The Noisy Channel

 

An Open Letter to the USPTO

September 25th, 2010 · 112 Comments · Uncategorized

Following the Supreme Court’s decision in Bilski v. Kappos, the United States Patent and Trademark Office (USPTO) plans to release new guidance as to which patent applications will be accepted, and which will not. As part of this process, they are seeking input from the public about how that guidance should be structured. The following is an open letter than I have sent to the USPTO at Bilski_Guidance@uspto.gov. More information is available at http://en.swpat.org/wiki/USPTO_2010_consultation_-_deadline_27_sept and http://www.fsf.org/news/uspto-bilski-guidance. As with all of my posts, the following represents my personal opinion and is not the opinion or policy of my employer.

To whom it may concern at the United States Patent Office:

Since completing my undergraduate studies in mathematics and computer science at the Massachusetts Institute of Technology (MIT) and my doctorate in computer science at Carnegie Mellon University (CMU), I have spent my entire professional life in software research and development. I have worked at large software companies, such as IBM, AT&T, and Google, and I also was a founding employee at Endeca, an enterprise software company where I served as Chief Scientist. I am a named inventor on eight United States patents, as well as on eighteen pending United States patent applications. I played an active role in drafting and prosecuting most of these patents. I have also been involved in defensive patent litigation, which in one case resulted in the re-examination of a patent and a final rejection of most of its claims.

As such, I believe my experience gives me a balanced perspective on the pros and cons of software patents.

As someone who has developed innovative technology, I appreciate the desire of innovators to reap the benefits of their investments. As a founding employee of  a venture-backed startup, I understand how venture capitalists and other investors value companies whose innovations are hard to copy. And I recognize how, in theory, software patents address both of these concerns.

But I have also seen how, in practice, software patents are at best a nuisance and innovation tax and at worst a threat to the survival of early-stage companies. In particular, I have witnessed the proliferation of software patents of dubious validity that has given rise to a “vulture capitalist” industry of non-practicing entities (NPEs), colloquially known as patent trolls, who aggressively enforce these patents in order to obtain extortionary settlements. Meanwhile, the software companies where I have worked follow a practice of accumulating patent portfolios primarily in order to use them as deterrents against infringement suits by companies that follow the same strategy.

My experience leads me to conclude that the only beneficiaries of the current regime are patent attorneys and NPEs. All other parties would be benefit if software were excluded from patent eligibility. In particular, I don’t believe that software patents achieve either of the two outcomes intended by the patent system: incenting inventors to disclose (i.e., teach) trade secrets, and encouraging investment in innovation.

First, let us consider the incentive to disclose trade secrets. In my experience, software patents fall into two categories. The first category focuses on interfaces or processes, avoiding narrowing the scope to any non-obvious system implementation details. Perhaps the most famous example of a patent in this category is Amazon’s “one-click” patent. The second category focuses on algorithm or infrastructure innovations that typically implemented as inside of proprietary closed-source software. An example in this category is the patent on latent semantic indexing, an algorithmic approach used in search and data mining applications. For the first category, patents are hardly necessary to incent disclosure, as the invention must be disclosed to realize its value. Disclosure is meaningful for patents in the second category, but in my experience most companies do not file such patents because they are difficult to enforce. Without access to a company’s proprietary source code, it is difficult to prove that said source code is infringing on a patent. For this reason, software companies typically focus on the first category of patents, rather than the second. And, as noted, this category of innovation requires no incentive for disclosure.

Second, let us ask whether software patents encourage investment in innovation. Specifically, do patents influence decisions by companies, individual entrepreneurs, or investors to invest time, effort, or money in innovation?

My experience suggests that they do not. Companies and entrepreneurs innovate in order to further their business goals and then file patents as an afterthought. Investors expect companies to file patents, but only because everyone else is doing it, and thus patents offer a limited deterrent value as cited above. In fact, venture capitalists investing in software companies are some of the strongest voices in favor of abolishing software patents. Here are some examples:

Chris Dixon, co-founder of software companies SiteAdvisor and Hunch and of seed-stage venture capital fund Founder Collective, says:

Perhaps patents are necessary in the pharmaceutical industry. I know very little about that industry but it would seem that some sort of temporary grants of monopoly are necessary to compel companies to spend billions of dollars of upfront R&D.

What I do know about is the software/internet/hardware industry. And I am absolutely sure that if we got rid of patents tomorrow innovation wouldn’t be reduced at all, and the only losers would be lawyers and patent trolls.

Ask any experienced software/internet/hardware entrepreneur if she wouldn’t have started her company if patent law didn’t exist. Ask any experienced venture investor if the non-existence of patent law would have changed their views on investments they made. The answer will invariably be no (unless their company was a patent troll or something related).

http://cdixon.org/2009/09/24/software-patents-should-be-abolished/

Brad Feld, co-founder of early-stage venture capital firms Foundry GroupMobius Venture Capital and TechStars, says:

I personally think software patents are an abomination. My simple suggestion on the panel was to simply abolish them entirely. There was a lot of discussion around patent reform and whether we should consider having different patent rules for different industries. We all agreed this was impossible – it was already hard enough to manage a single standard in the US – even if we could get all the various lobbyists to shut up for a while and let the government figure out a set of rules. However, everyone agreed that the fundamental notion of a patent – that the invention needed to be novel and non-obvious – was at the root of the problem in software.

I’ve skimmed hundreds of software patents in the last decade (and have read a number of them in detail.) I’ve been involved in four patent lawsuits and a number of “threats” by other parties. I’ve had many patents granted to companies I’ve been an investor in. I’ve been involved in patent discussions in every M&A transaction I’ve ever been involved in. I’ve spent more time than I care to on conference calls with lawyers talking about patent issues. I’ve always wanted to take a shower after I finished thinking about, discussing, or deciding how to deal with something with regard to a software patent.

I’ll pause for a second, take a deep breath, and remind you that I’m only talking about software patents. I don’t feel qualified to talk about non-software patents. However, we you consider the thought that a patent has to be both novel AND non-obvious (e.g. “the claimed subject matter cannot be obvious to someone else skilled in the technical field of invention”), 99% of all software patents should be denied immediately. I’ve been in several situations where either I or my business partner at the time (Dave Jilk) had created prior art a decade earlier that – if the patent that I was defending against ever went anywhere – would have been used to invalidate the patent.

http://www.feld.com/wp/archives/2006/04/abolish-software-patents.html

Fred Wilson, managing partner of venture-capital firm Union Square Ventures:

Even the average reader of the Harvard Business Review has a gut appreciation for the fundamental unfairness of software patents. Software is not the same as a drug compound. It is not a variable speed windshield wiper. It does not cost millions of dollars to develop or require an expensive approval process to get into the market. When it is patented, the “invention” is abstracted in the hope of covering the largest possible swath of the market. When software patents are prosecuted, it is very often against young companies that independently invented their technology with no prior knowledge of the patent.

http://www.unionsquareventures.com/2010/02/software-patents-are-the-problem-not-the-answer.php

In summary, software patents act as an innovation tax rather than a catalyst for innovation. Perhaps it is possible to resolve the problems of software patents through aggressive reform. But it would be better to abolish software patents than to maintain the status quo.

Sincerely,

Daniel Tunkelang

112 responses so far ↓

  • 1 Daniel Tunkelang // Aug 18, 2011 at 10:31 am

    And I agree that a 90/10 argument is bs. That’s certainly not the reason I’m against software patents. However we define innovation, we should be optimizing for total utility, recognizing that its distribution over participants will be highly non-uniform. The power of the power law. :-)

    Oh, and I’ll buy you a pint at CIKM. :-)

  • 2 jeremy // Aug 18, 2011 at 12:58 pm

    FYI: http://www.techdirt.com/articles/20110817/03120415557/court-ruling-opens-door-to-rejecting-many-software-patents-as-being-mere-mental-processes.shtml

  • 3 Daniel Tunkelang // Aug 18, 2011 at 2:30 pm

    Wow — that is encouraging news for me, at least from first glance. Thanks for sharing!

  • 4 jeremy // Aug 18, 2011 at 7:01 pm

    You’re welcome. I’m going to disagree with you about certain things, arguing from what I feel is a reasonable position, and I’m going to back it up with whatever evidence I can. But I will also not withhold anything I come across that makes your point, too.

    One of the comments on the article actually made a very interesting point. He or she said:

    The more broad the patents are today, the more difficult will it be to say they are not valid tomorrow when they expire and others start using those to build new things without having to pay anyone.

    So maybe it is not all bad, a broad patent today is the free ticket for tomorrow.

    Maybe it even creates some jobs for people digging through all those patents fillings and court decisions LoL

    Since patents today are divorced of the implementation today, any implementation done in the future will have broad legal precedent to invalidate similar claims

    I know your response is to say, “well, why wait 17 years for the free pass.. why not just do away with it all now. Again, the reason is for all the reasons above. But the commenter does make an interesting point anyway. Maybe the *types* of software patents you don’t like will all eventually blow over anyway, with no reform needed at all, for the reason given.

    I don’t disagree with you that there are some software patents that shouldn’t be granted, for reasons of vagueness, over-broadness, obviousness, etc. But that is different than wanting to do away with them altogether.

    Y’know, I really want to continue this discussion, too, by going into all the various types of software, not just web information software. Things like the software that controls smart vehicle braking systems, or the software for certain intelligent piloting controls, or the software to regulate pacemakers for the heart. All sorts of very important, useful inventions that, at their heart (pun not intended, despite the pacemaker example) are software inventions. I really want to have a discussion about why you don’t want to allow people to patent those pieces of software, too. Again, a lot of times in these sorts of discussions I feel like all we ever hear from are Silicon Valley webbies. And while that’s the most visible, popular form of software, it’s not all of software.

    But I think we should save the discussion for that CIKM pub.

    Thanks all, for the spirited comments!

  • 5 jeremy // Aug 19, 2011 at 12:15 pm

    http://techcrunch.com/2011/08/19/terrible-cost-patents/

    The article says:

    If you think about the cost of these patents, technology companies are spending billions of dollars on assets which they need primarily to defend themselves against the rising tide of patent litigation. Those are billions of dollars that Google, Apple, Microsoft and others won’t invest in new products, new jobs, new facilities or other economically productive activities. And by and large, they will not use these patents to create new products. Google is doing it just to protect Android from rival patent claims. Looking at the billions of dollars being spent in the span of just the past couple months, it should be clear by now that the cost of patents (at least for software) outweighs their value to society.

    Ok, so the article claims that the costs of software patents outweigh the benefits, because Google et al have to pay a one-time fixed cost of.. about 9 billion (3.5 for Nortel patents, plus another 5.5 in overpayment for Motorola).

    Someone is not doing their math. Google alone, which was founded on the back of the PageRank patent, has a market cap of 163 billion as of this moment.

    Let’s see.. it’s been a while since I’ve done second grade arithmetic.. but 163 – 9 = 154 billion, which is a positive number. I think. A net benefit to society coming from the patent side.

    There are two main arguments against technology patents. One has to do with the nature of innovation in the technology industry, which is different than inventions in other industries like pharmaceuticals…Technology products, and software especially, are never created from whole cloth. By their very nature, they build upon previous technologies and improve upon them.

    Ok, let me get this straight: Schonfeld claims that software patents are different, because they are never created from whole cloth? That by their nature software builds on previous technologies and improves them? All true, but he thinks that this fact is somehow fundamentally different from pharma patents, or mechanical engineering patents? Or electronics patents?

    Are you f’ing kidding me?

    ALL those industries move forward by building on inventions that came before them. Pharma is able to create a new drug that specifically attacks a certain type of virus because and only because some other company has invented a delivery mechanism to be able to wrap compounds in a way that allows them to easily pass through a cell’s wall. Could easily give similar examples for electronics, manufacturing, etc. One person’s invention almost, if not always, builds on the inventions of thousands who have come before.

    And yet Schonfeld is claiming that software, by building on things that came before, is somehow different? Does he not fundamentally understand the nature of invention? It seems not.

    I know you, Daniel, still have your own arguments against patents. But this article’s reasoning does not hold up. These arguments are very, very weak.

  • 6 jeremy // Aug 19, 2011 at 12:43 pm

    I feel like we’re almost in need of a history lesson. How is it that Goog makes the majority of its revenues? AdWords, right? Advertisements that appears when you express your intent by doing a web search.

    I think we forget, but there was a time when the whole of the tech industry had dismissed web search as a dead technology because no one could figure out how to make any money off of it. PPC was, shall we say, non-obvious, or else the two dozen companies doing web search, from infoseek.com to northernlight.com, would have done it, and Silicon Valley wouldn’t have dismissed search. In the mid 90s, web search existed, but it had little to no value.

    Bill Gross then figured out a way. And he patented it. Correct me if I’m wrong, but this patent went to goto.com, which became overture.com, But the point is, before Gross’s innovation in 1998, and I do mean innovation, there was no value in search. After Gross’s innovation, a patented innovation at that, we have Google alone worth $163 billion, not to mention whatever other value that the search arms of Y! and Microsoft are bringing in.

    So again, anyone could have come up with the idea before Gross did. Anyone could have established prior art, so that the innovation was unpatentable. No one did. No one could figure out how to actually do it, and make search profitable. Despite the fact that there were literally dozens of search engines on the web in the mid 90s, all trying to make money.

    So once again, score +1 for patents. Patents gave us the ability to have the technology that we have today, because they created a business model, which was then adopted by Google at a time when the “smart money” in the industry saw no value in search, which allowed Google to then further build and innovate.

  • 7 FXPAL Blog » Blog Archive » The curious case of the software patent // Aug 30, 2011 at 7:14 am

    […] of software patents is all the rage lately, from bloggers like Daniel Tunkelang to the NPR. The list of problems with them includes that they stifle innovation, that they are […]

  • 8 Visitor // Sep 9, 2011 at 4:04 am

    All true, but he thinks that this fact is somehow fundamentally different from pharma patents, or mechanical engineering patents?

    With a pharma patent, you can be fairly sure you will be allowed to sell the drug in question. With a software patent your final product is likely to be encumbered by 10 000 other patents.

  • 9 jeremy // Sep 11, 2011 at 6:28 am

    With a pharma patent, you can be fairly sure you will be allowed to sell the drug in question. With a software patent your final product is likely to be encumbered by 10 000 other patents.

    Like I already said:

    Pharma is able to create a new drug that specifically attacks a certain type of virus because and only because some other company has invented a delivery mechanism to be able to wrap compounds in a way that allows them to easily pass through a cell’s wall.

    So it’s the same.. you can’t make your new drug, unless the patent-holder of that “wrapper” technology lets you. Maybe there are only 2-3 patents standing in your way, not 10,000. But it’s not true that there are always going to be 0 patents standing in your way.

  • 10 wholesale electronic suppliers // Oct 21, 2011 at 11:56 pm

    Someone is not doing their math. Google alone, which was founded on the back of the PageRank patent, has a market cap of 163 billion as of this moment.

    Let’s see.. it’s been a while since I’ve done second grade arithmetic.. but 163 – 9 = 154 billion, which is a positive number. I think. A net benefit to society coming from the patent side.

    There are two main arguments against technology patents. One has to do with the nature of innovation in the technology industry, which is different than inventions in other industries like pharmaceuticals…Technology products, and software especially, are never created from whole cloth. By their very nature, they build upon previous technologies and improve upon them.

  • 11 NIke Shoes // Jan 16, 2012 at 11:17 pm

    I think we forget, but there was a time when the whole of the tech industry had dismissed web search as a dead technology because no one could figure out how to make any money off of it. PPC was, shall we say, non-obvious, or else the two dozen companies doing web search, from infoseek.com to northernlight.com, would have done it, and Silicon Valley wouldn’t have dismissed search. In the mid 90s, web search existed, but it had little to no value.

  • 12 bianca // Oct 27, 2012 at 5:59 am

    Therefore, I believe your experience gives me a balanced perspective on the pros and cons of seo marketing patents.

Clicky Web Analytics