Patently Absurd? Report Calls for Patent System Revamp

A report from the Cutter Consortium, an IT advisory firm, says that the U.S. Patent Office should carefully re-examine its rules and regulations regarding software patents. Cutter believes the U.S. software patent scheme is "badly broken" and that, in light of the European Union's ruling not to grant patents on software, it is time for the U.S. to give serious thought to revamping its patent system.

Prior to the 1950s, the U.S. Patent Office didn't patent abstractions, such as algorithms, or those that existed in the limited software of the time, according to Tom DeMarco, fellow at Cutter Consortium. Starting in the 1960s, and picking up steam in the 1980s, patents started to be awarded for software and elements of software, including such innocuous items as formatting of footnotes. Some believe that, by awarding patents to firms for common things that can't be attributed to any one person or firm, the U.S. Patent Office is making it much harder for smaller software companies to not only develop new products but also just stay in business.

In fact, large companies may actually be leveraging the patent system to undermine innovation by others. DeMarco says that the current patent law favors large firms such as Microsoft (which filed for more than 3,000 patents in 2005) at the expense of the smaller ones. "If a large company were to obtain thousands of software patents every year, the barrier to entry of new software companies could become insurmountable," DeMarco adds, explaining that smaller firms don't have the financial wherewithal to file for and contest patents on the same level as larger companies.

Ken Orr, fellow on Cutter's business and IT trends council, intellectual property, agrees. He says intellectual property "is perhaps the most valuable thing in the world . . . next to oil." He bases his theory on the fact that software, written works, and so forth, cost virtually nothing to make additional copies once the first one is developed.

So companies that can file for thousands of patents can profit greatly, while smaller companies are left struggling. One pertinent example, according to DeMarco, is the current patent lawsuit brought by intellectual property company NTP against Research In Motion (RIM). If NTP wins the lawsuit and the billion in damages it is seeking, it could mean the end of RIM and a questionable future for the BlackBerry device.

"There have been some really strange patents for software processes that have been common practices for a long time," Orr says, citing the footnote example and others like it. "In our litigious society, this makes business very difficult. As process patents become more popular, the number of nonsense patents grows daily."

Companies can choose to go overseas to develop and release new software rather than develop products in the U.S. The United Kingdom, for example, doesn't grant patents on software, DeMarco adds. But that's not an option for some small companies that don't have overseas operations.

There's no easy fix to this situation, either, DeMarco and Orr agree. Changing current practice could lead to numerous lawsuits from companies that have won patents under the current rules. Orr says that the process of patents needs to be re-examined so that vacuous patents are minimized. He also calls for the establishment of an expert panel that will "look over the shoulders" of the U.S. Patent Office to "enlighten" the process.

"In the next decade, the intellectual property regimes for the 21st century are apt to be set," Orr says. "We should not be bystanders to that process."