New legal code

Copyrights should replace software patents: Second in a two-part series

Illustrator: David Rodriguez

Last month I discussed the fundamental impossibility of distinguishing between software and pure mathematics and argued that software patents should be abolished as a result. If software is math and pure mathematics is supposed to be unpatentable, then every software patent issued exposes a legal contradiction.

This month I explore the current economic consequences of having that contradiction enshrined in U.S. intellectual property law and propose that instead of software patents, we rely on another, already existing, method that can protect innovators from exploitation: copyright.

One of the most common arguments from those who advocate software patents is that software is just like any other technology. Patents work great for pharmaceutical companies and integrated circuits, so why shouldn't they work for software as well?

But there is a key difference between software, on the one hand, and physical technologies such as drugs and integrated circuits, on the other: the software industry is not only massive but massively decentralized. Every company with a Web page or an accounting database has people on staff writing software to support those systems--from the simplest script for automating backups to complex, custom-built systems.

Only a relatively small number of firms make drugs or ICs, but the software industry, with no equipment costs to speak of, as well as the ubiquitous demand for software to oil the gears of our lives, is unlike any other business. It not only includes the usual full-time producers, such as Novell Inc. and Microsoft Corp., but also a team of people in the basement of every company in America. A study by the U.S. Department of Commerce's Bureau of Economic Advisors found that in 2002 nearly as much money was spent in the United States on software written in-house as on prepackaged software--US $72 billion and $76 billion, respectively.

But what does the ubiquity of software creation have to do with patentability? The answer lies in the fact that because programmers use similar, if not identical, software and hardware tools to tackle common needs, certain ideas are independently conceived over and over again. But independent invention is not a defense against claims of patent infringement.

Patents are public records, and in a centralized industry with relatively few players--such as pharmaceuticals--the assumption that all patents are common knowledge is not unreasonable. The relative handful of drug companies can each support a legal department that is abreast of drug patents.

Now let's take a look at an example from the decentralized software industry. U.S. telecommunications giant SBC Communications Inc., in San Antonio, holds U.S. patents that are allegedly infringed on by a broad range of Web pages--including the Web site I threw together for the California Institute of Technology's undergraduate intellectual property class. Some businesses, such as Museum Tour, a company in Milwaukie, Ore., that sells educational toys, received letters demanding royalties for patent infringement from SBC. Applying the logic of the centralized industries, SBC's patents are public record, so the toy company could have avoided its dispute with SBC by hiring a patent attorney to do a full search of the software patent database before putting up its Web site.

Part of the problem is that infringing a software patent is so easy, because so many patents have been issued in even the most basic fields of computing. For example, just record a macro to automate a repetitive task in writing an online document. Suppose your word processor saves the macro as part of the document (many do by default), and your macro bears a sufficient resemblance to one of the more than 170 000 software patents registered with the U.S. Patent and Trademark Office. Congratulations! You've just engaged in worldwide distribution of an infringing technology. If you are truly committed to avoiding liability and following the law, then you will need to hire a lawyer to do a full patent search before you click the Record Macro button, design a database form, program a function to calculate a piece of textbook math, or draw up a Web page.

Does this sound absurd yet? Patents, designed for centralized industries, have been applied to the most decentralized industry imaginable, and the result is that patent law is taken only partly seriously. Ronald Mann, a scholar at the University of Texas, in Austin, interviewed venture capitalists and programmers and found them resigned about software patents. Programmers don't do patent searches on every line of code. Instead, they simply expect that a patent attorney will demand royalties if the need arises. Testimony to the U.S. Federal Trade Commission by businessmen and programmers said the same thing: to stay within the law requires such an absurd, paralyzing amount of work that nobody bothers. Conversely, one would be hard-pressed to find a pharmaceutical company that does not bother with regular patent searches.

Patents offer the benefit of fostering certain types of innovation, but the law also imposes economic costs. Most notably, everyone in the industry must spend money on remaining abreast of every relevant patent. When "industry" means everyone with a computer, that's an astronomical sum.

If a person or company does not spend the money to clear its macros, functions, and data structures, then it exposes itself to liability. Defending oneself against a claim of patent infringement can cost millions; it is easier to just pay a royalty so that the claimant will go away. Filing (or buying) a vaguely worded patent and sending out royalty demands has thus become a sure-fire business model. Some companies have no business other than seeking patent royalties and infringement damages. To give one example from a long list, Acacia Technologies Group, in Newport Beach, Calif., is suing nine U.S. cable TV providers, claiming a patent on the software written by these cable companies [see "The Patent Profiteers," IEEE Spectrum, June 2004].

There is no sensible means of reconciling an industry that has massive independent invention with a law that makes independent invention a liability. So what's the solution? How can we protect programmers and companies that invest in developing innovative new software from being ripped off--without tying the entire software industry up in red tape? The answer is copyright.

Copyrighting is very different from patenting. First, there is no paperwork. If you write an equation on the back of an envelope, then you hold the copyright to it, and there is no need for lengthy negotiations with the Library of Congress, as well as no need to put your work in the public record. But if somebody finds your envelope and plagiarizes the equation, then they are guilty of infringement, and you may attempt to prosecute them accordingly.

But as opposed to the case with patenting, independent invention is a valid defense against claims of copyright infringement. That is, if someone on the other side of the country should write down the same equation independently, then that person has done nothing wrong legally. Under a copyright regime, where independent invention is a valid defense, provided you have not reviewed and copied code from a copyright holder, you are free to write all the code you can dream up independently.

Because it doesn't offer a patent's monopoly protection, a copyright is, in some ways, weaker protection than a patent, but is there any evidence that innovation would be harmed without patent protection? Before the In re Alappat ruling by the U.S. Court of Appeals Federal Circuit in July 1994, software was effectively protected only by copyright; yet it would be difficult to claim that before 1994 the IT industry was short on innovation.

Copyright still provides protection from the sort of shady dealings that fair laws should prevent. If competitors find a way to copy code out of one program and paste it into one of their own, or if pirates mass-produce copies of an installation CD, or if a disgruntled employee take the company's code base to a competitor, then those people could still be prosecuted under a copyright regime.

There are many considerations to molding copyright laws to fit software best, but in an industry with literally millions of independent inventors, a copyright is much less likely to stifle innovation than a patent or to impose the cost of hiring a standing army of lawyers.

Ben Klemens has a Ph.D. in social sciences from California Institute of Technology, in Pasadena. He is currently a guest scholar at The Brookings Institution, Washington, D.C. His book Math You Can't Use: Patents, Copyright, and Software is to be published by the Brookings Institution Press.

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