Why All Small Businesses Need Software Patents
|Written by Gene Quinn
Patent Attorney & Founder of IPWatchdog, Inc.
Principal Lecturer, PLI Patent Bar Review Course 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.
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
Gene Quinn 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.