change the fact that I said it. Nevertheless, allow me to say it once again, and now for at least the third time on this page. Copyrights protect the code, specifically the source code. All a copyright will do is prevent others from cutting and pasting your source code and taking it as their own for their own product. Copyrights do not protect function, patents protect function. So if you have a really cool software product and I like it and all you have is a copyright what I do is create exactly what you have independently without cutting and pasting your source code. If I do that then you cannot stop me. If you had a patent you would be able to stop me from creating anything that provides the functionality you define in the patent claims, whether the source code is identical or not.

    To be perfectly honest, I wonder if you really even read the article. I explain the limits of copyright protection in the article, and yet you say all I do is reach a conclusion and vigorously assert the conclusion. Obviously you are not following along, because that is not what I did, and not my mode of operation.

    In terms of first to market, the point of the article is to explain why folks need software patents and cannot rely on copyrights. If they don’t want patents then by all means don’t get them. But if a willful choice is made to not obtain patents then those who make that ridiculous decision need to man up and live with the consequences. Others will obtain patents, are legally entitled to obtain patents and legally entitled to enforce said patents. If you don’t have patents yourself and rely on copyrights you have almost no useful protection and you are a target for those who do have patents.

    -Gene

  8. POP-

    You say: “If I found a way to compress data to 10% of the size of the best available algorithms but didn’t release the source code, do you think other companies would be able to rip me off? Of course not, because if it was that easy, they would have done it already.”

    RESPONSE: This statement demonstrates just how naive you really are. All unsophisticated inventors have this kind of hubris, and those who really believe this are destined to fail. I have never understood the arrogance of those who think that they and only they could ever come up with a particular solution. The reality is that this is nonsense and if you are smart enough to come up with the solution others are as well. The sad thing is that if you come up with it first, do not get a patent and then the second party who does come up with it gets a patent they will actually be able to prevent you for using the invention you created first. In the rest of the world that may not be the case, and it is not the case in the US in the narrow niche of business methods, but in the US only business methods enjoy prior user rights. So those that sit on their rights and do nothing may find themselves preventing from doing what they came up with first. So go ahead and be naive if you want, but don’t cry when others who are sophisticated in patents and business cut you off at the knees.

    You say: “For the idea to even be worthy of a patent it should be of sufficient quality that other people CAN’T figure out how to rip it off, and that a patent is needed to pry the information out of the Einsteins who invented it.”

    RESPONSE: You are welcome to that opinion, but it is important for everyone reading to understand that this is not the law. I can assure you with great and unquestioned certainty that you do not have to have an Einstein level revolutionary invention to get a patent. Whether that should be the case can be debated, but it certainly is not the law in the US. So once again, you are welcome to do whatever you want with your work, obtain patents or not obtain patents, but don’t cry that you are being subjugated by those with business sense enough to understand what the law is and exploit it to their own ends.

    You say: “If you are worried about competitors ripping you off, then you don’t deserve a patent in the first place.”

    RESPONSE: Actually, that is the only reason to get a patent. It is clear you do not know much about the patent system, nor patents as an asset or using patents to forward a business objective.

  9. Hi Gene,

    I love your blog and the updates you provide and I think it would be a more productive and friendly environment if we all use fairer language and respect the opinions of others without presenting arguments like a reply to an Office Action. We all know that there will always be people who disagree with each other and that the “bigger and generous man” is wisest of all.

    I say this because I think the intention of your blog is, not only for marketing purposes, but for the arousal of useful and productive input from the community that follow you.

    Regards,
    George

  10. The article is really good, clearing showcase why copyright is not strong enough to protect software invention. Having said that, the discussions are even stimulating. Great jobs!

  11. George-

    Thanks for your comment. I appreciate you reading.

    As far as wisdom, I am not sure anyone has ever accused me of having that. Life is a journey though, and I do appreciate your comment. Perhaps I will get there, eventually.

    Cheers.

    -Gene

  12. Gene: I read your article with great interest. I wrote a response on my blog (http://www.cscyphers.com/blog/2009/10/05/finding-balance-with-software-patents/ — it’s a bit too long to reproduce here); I’d be interested to hear your thoughts in response.

    All the best,
    C. Scyphers

  13. “I have explained in detail in the article why copyrights are not enough protection.”

    No, you definitely didn’t. You explained why copyrights do not give as much protection as patents, by listing the things competitors can do if you only have a copyright. You made no effort to explain why this level of protection is not sufficient. Do you see the difference? You’re just listing the distinctions between copyright and patent protection, not telling us why we need one and not just the other.

  14. Adam-

    I am sorry that you find the article not to your liking and lacking the information that is clearly there for all to see. It seems that more often than not you have a problem with the way I convey information and that leads you to the erroneous conclusion that the information is not presented. You say I do not explain why patents are needed, but you admit that I do explain why copyrights are not sufficient. You are making a distinction without a difference and I cannot understand that.

    Plain and simple, and now this is at least the 4th time this is said on this page alone, patents protect functionality and copyrights do not. If you have a copyright others can make an exact replica of your work from a functionality level as long as they do not cut and paste your source code. If you cannot understand why that means that copyrights are not sufficient I don’t know what to tell you. I can only lead a horse to water, I cannot make the horse drink. If you are satisfied with protection limited to only exact and literal copying of the source code then by all means copyrights are sufficient. Everyone with any experience with code knows that there are many different ways to achieve the same exact result and functionality, so protecting but one alternative by way of literal and exact protection of source code is extremely narrow.

    -Gene

  15. Gene, I’m clearly not communicated well here. You don’t have to keep repeating yourself, I have read your multiple explanations carefully.

    Maybe I can explain by analogy. You’re saying something like this:

    “Here’s why we need long novels. Short novels have fewer pages. They’re not as thick as long novels. They contain fewer words and chapters. Long novels have more pages and are thicker. That’s why we need long novels.”

    You are just defining the differences between copyright protection and patent protection. You have not formed an argument for why we need the protections that patents provide in order for software business and innovation to flourish. Since there are significant differences between software development and e.g. automobile development, and there have been many historical examples of software companies and innovations flourishing without patents, it’s important to explain why software needs the added protection of patents. I suggested that the particular economics of software development mean maybe we can get away with only copyright protection and still have a flourishing software ecosystem. You have not explained why this is not the case.

  16. Adam-

    I believe this is a recurring theme. You seem to want every post I write to be a thesis or research paper, which is not realistic. I focused on why copyrights are inadequate. I am happy to write something else explaining what patents are, but that is pretty much throughout the site.

    I do get your point though, and perhaps the creation of a comparison table would go a long way.

    -Gene

  17. Regarding your point about scope, I think I’m more objecting to the title and thesis of the post not matching the content, rather than the limits of the content. It’s a useful and informative post, but there’s just a disconnect between what it claims to do and what it actually does.

    I think a more appropriate title would be, “How Software Copyrights Leave Small Businesses Open to Competitors”. That would accurately describe the contents of the post.

  18. Gene,

    Given your propensity to draw lightening, I wanted to hand you a metal rod and provide a brief synopsis of a discussion over at Patently-O that I am sure will charm all of your avid software patentability followers.

    I will note that the conversation concerns an ongoing discussion with the only person I know of that you have banned from your site for his repeated and over the top ignorance of patent law – a blogger who purports to be an examiner at the USPTO and uses a host of pseudonyms and is generally famoosely known as 6.

    The thoughts I have offered to 6 have been posted on this site as well and deal with the patentability of software from the macro view (pun intended, ouch sorry), specifically the thoughts concern what appears to be THE controlling Case law – Alappat, a CAFC En Banc decision that defines “particular machine”.
    In relation to Bilski, I have put forth the argument that Alappat provides the protection necessary to meet either or both of the prongs in the Office’s proposed MoT test.

    6 had been chirping along, praising the beauty of the Kappos Bilski brief, when suddenly the chirping stopped. On pages 38 and 39 the reason became evident. While still couched in the Office’s weasel words (no surprise), the gist of the capitulation is plainly obvious.

    Let me quote:

    “the machine-or-transformation definition may readily encompass most software claims because such claims could be said to concern the use of a machine (i.e., the computer itself ) or involve a transformation of matter (i.e., the writing and re-writing of data, represented by magnetic changes in the substrate of a hard disk or the altered energy state of transistors in a memory chip).”

    And

    “The Interim Instructions state that “computer implemented processes” are often disclosed as connected to a machine, i.e., a general purpose computer. Such a computer, “when programmed to perform the process steps” so that it performs the specific function contemplated by the process, “may be sufficiently ‘particular’ ” for purposes of the machine-or-transformation test. ; cf. In re Alappat, 33 F.3d 1526, 1545 (Fed. Cir. 1994) (en banc) (“[A] general purpose computer in effect becomes a special purpose computer once it is programmed to perform particular functions pursuant to instructions from program software.”).”

    It does appear that the Office has made it a part of their argument to the Supremes that software on a machine is clearly patentable, at least as far as 101 and passing the Office’s preferred test is concerned.

    While I do not think you will find the holding of Alappat all that surprising, what may be surprising is that the Office now seems ready to capitulate on this front.

    Of course, the anti-software crowd at Patently-O is speechless at this development

  19. Criticisms aside, I find this article to be interesting and informative. Many small businesses and other innovators do not adequately realize the unique importance of patent rights, which are critical to self-protection and success in the marketplace.
    http://www.GeneralPatent.com

  20. The amicus brief filed by Microsoft, Symantec, and Philips adds interesting information to this post. In contrast to Gene’s comments about Microsoft wanting major patent reform, they say they want software to be patentable, and they think the eligibility rules crafted during the Industrial Revolution should apply to it. They argue that software running on a computer is no different than any other physical machine.

    “the eligibility framework that this Court developed during the Industrial Revolution— an era of tremendous advances in electronic and communications technology—retains its vitality, and relevance, today.”

    “Computer-implemented process claims, in general, will meet the standard historically employed by this Court, which should be retained and reaffirmed.”

    The full brief is here:
    http://www.patentlyo.com/am-brief.pdf

  21. Gene-

    First, I would like to say that I don’t question that you have a superior grasp on patent law compared with me, or even just law in general, after all you are a lawyer, and I am a programmer. I have however, read the justification for protection systems like the patent system in the constitution, which is to promote useful advances in science and art, not to hinder people from using ideas, and I’ve read the entire copyright law, all ungodly hundreds of pages of it and the patent codes. I realize that interpretation of the law is more important than what it says, but I do know what it says.

    All of the problems you addressed in your reply to me revolve around the way things are currently done, and I am suggesting that the current system is broken. More people are hurt, and more products and projects are hindered by patents than promoted by them, at least when it comes to software. The big companies like Microsoft and IBM have the lions share and so control the industry, because no software product is useful without at least one idea found in their huge portfolios.

    My bottom line is that ideas should be available for everybody to use but implementations of those ideas should be protected. Despite the weak enforcement, probably due to abuses of patents, copyright offers all the protection for implementation and fraud anybody needs when writing software. Patents are only useful for keeping people from using ideas, a form of thought crime, and in my opinion it’s wrong.

    Building off other people’s ideas is what creates competition, variety, and progress. The last thing we need in an industry that changes as fast as software is the government telling people what ideas they are allowed to use and which ones not, and which people they have to pay in order to use ideas.

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