The average user, politician or journalist, can be excused for not grasping the significance of the barrage of laws and other mechanisms, DMCA, EUCD, TCPA, software patents, copyright extensions, patents on anything and everything, that are being passed through the US and European legislative chambers, and are being implemented independently by the software and content industries under the guise of protecting ‘intellectual property’, but incidently serve to limit the rights of consumers, inhibit innovation and stifle competition.

Such laws and innovations should be opposed on a wider stage, in the mainstream press and in parliament, and probably will be when their effects become all too apparent. So it is depressing that they are being ignored now because the lobbies are dominated by the bigger business interests that promote such laws, with the dubious argument that the freedom of computer users is a threat to commerce.

Software patents benefit a small but tightly knit community of patent lawyers and corporations, and are employed as a means of inhibiting competition and innovation. The myth perpetuated by the patents industry is that software patents are opposed by free software advocates alone. This prejudice was illustrated by the European Commission’s orignial FAQ on the European Patent directive, which stated that: “Many of the responses [to the EC ‘consultation’ on the directive], supporting a more restrictive (sic) approach than at present, with fewer patents being granted, were transmitted through an open forum set up by the ‘Eurolinux Alliance’, a group of companies and other entities supporting the development of open source software such as Linux”, and went on to to claim that “although this group numerically dominated (90 per cent) the response, the major sectoral bodies representing the information and communication technology industries, as well as many of the member states, all supported the approach put forward by the discussion paper. Some responses argued for eligibility for patents to be widened in line with the practice in the US.”

In other words, in the case of both the United Kingdom and European ‘consultations’, the majority response was sidelined and discounted in favour of the sectional interests of the patent industry, and their partners in various European governments.

Gates of wisdom
Software patents have many opponents throughout the computing industry, and every study undertaken on the subject, whether independent or commissioned by the patent industry, has come to the same conclusion, that software patents will, at best, act as a break on innovation in the software industry, and create severe problems for free software development – which may help to explain why some of the larger software companies are so much in favour. Free and open source software offer an alternative development model that is a refreshing challenge to the comfortable assumptions of the proprietary software companies, and software patents are one instrument among many that are intended to inhibit the development of free and open source software.

But free software will not be the only sector of the industry to be adversely affected. Because the mechanisms of the patent industry best serve those corporations that have limitless funds at their disposal, the inevitable effect will be to create barriers of entry to competition. Enforcing a patent is as expensive as defending against one. Either way, the corporations with the larger fleets of lawyers will tend to win. If the practice of imposing trivial patents on computing methods continues as it has done in the US, the computing industry can look forward to a long period of stagnation, as software developers encounter a world where every building block of every software project may be subject to expensive claims on more and more trivial patents. It’s hard to see how this contributes to the progress of science and the useful arts. The culture among the larger software (and hardware) companies is to stockpile patents, both as revenue earners, and as a defence against competing patent claims. Neither is productive. Both are high maintenance.

Richard Stallman has done much to expose the flaws in the principles that lie behind the patent industry, as have any number of campaigners from George Monbiot to Ralph Nader. More surprisingly, Bill Gates stated in an internal Microsoft memo, dated 16 May 1991, that “if people had understood how patents would be granted when most of today’s ideas were invented, and had taken out patents, the industry would be at a complete standstill today.”

Can we patent this?
Meanwhile, the myth persists that large corporations, (and their employees), inevitably support the imposition of software patents. This is not so. Software patents should be of concern to every software professional, and every organisation that develops software as part of its business. Somebody who understood this was Robert Barr, vice president and worldwide patent counsel for Cisco Systems, who presented his experiences of patent law to the hearings of the US Federal Trade Commission on ‘Competition and Intellectual Property Law and Policy in the Knowledge Based Economy’ on 28 February 2002.

Barr’s evidence is an eloquent exposition of the failings of patent law, and the mistaken philosophies that underpin it, and is worth quoting at some length: “Cisco Systems designs and sells network equipment,” he told the hearings. The company was founded in 1984 and went public in 1989. “Between 1984 and 1993, the first ten years, the company filed only one patent. In 1994 the company had grown to over one billion US dollars in annual revenue. This growth was obviously not fuelled by patents – it was fuelled by competition and by open non-proprietary interfaces.”

In 1994, the company instigated a policy of obtaining more patents. “We did this for defensive purposes,” claimed Barr, “to have something to offer in cross-licences with older companies who had large patent portfolios.”

According to Barr, Cisco used its patent portfolio “to obtain revenue and design freedom through licensing. We filed six patents in 1994, and increased that each year – we are now filing over 700 patents a year. We have entered into several cross-licences and we have been involved in several costly patent lawsuits.”

Barr told the Commission that “patents have not been a positive force in stimulating innovation at Cisco. Competition has been the motivator; bringing new products to market in a timely manner is critical. Everything we have done to create new products would have been done even if we could not obtain patents on the innovations and inventions contained in these products. I know this because no-one has ever asked me ‘Can we patent this?’ before deciding whether to invest time and resources into product development.”

Gathering patents
The bigger problem for companies creating innovative software and hardware products (and even those creating more mundane products) is the problem of whether someone else might have a patent on a product, lowlevel method, or feature that is being considered as part of a development project.

Barr observes that however diligent he may be, “despite the fact that our products are independently developed, [and] we do not copy, I can never definitively ‘clear’ a product or feature, or determine the costs of licensing in advance.”

The first consideration is “the ‘hold-up’ problem, where patents are issued after the product is in the marketplace and design round is costly.” This problem is exacerbated in “industries like ours, where a large number of patents can potentially read on a given product, because the likelihood of stepping on a land mine is so great ... Early publication does not solve the problem, because of the uncertainty about the claims that will issue.”

Barr also notes that “the large number of issued patents in our field makes it is virtually impossible to search all potentially relevant patents, review the claims, and evaluate the possibility of an infringement claim or the need for a licence.”

The telling observation that summarises the force the patent industry exerts against productive work is Barr’s assessment that “it makes more business sense to assume that, despite the fact that we do not copy other company’s products, and despite the fact that we do not derive solutions to problems from the patent literature, we will be accused of patent infringement. The only practical response to this problem of unintentional and sometimes unavoidable patent infringement is to file hundreds of patents each year ourselves, so that we can have something to bring to the table in cross-licensing negotiations. In other words, the only rational response to the large number of patents in our field is to contribute to it. The time and money we spend on patent filings, prosecution, and maintenance, litigation and licensing could be better spent on product development and research leading to more innovation. But we are filing hundreds of patents each year for reasons unrelated to promoting or protecting innovation.”

Barr notes that “since our purpose is to create a portfolio for cross-licensing, we find it necessary to stockpile patents and contribute to a backlog in the Patent Office that has reached three to four years in our technology area. In an industry where healthy competition makes time to market critical, and the pace of innovation is so rapid, that’s a long time to wait for a patent. Too long. The system is in danger of destroying itself. Moreover, stockpiling patents does not really solve the problem of unintentional patent infringement through independent development. If we are accused of infringement by a patent holder who does not make and sell products, or who sells in much smaller volume than we do, our patents do not have sufficient value to the other party to deter a lawsuit or reduce the amount of money demanded by the other company. Thus, rather than rewarding innovation, the patent system penalises innovative companies who successfully bring new products to the marketplace, and it subsidises or rewards those who fail to do so.”

An end in itself
Given his position as Cisco’s representative in the world of patents, Barr’s cynicism towards the patent industry was either remarkably astute or extraordinary, depending on the position that you are coming from. “Obtaining patents,” he tells his audience, “has become for many people and companies an end in itself, not to protect an investment in research and development, not to license technology to others who need it, but to generate revenue through licensing (‘holding up’) other companies that actually make and sell products without even being aware of their patents.”

His accusation is that companies “try to patent things that other people or companies will unintentionally infringe and then they wait for those companies to successfully bring products to the marketplace. They place mines in the minefield. The people and companies [...] who file these patents and extract licence fees from successful businesses play the patent system like a lottery. They gamble that people will infringe these patents without ever learning anything from the patentee, and without interfering with any effort by the patentee to commercially exploit their invention.”

Moreover, Barr alleges that the long delays in the processing of patents through the patent office work to the benefit of such litigants “by keeping the eventual coverage of their patents indefinite while others produce products.” Such companies “benefit from the high cost of litigation by demanding licence fees that are less than the cost of litigation, hoping that people will pay even if they don’t infringe, or, if they do infringe, it will be too costly to change the product. This provides opportunities for contingency fee litigators, for licensing companies and consulting firms who claim to help people ‘mine’ their patent portfolios for patents that even they didn’t know they had. It’s hard to see how this contributes to the progress of science and the useful arts.” You could not hope for a more honest exposition of how the patent industry works in practice.

“The patent system does not exist to protect the rights of inventors”, says Barr, “or any particular interest group. It doesn’t exist to protect what we now call ‘intellectual property’.” The patent system came into existence “to protect the progress of science and the useful arts [...] but in my experience at Cisco and my prior experience representing a variety of companies, the negative effects of stockpiling patents, the consequences of innocent infringement through independent development, the cost of proving noninfringement or invalidity through patent litigation, and the exploitation of the patent system as a revenue generating tool in its own right, have hindered true innovation and have outweighed the benefits.”

Richard Hillesley