Recently, I had the privilege of attending a program on software patenting— the tips and the traps of the overall procedures involved. India, being relatively new to this realm has significant concerns. We are in a rather vulnerable position and need to tread this path with caution.
A patent is a set of exclusionary rights granted by a state/country to a patent holder for a limited period of time, usually 20 years. Patents are territorial in nature; and so, inventors must file patent applications in each country as per the applicable requirements. In the US conventional industry, patenting has flourished for over half a century.
However, the United States Patent and Trademark Office (USPTO) has traditionally not considered software as being patentable. This is because by statute, patents can only be granted to "processes, machines, articles of manufacture, and compositions of matter.” In particular, patents cannot be granted to "scientific truths" or "mathematical expressions." This means that most fundamental techniques of software engineering have never been patented.
The USPTO maintained this stand towards software till the ‘80s, after which, in response to a petition, it stated that while algorithms themselves could not be patented, devices that utilized them could be. This led to a flurry of vendors filing patents for their inventions.
In India however, a clause to include software patents was quashed by the Indian Parliament in April 2005. The existing text of the Indian Patent Law is still being scanned and is far from maturity.
Before patents came into existence, we already had copyrights to take care of software security. Considering the similarity that software applications demonstrated with works of art and literature, this was deemed sufficient.
As a matter of fact, it is characteristic of software to be incremental and complex. This makes patenting software all the more challenging.
A second and equally important issue is that though the creator of a copyrighted material automatically becomes the owner of the copyright, the patent is granted to the first individual/organization applying for it. So, while a patent provides an innovator protection over a created idea, a copyright only protects a particular manifestation of that idea. Some inventors deem this as being insufficient.
Writing patents is an excruciatingly complex legal affair, and only a counsel-written application has chances of seeing the light of day. Patent Disclosures are intentionally meant to be vague in order to have the widest possible scope of enforcement.
In addition, the overall costs associated with patent disclosures and grants is around $50,000 to $60,000, hardly the amount an individual or small startup can afford to expend. However, the major benefit of patents comes to giant corporations, where the patents turn out to be intangible assets for the organization.
Large organizations encash their patent banks for cross licensing with their peers, leaving small businesses with no choice but to license those patents if they use them. Large corporations create additional revenue from independent divisions pursuing patent infringements by foreign companies.
On the contrary, if a small organization has patents and a larger company infringes upon these, the cost of defending this patent is far too large for the small company to afford. All these complications give a bad flavor to the objective of mutual co-existence and growth in the industry.
Another set of people who capitalize on this business are the litigation firms. These firms do not make any real products. However, they derive all their income from patent litigation and function as ‘patent parasites.’
The process of patenting has more to do with lawyers than the actual implementer of software principle, who knows little about the legal issues involved. Because of the legal jargon used to write patents, the cost of determining if a particular piece of software infringes any issued patents is too high, and the results far too uncertain. This makes the search for existing patents also implausible. For instance, two very similar principles have been penned down in completely different languages.
The USPTO has eventually been granting patents on much more abstract components. The easy malleability of legal terminology adds to the disarray. IBM for instance was granted a patent on the same data compression algorithm which Unisys owned. Such instances could prove fatal for a developing company which has planned its budget meticulously.
Patents when applied to standards restrict inter-operation and communication between programs. A pernicious patent holder can engage in patent farming, influencing a standards organization to use a particular principle covered by a patent, sometimes even without disclosing a patent application already filed for the principle.
Internet is the most important tool of democracy. Standards applicable to it, if offended by the patent regime, will lead to the largest companies having plutocratic domination of the future internet.
Amazon's Single Click patent is a classic example, defying the democratic opportunity of smaller groups. Another victim of the patent theory is the open source community. Collecting no royalties from the distribution of their own software, they have none to pass on to patent holders.
Another object of concern is the longevity of patents. A typical patent in US lasts 20 years, which is alarming in the case of software, as according to Moore's Law, the speed of computer hardware doubles every two years, rendering existing patented software unusable. Considering the slow patent examination procedures, sometimes, the time taken for an invention to be patented is far more than the life of the invention itself.
It is often quoted that patenting drives innovation and development; in reality however, nothing could be further from the truth. Whether or not software patents do exist, organizations need to bring in new features regularly and be inherently innovative if they want to remain in business.
It has been observed that those who invest time creating and lodging patents vastly outpace those who invest effort bringing such ideas to market. In this way, the whole idea of patenting, when applied to software only seems to hinder the growth of the industry. A classic example of this is the Public Key Encryption whose patent expired in 1997, only after which the technology gained traction. Other similar cases are that of the Data Compression Software and Amazon's Single Click software.
Software is unique in its economic aspect as well. The major costs incurred are in the development (manufacturing) stage, while the research and production costs are minimal. Now, with software patents becoming so dear, the price of software is being singularly determined by the number of patented innovations it incorporates, rather than the actual development effort involved.
India is still in its infancy in the software domain and introducing adopted and biased patent laws could inflict a serious blow to the budding Indian software industry. The majority of patent applications at the European Patent office for instance, are from the US and Japan. India needs to be alert about such domination.
Ambiguities in the Indian patent law could end up making the Indian software industry a mere puppet in the hands of developed economies. Ironically, in the words of the Microsoft CEO himself, a future startup with no patents of its own will be forced to pay whatever price the giants choose to impose.
Established companies have inherent interests in excluding future competitors. Nothing could be more relevant to the dynamic Indian IT story than this important fact.
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