“Before He Tweets” – by “Stephanie R”

To the tune of Carrie Underwood’s “Before He Cheats”

Right now, he’s probl’y bloggin’ all my secrets to the world and they’re probl’y pretty nerdy
Right now, he’s probl’y telling some noob how to bring his offensive level up to thirty
Right now, he’s probl’y making an eHarmony account and hitting on a pedo,
And he don’t know…

Cause I plugg’d a flashdrive into the side of his pretty little souped up Mac hard drive
Carved my name into his glossy screen
I used up all of his World of Warcraft lives
Spammed his Facebook wall with lies
Maybe next time he’ll think before he Tweets

Right now, he’s probl’y retweetin’ with the hashtag #Ican’tbelievethatshepwnedme
Right now, he’s probl’y google searchin’ “Where can I find Mean Girls online for free”
Right now, he’s probl’y buying twenty dollars worth of those rare Pokemon…
And I mean, come on….

I plugg’d a flashdrive into the side of his pretty little souped up Mac hard drive
Carved my name into his glossy screen
I used up all of his World of Warcraft lives
Spammed his Facebook wall with lies
Maybe next time he’ll think before he Tweets

I might’ve saved a little trouble for his followers
Cause the next time that he Tweets
Oh you know it won’t be about me
Nooooo, not about me….

Cause I plugg’d a flashdrive into the side of his pretty little souped up Mac hard drive
Carved my name into his glossy screen
I used up all of his World of Warcraft lives
Spammed his Facebook wall with lies
Maybe next time he’ll think before he tweets
Maybe next time he’ll think before he tweets

 

Lyrics by Claire R and Alexander R

Patents: Essential, if flawed – by “Brian S”

The patent system purports to encourage innovation, but it is unclear whether it successfully does so. The idea is that if an inventor gets credit for his work, there is greater reward for invention, thus a greater incentive to invest time and effort into inventing. Patents can have the counter-productive effect, however, of inhibiting innovation, perhaps due to fear of infringing; this potential ramification is supported by at least one interesting study. But does the good outweigh the bad?

One major use of patents – to deter competition – seems problematic in light of the existence of anti-trust laws and prohibitions on monopolies. Shouldn’t we want everyone to have access to a new invention, and leave it to the forces of the market to decide who makes the best use of it? Well, perhaps not. If one company spends millions in research and development and another company simply steals the idea as soon as it comes out, the second company saves the millions and gleans an advantage by refusing to innovate. In some sense, we have a version of the prisoner’s dilemma wherein both companies are individually better off by refusing to innovate, yet both suffer if neither innovates. Patents are, then, the theoretical solution to this: if a company innovates, it alone can reap the rewards of the new invention.

In the case of Amazon’s 1-Click, however, it is unclear whether Amazon truly invested a great deal of resources in what many consider to be an “obvious” (and thus unpatentable) development. If they did invest a great deal, and the technology is non-obvious, Amazon is righteously defending itself against moochers (in the form of Barnes and Noble). If not, Amazon has devised a cheap ploy meant to unjustly hurt a rival business. The line between these two poles is sufficiently blurred so as to be a cause for concern.

Another difficulty is that the financial cost of applying for a patent, while likely trivial for a corporation, presents a barrier to the everyman – the one arguably most likely to actually need a patent, as he may have great post-hoc difficulty, should a company quickly grab his idea, in proving prior invention. In other countries, where patents are a matter of first-to-file rather than first-to-invent, obtaining a patent becomes even more indispensable. Yet at the same time it is difficult to do away with or significantly lessen the fees, lest we encourage spam (and, after all, there is a labor cost in processing each application).

Ultimately, a patent is proof, of sorts, that one actually invented something. This can translate to confidence among investors, market-share among consumers, or an extra footnote in the history books. While there are certainly valid concerns about the implementation of the current patent system, the idea behind it is highly sensible: we want to give credit for an invention where credit is due. Until we can invent a better system to do this (and patent it, of course), we have to live with the one we’ve got.

(And finally, although software patents seem to be especially problematic, there is at least one paper arguing that the negative impact of software patents has been negligible.)

Multi-jurisdictional Patents…Easier said than done. – by “Misbah U”

Today, the internet, media and telecommunications in general have not only allowed for instant collaboration worldwide, but have also accelerated the process of breaking down cultural barriers. Just as the back of my iPhone says “Designed by Apple in California. Assembled in China,” software products, too, are often designed and architected in one country, further developed in another, and then available for sale worldwide. Hence, being able to have patents filed in multiple jurisdictions has become increasingly useful and crucial for companies.

In a perfect world, one would be able to draft a patent with one set of claims, regardless of the jurisdiction of where it was submitted. In reality, however, it’s not so easy. This approach usually leads to nothing more than confusion and frustration. For example, claims drafted according to the United States’ best practice guidelines will usually have a difficult time evading step objections present with the European Patent Office (EPO), while those drafted for the EPO will also have difficulties with the United States when it comes to nuances surrounding patentable subject matter or language. As for Canada, I don’t think it’s quite clear yet as to which of these approaches (if either) would serve best, simply because of the uncertainties around what is even patentable there (i.e. recently, while Bilski v. Kappos reaffirmed software patentability in the States, while Amazon v. Canada raised questions around whether a “business method is patentable”).

Technically, software and business methods aren’t unpatentable in the United States. Originally the process was required to pass the following test (2008) of either being 1) “tied to a particular machine or apparatus”, or 2) “[transforming] a particular machine or apparatus.” However, in rejecting this “machine or transformation test” as the sole criterion, the Supreme Court (Bilski) opened room for interpretation in terms of defining “process” and what counted as an unpatentable “abstract idea.”

Interestingly, in Europe, the EPO has a stricter approach (based on the European Patent Convention, or EPC) when it comes to software and business patents. According to them, claims must:

  1. Have technical character and solve a technical problem.
  2. Be new.
  3. Involve an inventive technical contribution to the prior art.

For the “inventive step” specifically, the claim should solve “a technical problem using technical means” (epo.org source). Because of this, they also usually prefer that applications be written in a problem-and-solution approach, whereas United States applications want people to focus less on extraneous details.  Furthermore, although in Article 52(2) the EPC explicitly excludes “programs for computers, and presentations of information,” Article 52(3) serves as an exception to this exception (“the patentability of the subject-matter or activities referred to therein only to the extent to which a European patent application or European patent relates to such subject-matter or activities as such.”) and has therefore allowed thousands of software patents (and software-related business patents) to have been passed (source).

In Canada, as mentioned above, the Canadian Patent Act generally outlines the criteria for the claim to be “any new and useful art, process, machine, manufacture, or composition of matter…or any improvement thereof” (source). In Amazon v. Canada, the claim at issue was Amazon’s “1-click” ordering system and the CIPO’s Patent Appeal Board had upheld its initial rejection of this. Ultimately, they had applied a machine or transformation like approach in forming their decision deeming it unpatentable. The Canadian Federal Court, upon review, however, disagreed with this and cited the United States’ Supreme Court’s decision in Bilski—essentially conveying that Canada’s Patent Act had too restrictive of a view.

Thus, for the time being, I think it’s important for companies to a) have an extensive background on the various nuances for patent applications based on which jurisdiction(s) they are looking into applying for, and b) therefore draft multiple sets of claims in order to obtain multi-directional patent protection. Based on whichever application is filed first (United States or EPO, for example), the applicant would be able to prioritize filing U.S. style claims, and later EPO, or vice versa. Because of the disparity between United States and EPO criteria, having separate claims for each jurisdiction makes the most sense if one wants to avoid issues associated with having submitted one set of potential patent claims in multiple jurisdictions. Moreover, I think if Canadian law changes anytime soon, then showing support from both the US Patent Office, and the EPO can only help.

A Startup View of Business Method Patents – by “Victor W”

Business method patents create a tax or at the very least, an unnecessary cost on doing businesses in the Internet economy.  Many investors in technology or technology-enabled businesses have come to expect companies to file for patent protection and  assume eligibility on the basis that the idea involves a novel implementation and some computer code.  While not every  business will get a patent nor do investors expect companies to always get them, this market expectation forces many  businesses to at least file for patents even when they have a trivial chance of obtaining the patents.  The very act of filing at least gives possible competitors pause because they may now have to worry about building an entire business around  a model that may be owned by their competition.  They may also force competitors to start filing patents for some derivative  works or models to create a bargaining chip with the original innovator or build up a defensive patent portfolio for future  usage in lawsuits.

All these consequences impact small businesses and individual innovators the most.  They get hit by patent infringement  lawsuits first because they are less likely to have the financial resources to defend themselves.  They will settle quickly and the volume of settlements will give weight to the the claims of the patent holders to pursue larger targets.  The cost of  patent filing and defense relative to total financial resources is much higher for smaller companies.  Just how expensive is  it?

Well, for the two software patent applications I have filed, the total legal and filing cost was $40,000.  This number includes roughly $10,000 for provisional patents and $30,000 for the final patent filings.  This cost also overlooks the time spent by the inventor in preparing the filing and not working on the business.  These figures don’t capture all the effort exerted in searching for prior art and examples of business methods.  The total hours associated working with lawyers and preparing patent filings was well over two hundred man hours.

To put it in context, the average American income is about $50,000 and the typical work week is forty hours.  So, if the lonely  individual inventor or small business owner was like the average American, he or she would be expending significant cost and time towards legal and regulatory overhead rather than capital  investment in their business.

Disallowing business method patents (which would require a definition people can agree on) would likely not disincentivize  Internet entrepreneurs from starting companies.  They rely chiefly on execution of ideas rather than the ideas themselves to  succeed; the execution produces new types of advantages like network effects that exist for information goods and largely  doesn’t exist for physical goods.  Creating an artificial monopoly for coming up with an idea could have made sense in the  industrial age and even for certain modern industries like pharmaceuticals which cannot produce natural monopolies or protection for perfecting  the implementation of the idea; however, in the information age most businesses do not need patent protection to achieve defensibility or be incentivized to innovate.

Removing the cost of associated with business method patents would be a boon to startups.  True technological advantages  should be given protection.  Admittedly, defining what constitutes a business method and what constitutes true technology  is very hard.  However, raising the requirement for protection, as In re Bilski has done, is a step in the right direction.  Startups face enough problems as it is, and business method patents shouldn’t be one of them.

The non-obviousness of the non-obvious clause – by “Lynn W”

In critiquing patent law, it helps to return to the original rationale for protection. As Merrill and Elliott’s patent primer states, “A utility patent is an exclusive right of limited duration over a new, non-obvious invention capable of practical application…The right—to prevent others from making, using, selling, offering for sale, or importing the patent holder’s invention—is granted in return for publication of the invention.”

Unfortunately, it is not exactly obvious what constitutes new, non-obvious, and useful. In addition to reading about the “absurdity” of headline-making patents such as Google Doodles and Amazon’s one-click payment feature, I did a quick search through Google Patents and found countless other inventions that not only seem bafflingly unoriginal, but also appear to be useless. Here are some of my favorites (with existing patents that inspired their creation following in parenthesis):

Kissing shield game for “teaching safe affection” (inspired by the “plastic garbage bag holder and sealer,” “sanitary face mask,” “inflatable art frame,” “arrangement for separating an area of operation or treatment in the oral cavity,” and “surgical face mask”)

Rock, paper, scissors card game (inspired by “board game,” “game comprising a pack of cards,” “card game,” and “card game deck and methods of play”)

Giant gummy bear whose “primary object is to provide a giant gummy bear that will overcome the shortcomings of prior art devices” (inspired by 16 patents including “life-like toy animal” and “toy ball”)

Nose pick offering a novel “ornamental design” (inspired by “novelty trophy and base,” “combined lottery ticket scraper and key ring,” “nasal cleaning insert”)

Generally, I think these examples of un-new and un-non-obvious patented items can be separated into two categories, both of which would be better off without the patent.

The first category is that of patents that are not particularly innovative, but are widely useful. I would put Amazon’s one-click payment system into this category. Amazon CEO Jeff Bezos claims that the patent was a necessity because “We don’t want to be another Netscape.” When Barnes & Nobles tried to use the same system, Amazon sued it for infringement. But – would a one-click Barnes & Nobles really have stolen market share from Amazon when Amazon’s main competitive advantage against the book retailer is price? And even if Walmart – the ultimate low-price retailer – were to copy the one-click model, would that have stopped Amazon from creating the system in the first place?

My guess is no, simply because like any rational retailer, Amazon strives to improve user experience in any way possible to drive up sales. The competitive advantage exists the moment that Amazon adds a new feature for its users, and it continues to improve the customer’s Amazon experience even when the same feature gets adopted by other retailers. The patent simply reinforces and strengthens the competitive advantage – but at a cost to the user, who can only enjoy an expedited shopping experience with one Internet retailer. Besides, all Barnes & Nobles had to do to avoid infringement was to use a two-click system, which hardly seems different from the one-click innovation. It thus remains questionable whether or not the patent really helped Amazon sustain a competitive advantage in the online shopping checkout domain.

The second category is that of patents that are not particularly innovative or useful. Like the kissing shield game. Is this invention really worth the time and labor that goes toward filing and processing a patent? The costs are even greater when you consider the hefty legal fees that many naive inventors are pay in order to patent products that have no profit potential. Of course, once in a while you get an idea like the Pet Rock that generates millions in revenue, but as of 2005, only 3,000 patents in the U.S. were commercially viable out of a total of 1.5 million. There must be a better way to filter out the excess.

At the end of the day, it’s important to remember that the ultimate purpose of a patent is to benefit the public by fostering greater creativity through the means of benefiting the inventor. A study by Bessen & Hunt in 2004 found that software patents have actually resulted in lower R&D intensity and thereby, less creativity. Meanwhile, the vast majority of patents are clearly not providing any monetary benefit to the inventor. Bezos was right when he called for “fewer patents, of higher average quality, with shorter lifetimes.” One way to begin is to offer a better definition of the new, non-obvious, and useful.

Interview with a Patent Lawyer – by “Daniel P”

Last summer in Austin, TX , I was working on an iPhone app concept for a smart grocery list. The idea was to create an algorithm that determined what you were most likely to buy at a grocery on any given day by analyzing your past purchase history. App users wouldn’t have to worry about brainstorming lists anymore and grocery stores, which would be able to access the application, would have the opportunity to market to users as they shopped.
I had a written five page “business outline” of the idea, tentatively called MyShopper, and was trying to figure out what to do next. I didn’t know how to code, and I was unlikely to meet any developers until I got back to school, so I decided to look into getting a patent.
A quick Google search told me that I couldn’t patent an idea or software. But I wasn’t really sure what that meant. It made sense that the average Joe wouldn’t be given the exclusive rights to every idea that popped into his head. But how could it be that cutting edge software wasn’t protected by patent in the same way that the most recent nanofiber is.
To figure things out, I called a patent lawyer that my Dad is friends with.

“Hey Steve, I’m Mike Petkevich’s son. I’ve got this idea for an iPhone app and I’m thinking about patenting it. The app automatically generates a shopping list by –“

“Daniel, I’d love to help you, but don’t tell me about your idea! I can’t give you specific legal advice if you’re not my client.”

“Oh. Ok. I have a few questions – if you don’t feel comfortable answering some of them, just don’t. First, I’ve got an idea for a smartphone app, and a vague high-level plan for how it will function. Can I patent it?

“Sure.”

“How does that work? Is code generally patentable”

“Code itself can be protected by copyright, but its useless to. The copyright only keeps people other people from using the exact same code as you. It doesn’t prevent them from writing different code that does the same thing, which is pretty easy to do. That’s why people patent software. Patents protect a machine or process, either of which can be argued to be software.”

“Wait, but software isn’t a physical thing.”

“Think of it this way. New software gives your computer new capabilities that can be patented in the same way as a gear that improves the performance of a drill. You’re patenting the added capability the software provides to a computer.”

“Make sense. How specifically should I describe my app in a patent application? Do I need to include any code?”

“You don’t need to include any code. You need a list of technical specs that someone who knows how to code could use to build the software.

“Ok. How should I word the application?”

“That’s complicated. Remember to be as vague as possible. In the legal world, you always want to be able to explain yourself later. Also, I’m charging your Dad $100 for this call.”

“What?”

“Just kidding. Give me a call if you need anything.”

“Bye Steve.”

“Bye.”

So this is what I learned from my talk with Steve the patent lawyer:

– Software is patentable as something that adds capability to a machine
– Code isn’t patentable
– Patent applications for software require guidelines that a software engineer could use to develop the software.
– Wording a patent application correctly is really tough.

I was pretty happy with what Steve told me because it meant that I could patent my app without writing any of the code for it. Then I could develop it without worrying that someone would come up with a similar app first.

I didn’t end up patenting the app because the process just seemed to complicated. And come to think of it, the only part of the app I could have patented was the algorithm that trawled your past purchase history to determine what you needed or wanted on any given day. The rest of the application was pretty simple.

Now I’m wondering if I would have even been justified in patenting the algorithm if I had developed it.  I couldn’t do it on grounds of protecting me from competition because no one would have access to it. The algorithm would process data on my servers and users would only see the resulting shopping list from this process. Competitors could develop algorithms that did the same thing as mine, but they wouldn’t see the specific logic behind it.

As more software becomes web-based, maybe the relevance of software patents will decrease. Online software has a separate front end for users, and it keeps its guts, in a backend that only its creators have access too. You could patent the guts, but why bother if no one else is going to see them. And you probably couldn’t patent what the guts do, because it would obviously retard the progress of software development. Imagine if Facebook and Twitter were patented and no one else could develop social networking sites. That would be ridiculous.

Here’s to the end of patents in software.

Innovation Impediment: Out of Control Business Method Patents – by “Robert C”

The debate over software patents has now raged for decades, with no sign of slowing down. Last June, the eyes of the software industry were trained squarely on the Supreme Court when they handed down the decision in Bilski v. Kappos, a case with significant implications for the patentability of software. To the disappointment of many anti-software patent crusaders, the Court found against Bilski but failed to set a wider precedent and strike down business method or software patents in general. Proponents of software patents claim that legal protection encourages economic growth, job creation, and protection for innovators. However, more and more entrepreneurs, investors, and even large corporations have come to disagree with this view, realizing that software patents often impede invention, result in costly legal battles, and are used as bully sticks by competitors or non-practicing patent trolls to extract expensive licensing fees and concessions.

Property rights are a vital component of modern society that allow markets to function and economies to flourish. Intellectual property rights lend legal protection and recourse for ideas, designs, art, and writing and their owners, and are particularly important to foster a culture of innovation. Time and again, studies have demonstrated that stability and predictability in legal systems encourage economic growth. Few countries in the world have been as entrepreneur friendly than the United States ove the course of the last century. However, as the rate of technological innovation has increased, our nation’s legal framework has not kept pace. The U.S. Patent system is sadly outdated, and ill designed and poorly equipped to handle the inventions of a software age.

The idea of patenting “one-click” checkout on an e-commerce site or a means of “determining and displaying relationships between individuals who have entered personal information” seems ridiculous, yet Amazon and Friendster hold patents for these particular online functions. The 2008 Berkeley Patent Survey, which interviewed over thirteen hundred startups (more than seven hundred of which were software companies) showed staggering results that run counter to traditional academic beliefs regarding patents. The study reported “in general, the technology startup executives responding to our survey report that patents offer relatively mixed to weak incentives to engage in innovation.” Surprisingly, the study found that only 24% of software firms had even bothered to file a patent, and showed that many industry executives saw little value in spending time and money for what amounts to minimal defensibility.

While the benefits of software patents are disputed and somewhat unclear, the costs are certainly quantifiable. According to a 2008 report from an insurance industry trade organization, software firms bear major costs of litigation associated with securing and defending intellectual property – amounting to over $11 billion per year, which vastly exceeds the profits from the products disputed in those patent cases (see figure below for profits vs. litigation costs for software patents).

The United States Patent system is not adequately coping with the realities of modern innovation, resulting in uncertainty, long delays, and high cost litigation. While the United States has long been the world leader in innovation, in order to remain so patent law will need to adapt for modern inventions and developments in software. While there has been talk for many years about a major patent reform bill, and in recent days both the House and the Senate have put forward versions of the “Patent Reform Act of 2011”, neither draft of legislation takes a real crack at better defining business method or software patents. While there are certainly flaws in the patent process that merit attention (the long delays in patent reviews, first to file vs. first use, and the lack of funding for the USPTO), any true patent reform act will alter patent rules to better accommodate software inventions rather than only addressing the mechanics by which patents are reviewed and approved.