Software Patents

Some patent papers

Stallman is against software patents, of course. However, his case here is better than many open-source-related arguments; in fact, it is squarely aligned with the interests of software-development businesses.

3.Paul Graham, a computer scientist and one of the partners of the venture-capital firm Y Combinator, wrote a 2006 essay Are Software Patents Evil?

Graham makes the following claim early on:

Patents

Baase 4e §4.5 / 5e §4.6

Pharmaceutical Patents
Sofware-patent issues
Obvious in Context
The Benson decision
The Flook decision
The Diehr decision
Some software-patent examples
Heckel paper
Eolas
i4i
NTP
E-data
Patent Trolls
Bessen & Meurer
Business-method patents
Apple
Stallman essay
FRAND
Graham essay
KSR v Teleflex
The Bilski Case
Mayo Labs v Prometheus
Abstract patents and CLS v Alice 
Lawsuit Venue 

Do patents help advance progress? or hinder it?

Patents are pretty clearly a market regulation with the sole goal of improving innovation in technology. Inventors don't "deserve" to profit from their ideas; we simply want to make sure they are motivated to continue. In other words, this is purely utilitarian.

Patents are intended to cover INVENTIONS rather than IDEAS. If you have an idea to sell hamburgers with salsa, or newspapers & beer together, or to create a website where people can post their own stuff, that's an IDEA. It can't be protected: everyone else is entitled to copy it freely.

If you decide that a certain vertical market can use an XML-based word processor, is that an invention or is that a business idea?

• patents cover the idea, not the expression
  
• the time period is more limited

35 U.S.C. §101 (patent-eligibility law):

Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

The meaning of "process" is critical here: does it mean any procedure or method? Or does it mean "industrial process"? Historically, it pretty clearly was intended to mean the latter.

Pharmaceutical patents

Pharmaceutical patents are sort of the poster child for Why Patents Are Good For Us (though Boldrin and Levine have argued against even pharmaceutical patents in their book). Here the patent system IS generally seen as effective at encouraging investment:

• Development costs are HUGE (~200 million) (maybe 100 million for a small, straightforward trial, but some trials need LOTS of patients, and/or expensive tests).
  
• Copying is not much harder than for software

You might not at first really believe the second point above. But take a look at the Open Insulin Foundation, openinsulin.org. They are literally trying to create an open insulin-production process that can be implemented by individuals (though more likely by small groups).

Note that, despite these two points, pharmaceutical patents don't exactly encourage research on potential new drugs. New-drug research mostly comes from NIH-funded university research. Pharma patents primarily encourage investment in the FDA approval process (which is really the expensive part).

One weirdness involving pharmaceutical patents is that a patent can be "for the use of"; someone can, if drug X is in the public domain, patent the use of X to treat disease Y (this must be in some legal sense a "new" use of X). In practice this is not much of a problem, because generic manufacturers can still make and market X for its old purpose, and doctors can prescribe it for its new purpose. Such prescriptions are sometimes said to be "off-label"; they are an important way for drugs to get to people who will probably be helped by them, but for which no company has yet done clinical trials, and never will.

Some specific drugs:

Cancer monoclonal-antibody drugs

Cancers are caused by runaway cell replication, due to mutation. Traditional approaches to fighting cancer involved finding ways to kill cells that were dividing rapidly. Such treatment also affects cells that normally divide rapidly: hair roots and bone marrow, to name two groups.

However, mutations are ubiquitous; only some mutations lead to runaway replication. When this does happen, there is usually a specific genetic reason: the mutation unleashed some existing cellular mechanism to multiply. This has led to the idea that if we can identify a multiplicative mechanism, and find ways to shut it down, then we can attack cancers that utilize that mechanism. There is at least some evidence that many cancers share a relatively small common set of replication mechanisms.

These protein compounds that affect cellular replication are antibodies that are highly specific to a certain substrate; they have very narrow targets. The From http://en.wikipedia.org/wiki/History_of_cancer_chemotherapy:

Another branch in targeted therapy is the increasing use of monoclonal antibodies in cancer therapy. Although monoclonal antibodies (immune proteins which can be selected to precisely bind to almost any target) have been around for decades, they were derived from mice and did not function particularly well when administered to humans, causing allergic reactions and being rapidly removed from circulation. "Humanization" of these antibodies (genetically transforming them to be as similar to a human antibody as possible) has allowed the creation of a new family of highly effective humanized monoclonal antibodies. Rituximab, a drug used to treat lymphomas, is a prime example. -- Wikipedia

The point is that some cancers can be specifically targeted by certain antibodies, because they have specific antibody receptors not present or not relevant in non-cancerous cells. The receptors involved tend to be very idiosyncratic. Antibodies are produced by specific immune-system cells; an antibody is monoclonal if it is (or was at one time) produced by one specific cell that was repeatedly cloned. Generally speaking, "monoclonal" means that the antibody has only a single receptor; that is, its activity is very focused.

None of these drugs would exist in the US marketplace if it were not for pharmaceutical patents.

On the other hand, the US Food and Drug Administration, which regulates new drugs, is arguably a massive government intrusion into the free market. Why shouldn't patent law intrude as well?

rituximab/rituxan: binds to the white-blood-cell surface protein CD20. This makes those cells more visible to existing immune-system defenses. Used to treat leukemias/lymphomas, also some autoimmune diseases such as lupus

ibritumomab tiuxetan/Zevalin also binds to CD20; it is often tagged with a radioactive compound to deliver radiation therapy (that is, death) directly to the cancerous white blood cells.

cetuximab/Erbitux: metastatic colorectal cancer, head&neck cancers. Binds to EGFR receptor; it is an EGFR-inhibitor.

trastuzumab/Herceptin: breast cancer. Monoclonal antibody that interferes with HER2/neu receptor. In some breast cancers, the HER2 receptor is, as wikipedia put it, "stuck in the 'on' position".

crizotinib/Xalcori: attacks lung cancers triggered by a mutation in the ALK gene. The ALK gene encodes a protein that triggers the unlimited-cell-division process of the cancer.

vemurafenib/Zelboraf: blocks a protein that causes skin cells to replicate leading to melanoma.

ipilimumab/Yervoy: T-lymphocytes (a kind of white blood cell) attack certain cancer cells, but there are biological mechanisms in place that limit this action. Ipilimumab disables these limiting mechanisms, allowing the T-lymphocytes to work more effectively.

Antibiotics

There are very few new antibiotics, actually. The FDA used to require not just proof of effectiveness, but proof that the infection that was cured was in fact resistant to existing antibiotics. A more serious problem is economics: a new antibiotic will be approved for use only in the most dire cases, to postpone the development of resistance. This means that, during the patent period, sales will be at best modest.

One promising new antibiotic is Teixobactin, discovered with a new technique for culturing soil bacteria in situ.

Protein pump inhibitors (PPIs): used for various stomach-acid problems, including ulcers

• omeprazole/prilosec
• lansoprazole/prevacid
• esomeprazol/nexium

HIV: protease inhibitors moved HIV from a short-term acute illness to a long-term chronic illness. This made drug development profitable again. When AZT (one of the first effective anti-HIV drugs) was first applied in the early 1990's to HIV patients, though, it was an off-label use.

red/white-blood cell drugs:
    filGRAStim/neupogen       makes more neutrophils/other WBCs. Used for cancer/chemo/BMT patients
    erythropoietin          makes more RBCs: kidney disease, cancer, cancer treatment

diabetes
    exENatide/byetta: this often means the patient can avoid taking insulin. It is offcially for type-2 (non-insulin-dependent) diabetes. From byetta.com: Byetta may also be used for other purposes not listed in this medication guide.

ledipasvir and sofosbuvir: These were approved in 2014 and 2013 respectively. A combination of these two agents is used in the treatment of Hepatitis C; the cure rate for a common strain of the virus is around 95%, and serious side effects are rare. (Gilead Pharmaceuticals decision to price a course of treatment with their Harvoni brand of ledipasvir/sofosbuvir at close to $100,000 has been controversial; see http://www.alternet.org/personal-health/84000-hep-c-drug-only-1500.)

IpiLImumab and pembroLIzumab are "immune-checkpoint" agents used to treat a variety of cancers by reinvigorating the body's own immune-system defenses. It turns out that the body's immune system is quite capable of attacking cancer cells, but it is turned off by things the cancer cells produce. For ipilimumab, T lymphocytes have a receptor, CTLA-4, that turns off their effectiveness; many cancer cells can activate this receptor. Ipilimumab binds to the CTLA-4 receptor and thus blocks the ability of the receptor to turn off the cell, thus in effect re-enabling it. For pembrolizumab, lymphocytes have a "programmed death" receptor PD-1 that cancer cells can activate to kill the lymphocyte. Pembrolizumab blocks the receptor.

In 2015, Jimmy Carter announced he had metastatic melanoma that had spread to his brain. A few years earlier, his life expectancy would have been around six months. He was started on pembrolizumab, approved the previous year, and took it for six months, In October 2024, Carter celebrated his 100th birthday, although he was at that point in hospice care.

In 1984, Congress passed the Drug Price Competition and Patent Term Restoration Act, also known as the Hatch-Waxman Act. This allowed generic drug makers to use a patented drug in their own FDA application, so that approval would be in place as soon as the original patent expired (normally after 20 years). However, it also gave pharmaceutical developers a chance at a patent extension for up to five extra years, subject to the following:

• The extension application must follow the date of FDA approval (which of course is after all the clinical trials are complete).
  
• The maximum length of extension is five years additional from the time of patent filing, or fourteen years from the date of FDA approval (whichever is less).

New Drug Rates

Third-world issues with pharmaceutical patents

Basically, if a country is too poor to afford to treat all its citizens with a new drug, many may die. This has definitely been the case with some HIV drugs. As a result, the Third World has long argued that it should be exempt from pharmaceutical patents.

In the mid-1990's, the WTO basically agreed, and allowed (I'm not sure of the exact terms) third-world countries to manufacture generic equivalents of first-world drugs for use within their own borders only. The manufacturing must be for the government's own use (eg in distributing to its people; the manufacturing can't be a for-profit initiative of a private company in that country). Also, a good-faith attempt must have been made first to negotiate for a reduced-rate license to manufacture the drug, and such profits as are made must be given to the patent holder. In practice, large US pharmaceutical companies often enter into vastly-reduced-price licensing arrangements with third-world companies.

In 2005, the WTO relaxed this rule to allow poorer nations to import generics that would otherwise be covered by a patent. This is sometimes described as a "compulsory license". The manufacturer would not be prosecuted.

• List price of a month's worth of Gleevec^TM brand 𝛽-imatinib in India: US$ 1,900
• Price of a month's worth of generic 𝛽-imatinib in India: US$ 175
• Discounted price of a month's worth of Gleevec^TM brand 𝛽-imatinib in India for 95% of patients: US$ 0.

But Posner's title was Why There Are Too Many Patents in America.

The US patent on imatinib expired in 2015. Novartis is believed to have paid Sun Pharmaceuticals to delay the introduction of their generic formulation. When the generic was introduced, it was priced at around $140,000/year, versus $146,000 for brand-name Gleevec (see here). The price has since fallen, but not precipitously.

• racepinephrine
• levocarnitine
• dexibuprofen
• escitalopram

ARM patents

Patents Generally

Software Patents

Issues with Software Patents

Why are software patents even controversial? Maybe the basic theory is that, in computer science, almost all ideas are straightforward to implement. This is completely unlike every other field of endeavor, where, after someone comes up with an idea, extensive and uncertain development work is the norm. If you have an idea for a new pharmaceutical, you have to test it in patients. If you have an idea for a new brake rotor, you have to ensure that it doesn't corrode too fast, or get too hot, or have hidden weaknesses. But if you have a new software idea, developing it is pretty much only a matter of time and budget.

Some people argue that patents are fundamentally flawed. That approach, however, leaves us without pharmaceutical patents. Here are some issues that are a little more specific to software:

• Implementation problems with the patent office as applied to software (patent search is hard, trivial patents are granted). Examples: Diehr, Perpetual Motion.
• Software implementation is almost always obvious, and many software ideas are obvious. Examples: obvious-in-context, KSR v Teleflex, natural-order recalculation, XOR drawing, Eolas, I4I, NTP, Data Treasury,
• Problems with business-method patents, which until 2005 required involvement of "technological arts". Examples: State Street Bank, Bilski,
  
• Fundamental problems with software patents: algorithms are mathematical facts. Examples: Benson,
• Most physical systems infringe at most one or two patents. Software can easily infringe hundreds.
• Many software patents are very vague, potentially leading to very broad coverage. Examples: BT, E-data, ,
• Some software patents represent abstract ideas rather than a concrete invention. Examples: Bilski, Ultramercial, Alice,
• So-called patent "trolls" exact a high cost for society. Examples: Trolls, Trolls Again.
• Even companies that appear to have invested heavily in technology sometimes have only weak patent claims. Example: Apple

Complaints about the patent system as a purveyor of undeserved monopolies go back a long time; usually these come from the same sources as attacks on copyright. An implementation issue might be the (rather more mainstream) claim that the patent office is too free in granting patents for weak software ideas. We will get to business-method patents below, but it is not unreasonable to suppose that monopolies on a specific business idea are incompatible with free enterprise.

• realizing you need the invention
• actually getting it to work

What often seems to happen is that a patent is granted for an invention at a time when the inventor had no clear concept of how to use the idea. Much later, someone needed to get something done, and found a quick obvious solution that turned out to be the earlier patented one; this is the middle issue above. The Eolas case (below), on running applets within a browser, is a possible instance of this. Should early inventors be able to lock out later developers simply because they managed to patent a technique to solve a problem that was completely obvious later to anyone else faced with that same problem? Haven't they really patented the problem?

To put this another way, some inventions are the result of a genuine inventive spark, and some are very obvious. Both kinds of inventions do get patents, although patent examiners try to weed out most of the latter. Most inventions, and probably most patents, arise because someone needed to be able to do something. A plausible test for obviousness of an invention is that, if other "people of ordinary skill in the art" faced the same problem, they would quickly solve it with the given invention. So a nonobvious invention would be one for which other people who worked on it would not immediately arrive at the solution.

Physical-world patents usually take quite a number of real-world "building" steps before they can be realized, and so the total amount of effort tends to make the end result reasonably "non-obvious". However, large numbers of computing patents appear to describe inventions that any competent software engineer would have come up with independently; that is, there is not any real inventive spark. Therefore, when these ideas are patented, they are not generating any social utility. Large numbers of computing patents often seem to represent an approach that any average software engineer would have come up with very quickly.

Obvious in Context

At the risk of being misleading about the term "obvious" as used in patent law, I will call this the "obvious-in-context" problem. Much of what passes for "invention", at least in terms of application of known algorithms, is really just competent software engineering. We might define when an invention is obvious in context as follows:

If a software engineer of ordinary skill, familiar with the general area of programming, and familiar with common algorithms, and who was presented with the problem in a reasonably concrete setting, would readily come up with the solution in question.

This is quite different from readily being able to come up with an implementation, given the solution. That might take significant coding, but might involve little if any inventive leap. The idea here is that the patented idea would be obvious to anyone presented with the problem it solves.

This not, however, quite the same as the patent standard of "obviousness" under current law, in which discovering the applicability of an idea to a particular domain can be part of the novelty of an invention. For example, consider the use of XOR for drawing easily erasable objects on a video screen. We can take either of the following two approaches:

• This is obvious-in-context because anyone trying to figure out how update the mouse position using memory-mapped video would likely think of XOR
• This is novel because it represents the application of a purely mathematical operation to the management of bitmapped video, in a concrete and useful way

Perhaps a more serious issue is that the problem to be solved may have arisen long after the patent. That is, an engineer, when faced with a certain problem in 2015, may find an "obvious" solution that infringes on a patent filed in 2010. The engineer may feel the solution would have been equally obvious in 2010. But perhaps the problem in question couldn't have been formulated in quite the same way in 2010, or perhaps the problem itself suggests some element of the 2010 patent invention. The usual patent-office standard for obviousness means that the entire solution would have been obvious as of 2010.

An example here might be the Eolas applet patent. Web applets with embedded controls became obvious after browsers became ubiquitous, but Eolas was granted its patent in the early days of browsers, when embedded controls might have seemed much more novel. (That said, Eolas eventually lost its patent case because of evidence of prior art.)

A hypothetical solution to a problem of physical engineering is not the end of the story; it remains to be seen whether the solution works in practice. But for software engineering, that is not a concern: unless the engineer has missed something, the solution will work.

• Some software "inventions" are straightforward applications of general algorithms to specific cases. The XOR cursor and spreadsheet recalculation order are examples. (Though the application of topological sort to spreadsheet recalculation has arguably become more straightforward as time has gone on.)
• Some software "inventions" are obvious in a new technological context, such as embedding applets in browser windows. The Eolas patent is an example; it teaches the embedding of active controls in web pages. When the patent was filed in 1994, web browsers were not yet "universal viewers", but as soon as they became universal viewers, the embedding of active controls was obvious. Similarly, some of the screen-manipulation gestures used by smartphones are obvious once the concept of a multi-touch screen is available. But perhaps part of the original patents here is that browsers or multi-touch screens are a universal building block.
• Some software "inventions" are obvious ideas that were not implemented earlier due to concerns that the idea would not lead to a profitable business. The NTP wireless-email patent might be an example.

Another way to describe this situation is to say that many patented software solutions are ordinary, obvious applications of basic principles of software engineering.

Patent-law obviousness

When a patent case comes to trial, the judge will often take the position that if the patented idea really were "obvious", then someone else would have patented it first! Or at least published it first. This (codified into the original set of rules for interpreting "obviousness") can be an enormous hurdle for the patent defendant. Nonetheless, for software anyway the obvious-in-context rule suggests that an "invention" can be obvious, but only of interest when other infrastructure had reached a certain level.

Another judicial hurdle is that, when faced with a claim that a patented invention is obvious, the judge will argue that it is only obvious in retrospect, and the defendants must prove it was obvious at the time of invention. This is impossibly hard, unless there is actual published work prior to the time of the invention that describes the invention. Such a publication would then be considered prior art.

If prior art is published, it can invalidate a patent. However, if it was used privately, those users can continue to use their idea without paying royalties to the owner of the patent, but the patent may still stand. The patent can be challenged on the grounds of not being novel, but this is harder.

In the first facet in the list above, the obvious-in-context problem boils down to a general algorithm being applied to solve a specific problem. The Flook case (below) supposedly made many such inventions non-patentable. However, this isn't always what happens in practice, where the decision comes down to the question of just how much innovation was needed in applying the algorithm.

One of the central problems in the history of "patent wars" in any field is the exceptional expense of patent litigation; another is that the law puts the burden of proof on the defendant to prove a patent is invalid; patents are presumed valid until proven otherwise. Proving a patent's invalidity is not easy; realistically, this involves presenting "prior art". Direct challenge on the grounds of obviousness is particularly difficult. An added issue is that the party suing may be a patent-holding corporation that cannot be effectively countersued. Judges are often sympathetic to the "lonely inventor" whose idea is being "stolen" by a "big corporation". Finally, court costs are rarely awarded to those who win patent-infringement cases, which sometimes seems to have the effect of encouraging frivolous suits.

KSR and Obviousness

As stated earlier, the "obvious-in-context" standard is something like this:

If a software engineer of ordinary skill, familiar with the general area of programming, and familiar with common algorithms, and who was presented with the problem in a reasonably concrete setting, would readily come up with the solution in question.

The KSR v Teleflex case from 2007 does present one practical way of establishing obviousness: an invention is obvious if it is a straightforward combination of two (or sometimes more) prior-art ideas. This is related to the "obvious-in-context" idea because if a solution is obvious given the problem, then the solution is probably a combination of prior-art ideas (that is, well-known ideas), and therefore a KSR-type argument can often be made. Still, just because an invention is a combination of prior-art ideas does not always mean it is an obvious combination; there has to be some "motivation to combine". Sometimes there are inventions that are quite simple to implement, but which are not obvious.

Here's an example that might go either way: patentpandas.org/stories/company-patented-my-idea. On the one hand, "interactive pop-up books" is a combination of traditional pop-up books with standard ways of making content interactive by adding LEDs and buttons and chips and absolutely-standard stuff like that. On the other hand, bringing computer interactivity to children's pop-up books might be considered to be an innovative step.

In principle, the KSR decision rules out patents that are simple combinations of prior-art ideas, but doesn't apply to single-concept inventions. What about the XOR-mouse patent? Is this a single concept? Or a combination, of the XOR algorithm and the bitmapped video system?

List of software-patent issues

Aeroplane Control

A classic "broad" patent is the Wright brothers patent on "wing-warping" to control flight (to the Wrights, the wings were the "aero-planes", planing the air, the rest of it was the "flying machine"). The Wright brothers actually twisted the whole biplane structure -- using cables -- to bank in a turn. This later led to the development by others of ailerons, which achieve the same effect but which mechanically are entirely different. A court ruled the Wright patent still applied: what mattered was the concept of adjusting wing angles to tilt the craft.

This is a classic "broad patent" for a major new innovation. The courts have traditionally recognized "broad" patents, but somehow in software this distinction is often lost.

Some have argued that the Wright brothers tried to claim a functional patent here: a patent on any method for turning an aircraft. This is not entirely correct: the Wright claim was really for a specific set of movements of the wing and of the rudder.

There has also been major patent litigation about sewing machines, agricultural machinery, 19th-century telephones, and electric power. See http://www.bloomberg.com/news/2012-10-08/apple-phone-patent-war-like-sewing-machine-minus-violence.html.

Supreme Court cases limit the word "process" in USC Title 35, Chapter 10, §101:

Inventions Patentable: Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

Gottschalk v Benson, 1972

Here the "process" claim is so abstract and sweeping as to cover both known and unknown uses of the BCD to pure binary conversion. The end use may (1) vary from the operation of a train to verification of drivers' licenses to researching the law books for precedents and (2) be performed through any existing machinery or future-devised machinery or without any apparatus.

"It is noted that the creation of programs has undergone substantial and satisfactory growth in the absence of patent protection and that copyright protection for programs is presently available." 

Parker v Flook, 1978

• Steir patent for overlaying a hairstyle on the image of a person
• Pardo & Landau patent for using "topological sort" to establish an evaluation order for formulas

Diamond v Diehr, 1981

The Federal Circuit

Reading original patent descriptions

You can look them up online. To use the patent office files, go to the search-by-patent-number page:

PTO (Patent & Trademark Office) problems:

• researching "prior art" to determine whether ideas are "novel"
  
• secrecy of the process
• granting of patents to ideas that are "obvious"

ignorance is no defense: "submarine" patents
The entire process is secret: you can be making good-faith effort to be noninfringing and get hit with a huge verdict.

Infringement is considered willful if you had advance notice of infringing. Your belief that the patent was invalid is NOT generally a defense (although some judges have recently been allowing this). Damages automatically triple.

Maybe the central problem is that at the time of patent application, there is nobody representing the interests of the public. (Later on there is now a period when the new patent application is public, and there is now a large community devoted to objecting to such patents at that stage.)

A good example of the failure of the PTO is the issue of granting a patent (11047359) to a perpetual motion machine. Such a machine cannot exist, and so cannot be "useful". Yet this patent was granted. See unmakeme.com/2022/05/09/patenting-your-perpetual-motion-machine for the history, including the patent examiner's initial denial and a discussion of how the inventor wore down the examiner's resistance.

For another tale, this time about a perpetual-motion patent that was rejected, but maybe not for the right reasons, see www.ipwatchdog.com/2011/10/11/the-patent-law-of-perpetual-motion/id=19828.

Three Groups of Stakeholders:

• small inventors
  
• large corporations
  
• patent-holding companies

Where do we fit in?

Patent-holding companies are sometimes known as "trolls", as in "the troll under the bridge, demanding tolls". They are often seen as parasitic: they do not, for example, actually produce anything. Is this a fair characterization? They do, after all, create a market for small inventors.

How large corporations manage:

• patent banks
  
• legal departments
  
• cross-licensing

Small inventors:

• market your invention yourself??
  
• sell to a holding company? (These are tricky places. They produce nothing, they interfere with progress, but they do produce a market for new patents.)

Many times, when patent reform is proposed it is the small-inventors community that is most up in arms. Should we care?

But small inventors can still sell to patent-holding companies.

Legal situation of large corporations:

• hard for small inventors to sue them
  
• can cross-license

Examples of software patents

Here's an interesting list of some software patents, supposedly "random" though some particularly famous ones are sprinkled in:
    http://bat8.inria.fr/~lang/hotlist/free/licence/patents.html

Another list can be found at: http://www.textfiles.com/law/softpat.txt

CPU Stack Pointer register

Patent 3794980, to George Cogar, 1971. Supposedly, though I can't find the source, this was purchased by DEC [?] and eventually placed in the public domain. Or not enforced. Or, possibly, it was in fact licensed by Intel/Motorola/everyone_else.

ATT setuid-bit patent

Patent 4135240, invented by Dennis Ritchie, applied for in 1972 and later placed by AT&T in the public domain. The Supreme Court had just ruled in Benson that software couldn't be patented; ATT apparently got the patent because they claimed it was hardware. This patent was dedicated to the public domain in 1979. This patent is certainly a deep idea: if a certain bit is set in the filesystem information node for a file (not in the file itself), then when the file is executed, it runs with the privileges of its owner and not the user. Before then (and after; look up why Windows has all those svchost processes), there were complex ad-hoc methods for running selected programs with elevated (or alternative) privileges.

British Telecom Hyperlink patent

Patent 4873662. BT filed in 1976; the patent was granted in 1989. In 2000 they attempted to sue a large number of websites. The patent itself apparently refers to a system in which multiple remote users can access "blocks" of data on a central computer.

Here, the arguable problem is that BT's claims are much too broad and vague.

Altavista patents on web search

Altavista did have several such patents on basic web "crawling". Most were predated by the "archie" archive-searcher for ftp sites, developed by Alan Emtage in 1989. Altavista was purchased by CMGI, which then tried to demand licensing fees for its patents.

RSA encryption

Patent 4405829: Here is a short description

RSA uses standard high-precision arithmetic in its calculations; the underlying number theory has been well-known for centuries. The patent was for the APPLICATION of these standard methods to encryption. That application was certainly novel.

The RSA patents finally expired, after much controversy. Part of that controversy was self-induced; the patent owner at one point appeared to grant a general license for noncommercial use, but then backed away from that.

The RSA idea is not "obvious-in-context". In fact, RSA is, for many people, the classic Good Example for why software patents are needed.

Multimedia

Compton filed a patent in 1989 on multimedia, despite Apple Hypercard in ~1987.

Steir patent

Patent 5,060,171 on artificially adding hair to a person's image [Garfinkel article; obvious-in-context; Flook standard?]

G.729

This is a voice-compression patent for telephony use. The normal data rate for voice is 64 Kbps; G.729 reduces this to 8 Kbps. Given the idea of such compression, figuring out an implementation is definitely nontrivial, and figuring out an implementation usable in real-time for simple CPUs is harder still.

But eventually open-source alternatives to G.729 appeared. The problem was that G.729 was the standard; alternatives were usually not recognized by at least one step along the path.

E-data

This is the canonical example of how a vague patent description can lead to "claims expansion". The original patent was for an in-store kiosk at which a customer could select a number of music tracks to be written on the spot to a cassette tape. But E-Data argued that it also applied to home music sales, like iTunes.

Eolas applet patent

About a way for running "applets" in a browser window, with embedded controls. See below. A good candidate example for "obvious in context"; the idea is obvious to anyone thinking of the browser as a universal interface. (That the implementation is also obvious is just a given.)

NTP v RIM: the blackberry patent. See below.

Spreadsheet natural-order recalculation

Early spreadsheets restricted cells to referring to cells in earlier rows, or in earlier columns. Natural-order recalculation means that any cell dependencies are allowed, as long as the dependencies are not circular. The patent was filed in 1970; the topological-sort algorithm for implementing it was published in 1963. The spreadsheet was not invented until 1979. Once the spreadsheet was invented, natural-order recalculation becomes obvious.

Using XOR to write to video memory

You use XOR once to display the content, and a second time to erase it. Was this well-known enough in 1976 to be obvious? Again this is a candidate for "obvious in context"; anyone needing to write to and then restore a memory buffer (eg a video buffer) would naturally think of using XOR. But also note that XOR is the implementation, not the "idea".

Lempel and Ziv published their compression scheme in 1978; Terry Welch published an improvement in 1984. CompuServe used this compression mechanism for the GIF file format, introduced in 1987. A year later, they noticed that the algorithm was patented, and that the patent was currently held by Unisys. Allegedly, Unisys told Compuserve at that time that they would not need to pay royalties.

In 1999, Unisys demanded that some noncommercial websites pay a $5000 fee for hosting files in the gif format (an interesting strategy, given that the sites were not themselves rendering the images). Some commercial sites were asked for even more. It's not clear whether anyone paid it; most affected sites rapidly switched to .jpeg or .png. Some observers were especially offended by the fact that Unisys allowed the use of the GIF format as a free standard until it became well-established, and then demanded fees.

There's some question as to whether this was the only or even the dominant reason for the shift to PNG format; the latter does offer more features (especially alpha and gamma) than GIF, and is a lossless format unlike JPEG.

Note that LZW compression is not "obvious-in-context"; you can realize you need compression and still work very hard to develop LZW.

Newer compression techniques are even less obvious. These would include the patents on the MP3 sound-compression strategy, and the G.729 voice-compression algorithm.

Bandwidth-sharing patents

There are a number of patents for deciding how to share bandwidth among a set of customers (eg of an ISP, or guests at a hotel). They all depend on the deficit-round-robin implementation of Weighted Fair Queuing. Typically these take the form of a strategy for sharing unreserved bandwidth in support of a specific business goal.

Canadian patent 2750345 discloses a method for assigning users to various "zones" (or traffic "classes"), and ensuring that excess bandwidth is assigned to each zone in proportion to the current activity in that zone. This is the basic idea of so-called Fair Queuing, extended to having multiple zones.

Generally, queuing systems adjust bandwidth of a user by adjusting the amount of data dequeued for that user during each dequeuing cycle. If, on each dequeuing round, Alice gets 2000 bytes and Bob gets 3000 bytes, then Bob will get 50% more bandwidth. This amount of data dequeued is known as the quantum for that user.

The patent claim 1 states that there is

a quantum manager for dynamically adjusting the values of a plurality of quantums, each of the queues having a respective quantum associated therewith

a dequeuing module for selectively dequeuing data from the queues and passing the data to one or more outgoing network interfaces;

wherein, when a selected queue has no guaranteed bandwidth rate or has already reached its guaranteed bandwidth rate, the dequeuing module dequeues at most an amount of data from the selected queue up to the quantum of the selected queue before dequeuing data from another of the queues; and

the quantum manager dynamically adjust the quantums in proportion to tracked user load under each of the zones such that the quantum of the selected queue is higher than the other quantums while the zone to which the selected queue corresponds has higher user load than the other zones....

The idea here is that the quantum is adjusted dynamically to reflect the bandwidth.

The defendant's system did this dequeuing on an average basis, but the amount dequeued in each round was not a fixed quantum chosen "in proportion to tracked user load". That is, instead of giving Alice and Bob fixed quantums of 2000 and 3000, maybe the quantums over three successive rounds would be (2000, 1000), (3000, 7000), (1000, 1000). These add up to 6000 and 9000, respectively, so Bob is still getting 50% more bandwidth than Alice on average.

Does that matter?

MP3 patents and lawsuits

The MP3 idea was not obvious, and remains fairly complex. Alcatel-Lucent v Microsoft: Alcatel-Lucent won $1.5 billion in an infringement suit about mp3 decoders Feb 22, 2007

MS countersued for other patents

The judge eventually set aside the damages, and the appellate court agreed.

MS then sued A-L for other patents.

check out mp3licensing.com (Thompson) Royalty Rates: basic mp3 decoder: $0.75/unit

MP3 was published in 1991. Did all US mp3 patents expire in 2011? Original holder: Thompson Consumer Electronics & Fraunhofer Institute. These still hold the "core" mp3 patents.

MP3 Patent claimants:

• Thompson
• Fraunhofer
• Sisvel / Audio MPEG
• Texas MP3 Technologies
• Alcatel-Lucent

The mp3 compression algorithm is admittedly a deep idea. Part of it involves the use of wave decomposition to store the information more efficiently; part of it involves "psychoacoustics" to identify parts of a sound file that are "unhearable" and so can be deleted.

MS has patented the FAT disk format. Here is a summary of the events from the Public Patent Foundation, which had challenged that patent:

The fact that PubPat can't appeal or even respond to the decision is a serious procedural issue. If you are sued by Microsoft for using the FAT format, you will be allowed to respond to Microsoft's post-2004 amendments to the patent claims. But you will probably not.

Microsoft is now actively licensing the format to flash-card manufacturers. Why not switch to the free ext2 filesystem? Because that is impossible if the device in question has embedded software to read the FAT format.

It is unclear which patents Microsoft is most interested in pushing. While there are legitimate reasons for thinking that FAT itself might not be patentable, Microsoft later introduced a strategy for supporting both long filenames and also "8.3" filenames (8 char name, 3 char extension). The patent that covers the dual-name strategy is less vulnerable to "obviousness" or "prior art" challenges.

Microsoft sued the TomTom people (http://arstechnica.com/microsoft/news/2009/02/microsoft-sues-tomtom-over-fat-patents-in-linux-based-device.ars), because TomToms, although they are based on Linux, use the FAT filesystem internally. The suit was settled two months later, after TomTom agreed to switch to the ext2 filesystem.

FAT is a good example of an idea that is obvious to anyone presented with the problem of how to create a simple filesystem suitable for small devices. However, there is the added problem of it's being standard (although an unofficial one); you can't just implement a workaround.

Photoshop and patents

Patent infringement suits

Heckel Paper

Method for dynamically viewing image elements stored in a random access memory array

The idea is to take a set of formulas (spreadsheet cells, for example) that have dependencies: some cells depend on other cells in that they use the value of the other cell when computing their own value. We want to find a way to evaluate all the cells correctly, unless there is an actual circularity.

Spreadsheets were a brilliant idea (Dan Bricklin, VisiCalc?). How significant, as an invention, is natural-order recalculation? Was it a major insight? Or did someone finally pick up their copy of Knuth and look for an appropriate algorithm?

Bricklin, by the way, did try to patent VisiCalc, but was unable to, because in 1979 (two years before Diehr) he was unable to. VisiCalc was a software application. See www.bricklin.com/patenting.htm. There might have been some patentable general principle -- after all, Pardo and Landau managed to get their patent in 1970 -- but officially algorithms could not be patented since Benson in 1972. Pardo and Landau just managed to get lucky.

Eolas v Microsoft

Patent 5838906: Distributed hypermedia method for automatically invoking external application providing interaction and display of embedded objects within a hypermedia document, filed in October 1994.

The alleged invention is about a way for running "applets" in a browser window. Is this really an "invention" at all?

Back in 1992, browsers just displayed images and static text. However, it was clear by then that applications could display content in windows created and "owned" by other applications; for example, MS Word could at that time display an Excel subwindow.

What was not foreseen was that browsers would become universal viewers of just about everything. Once they did, though, the Eolas "invention" -- displaying a certain kind of content in a browser -- does become obvious. Should this make the idea not patentable? Eolas finally did lose their patent, but not for this reason.

Microsoft v Eolas (+ Univ of California, as part of UCSF):
MS lost this case in 2004; was ordered to pay $521 million.  They then won the right to a new trial, but settled in 2007 before the beginning of the new trial. There are suggestions on the web that the settlement amount was in the range of $100 million. These may be pure speculation, but the odds are they settled for less than the original verdict.

Between the end of the first trial and the settlement, a PTO re-examination upheld the patent. However, the examiners discovered that a crucial feature of the Eolas patent that was not prior art was that the applet began running immediately, with no user input (like YouTube videos do today). Microsoft modified Active-X for a while so that it did not start automatically; users had to press "run". This "workaround" possibly gave Microsoft an edge in the negotiations.

The patent covers

Patent filed 1994, granted 1998, USPTO review 2004, upheld 2005

See http://cse.stanford.edu/class/cs201/projects-99-00/software-patents/hypermedia.html

"Viola" prior art: may or may not be relevant: see http://www.viola.org

The Viola browser project was found by the district court to have been "abandoned", but the circuit court found that Viola version 1.0 was "abandoned" only in the sense that it was replaced with version 2.0.

Part of the technical issue was about the meaning of the term "executable application". The court allegedly gave this broad meaning. Microsoft claimed it only meant "standalone applications".

Eolas was started by Michael Doyle, faculty member of UCSF. UC Berkeley is apparently the owner of the patent.

Doyle certainly had some early ideas, that came before Java applets.

Had the Eolas patent been more aggressively enforced (and been more enforceable), it would have been a huge impediment to the world-wide web.

October 2009: Eolas has launched a major lawsuit against just about everyone: press release. The list of defendants includes lots of sites that use web-embedded objects: amazon, apple, eBay, and youtube.

View 1: Eolas developed some early web-embedding technology, and got really lucky
View 2: Eolas patented Microsoft's 1990 Object Linking and Embedding idea, and got a 20-year license to fleece us
View 3: Eolas might control a "critical" piece of the web standards.

PTO review

E-Data

Two more specific patent cases

• i4i v Microsoft: i4i patented a particular, straightforward method of storing files with markup tags. Microsoft used a method of storing markup tags in Word documents. i4i claimed that MS violated its patent; this appears to be a very expansive interpretation of their original patent.
  
  
• NTP v RIM: RIM developed the Blackberry system of wireless email devices. NTP claimed to have a patent on the idea.

• NTP v RIM: NTP did "invent" something, but the actual invention seems rather straightforward. Before RIM, neither NTP nor anyone else was willing to give the idea of building a wireless system for forwarding email the investment needed to get the system running
• Eolas: a very "obvious in context" patent, and one for which (fortunately!) documented evidence of that existed at the time it was granted.
  
  
• i4i v Microsoft: a good example of "claims inflation": i4i invented something much more rudimentary

Patent Trolls

EXECUTIVE ACTIONS

Today the Administration is also announcing a number of steps it is taking to help bring about greater transparency to the patent system and level the playing field for innovators.  Those steps include:

1. Making “Real Party-in-Interest” the New Default.  Patent trolls often set up shell companies to hide their activities and enable their abusive litigation and extraction of settlements.  This tactic prevents those facing litigation from knowing the full extent of the patents that their adversaries hold when negotiating settlements, or even knowing connections between multiple trolls....

2. Tightening Functional Claiming.  The AIA made important improvements to the examination process and overall patent quality, but stakeholders remain concerned about patents with overly broad claims — particularly in the context of software.  The PTO will provide new targeted training to its examiners on scrutiny of functional claims and will, over the next six months develop strategies to improve claim clarity, such as by use of glossaries in patent specifications to assist examiners in the software field. [pld: about time!]

3. Empowering Downstream Users.  Patent trolls are increasingly targeting Main Street retailers, consumers and other end-users of products containing patented technology — for instance, for using point-of-sale software or a particular business method.  End-users should not be subject to lawsuits for simply using a product as intended, and need an easier way to know their rights before entering into costly litigation or settlement. [pld: may not help much]

4. Expanding Dedicated Outreach and Study.  Challenges to U.S. innovation using tools available in the patent space are particularly dynamic, and require both dedicated attention and meaningful data.  [pld: chatter]

5. Strengthen Enforcement Process of Exclusion Orders. Once the U.S. International Trade Commission (ITC) finds a violation of Section 337 and issues an exclusion order barring the importation of infringing goods.... [pld: irrelevant to troll suits]

1. Require patentees and applicants to disclose the “Real Party-in-Interest,” by requiring that any party sending demand letters, filing an infringement suit or seeking PTO review of a patent to file updated ownership information, and enabling the PTO or district courts to impose sanctions for non-compliance.

2. Permit more discretion in awarding fees to prevailing parties in patent cases, providing district courts with more discretion to award attorney’s fees under 35 USC 285 as a sanction for abusive court filings.

3. Expand the PTO’s transitional program for covered business method patents to include a broader category of computer-enabled patents and permit a wider range of challengers to petition for review of issued patents before the Patent Trial and Appeals Board (PTAB).

4. Protect off-the-shelf use by consumers and businesses by providing them with better legal protection against liability for a product being used off-the-shelf and solely for its intended use.

5. Use demand letter transparency to help curb abusive suits, incentivizing public filing of demand letters in a way that makes them accessible and searchable to the public.

End-User Patent Lawsuits

Innovatio IP

Project Paperless

Bessen and Meurer, Patent Failure

1. unpublished claims
2. difficult-to-interpret claims (due to obfuscatory language)
3. changes in claim interpretation (by the plaintiff or by the courts; E-data and i4i are good examples)
4. very high search costs

• "Make patent claims transparent", and available to interested parties from the time of filing
• "Make claims clear and unambiguous by enforcing strong limits against vague or overly abstract claims". The idea here would be that, if a patent were vague and subject to multiple interpretations (eg i4i and E-data), then the most restrictive interpretation, or at leaset the interpretation most concretely described by the patent, should be the one used by the courts.
• "Make patent search feasible by restricting the flood of patents." In other words, there is a hidden social cost from too many patents: it becomes too hard for other inventors to examine them all.
• Create "an exemption from penalties when the infringing technology was independently invented"
  

1. Immediate publication of all patent applications (versus after 18 months, currently)
2. Limit changes to claim language in pending patents (to prevent a pending patent from morphing into something else entirely). These changes, though, are actual changes to the claim text, made by amending the patent; this does not refer to changes in interpretation.
3. Availability of greater information about prosecution history, that is, other infringement lawsuits filed for the same patent.
4. Mandatory disclosure of changes in patent ownership

Reading original patent descriptions

State Street Bank case, and Business-Method patents

Exhibit A: Amazon "one-click" patent, # 5960411, granted 1999. Twenty-three days later, Amazon got an injunction against Barnes & Noble, and eventually won their case. BN had to stop using their "ExpressLane" shopping method.

The essential feature of the 1-click patent appears to be that you don't have to go through the usual multi-screen checkout process; you can just click "send me this stuff the usual way", and it will remember all your previous entries.

Paul Barton-Davis, one of Amazon's founding programmers, called the 1-Click patent "a cynical and ungrateful use of an extremely obvious technology" [emphasis added]. By "ungrateful", Barton-Davis apparently meant that Amazon had benefitted enormously from public-domain software ideas.

One-click shopping is obvious from a software-development perspective. It is not nearly so obvious from the perspective of online shopping, however.

Overall, there are many other more-mundane patents on online shopping carts. IBM[?] supposedly has a patent on suggesting new purchases based on past ones.

Apple Patents

Just so you know who we're dealing with, here is a memo from Steve Jobs in 2010 in which he describes "Holy War with Google", presumably in large part because of Android. But he (later on in the memo, in item 5) says "Strategy: catch up to Android where we are behind (notifications, tethering, speech, ...) ...

Apple v Motorola

Apple v HTC

Apple v HTC before the International Trade Commission (ITC), filed March 2, 2010

Apple v HTC, US District Court, Delaware

HTC counterclaims

Apple v VirnetX

Apple v Samsung

• 7,469,381: Bounce-Back Effect
• 7,844,915: On-Screen related to '381, above, but also related to pinch-to-zoom. It is sometimes even called the "pinch-to-zoom" patent, but that seems a very optimistic designation.
• 7,864,163: Tap To Zoom: the user taps on something and the display zooms in

Is the last patent a material improvement over having to zoom using the "pinch" gesture?

• D593087, covering the overall iPhone shape, with Home button and surrounding bezel
• D604305, covering on-screen icons
• D618677, covering "the ornamental design of an electronic device"

Design patent 504,889, on the rectangular case with rounded corners, was also included in Apple's complaint, but the jury did not find for Apple on this. It would be difficult to find a workaround for a rectangular case with rounded corners, as this layout is largely functional.

• 5,946,647: Quick Links; eg recognizing URLs in text
• 6,847,959: Universal Interface for Search (think Siri, but it's hard to see how the claimed "unitary interface" innovation is different from Google itself).
• 7,761,414: Syncing in the background. Multi-tasking was developed in the 1960's.
• 8,046,721: Slide-to-Unlock, v1 (below)
• 8,074,172: Predictive Text; having your keyboard suggest word completions. Some forms of this go back to the 1970's.

Slide-to-unlock

• rubber-banding edge bounce
• slide-to-unlock
• pinch-to-zoom (I am not clear which version)
• 7,479,949: touchscreen heuristics (the "Steve Jobs" patent)

Müller makes an argument that the first one is the most important, because it is revolutionary and not evolutionary. Past practice had been to display a document with "hard" margins. Müller writes:

Stallman article: why software is different

• XML-structured documents (because of i4i v Microsoft)
• RSA encryption (patent difficulties were the "other" reason RSA made little progress in the 1990's
• X-windows XOR cursor (but the workaround worked pretty well)
• natural interfaces for embedded applets [?], because of the eolas patent
  

It is more likely for workarounds to be found, or for a feature to be licensed and added to non-open-source software.

FRAND

Standards organizations often require that patent holders who want their technology incorporated into a standard agree to license the technology on "fair, reasonable and non-discriminatory" terms (this is also sometimes abbreviated RAND).

The theory behind F/RAND licensing is that the patent should be reasonably inexpensive, and no company should get a special deal. Essentially all the core cellphone technology is licensed under F/RAND terms.

Apple v Qualcomm

F/RAND makes patented standards a little more reasonable, but does not resolve all the problems. In 2017 Apple sued Qualcomm, owner of a large number of cellular and mobile-internet patents, over its licensing terms. Qualcomm's interpretation of "fair and reasonable" is that it charges a percentage of the phone's price, around 5%. For a $400 phone, that's $20. But for a high-end $1000 iPhone, it's $50.

Qualcomm allows chip makers to manufacture chips based on Qualcomm's technology for free, more or less. But the company that buys the chips and builds a consumer product has to pay the 5% licensing "tax".

Apple's issue is that most of the costs of an iPhone are not related to the communications technology. Apple has a large number of innovations, and feels that Qualcomm's licensing fee should be a flat rate. Qualcomm is profiting from every non-telecom feature Apple adds to the iPhone.

Apple has a point. Apple's case is bolstered by a Supreme Court decision disallowing royalties if a part is sold outright; the patent-licensing costs must be entirely included in the selling price of the part.

See www.bloomberg.com/news/features/2017-10-04/apple-and-qualcomm-s-billion-dollar-war-over-an-18-part.

For another tale of F/RAND woe, see alastairs-place.net/blog/2018/02/21/aura. Alastair Houghton developed in 2014 a way of connecting speakers to Apple laptops so as to get digital surround sound. There was one catch: the software made use of the Dolby AC-3 codec, which was patented.

Dolby licensed the technology under F/RAND terms, though, and initially Houghton thought he could work out a deal. But the set patent terms assumed a mass-market level of sales, and were much too high for Houghton's niche product.

Dolby considered Houghton's request for special licensing terms, but in the end decided they could not do that because that would violate the non-discriminatory part of F/RAND. Not everyone would get the same deal! The pricing structure built into the F/RAND terms made sense only for hardware devices, not for software.

The patent for AC-3 finally expired, and Houghton was able to release his package in 2018, four years later.

In 2008, the FTC weighed in to enforce the original F/RAND terms for licensing Ethernet speed auto-negotiation from N-Data, which had purchased the patents and tried to raise the licensing terms. See http://arstechnica.com/news.ars/post/20080123-ftc-defends-ethernet-forces-patent-troll-back-under-bridge.html

Paul Graham

The contrary position here is that physical systems are different. If you are building a complex machine with gears, you have to worry about all sorts of things: the strength of the gears, the precise shape of the gear teeth, whether the gears are meeting at an angle (as in bevel gears), whether there are pinion gears, the force between the gears, lubrication, temperature, and bearings for the gear shafts. None of that matters for digital systems. Gears, ultimately, are used to transfer power and to adjust "impedance"; those issues don't even exist for digital systems.

Suppose one is designing a mechanical valve. There are again all sorts of mechanical details to be addressed. Now consider a network router as a kind of "packet valve". To open the valve, this is all you need:

    ipforward = True

To close it:

    ipforward = False

(The "ipforward" name is used for this purpose in Linux; it is in /proc/sys/net/ipv4.)

The bottom line is that, yes, there are very advanced digital analogues of physical machines that are not trivial, but the most common problem with implementing software control systems is simply the development time. There is no "trial and error" to speak of.

Here are a few more Graham points, based largely on his experience as a venture capitalist. Patents, he feels, don't matter much to software startups, unlike physical-machine startups.

• Third paragraph (above) on being against software patents meaning you're against patents generally
• Amazon one-click patent
• Startups do not in fact get sued. They don't attract any attention until they're big enough to be acquired or to cross-license.
• Patents do play a role with being acquired; the suitor has to feel that it's cheaper to buy you than to build on their own.
  
• "So, are you guys hiring?" and the Viaweb project
  
• patents: for an "armed truce" (cross-licensing) with other big guys, or as part of being acquired
• patents play a small role the software business.
• The Reveal startup in 2002. They made X-ray machines, not software.
  
• Design counts for more than invention, because design is what delivers the product.
• Why Microsoft won't sue linux out of business (MS probably won't, but Graham's reasoning here is perhaps wishful thinking).
  

1. Software is complicated; the real issue isn't the software but developing -- and designing -- it. However, this argument also works the other way; if you have an idea, then you are better off pursuing patent enforcement than development, because development is hard. But also note Graham's point that if a big company tries to copy a little company's patents, there will be a "thousand little things the big company will get wrong".
   
2. Startups seldom compete head-to-head with big companies; they "change the paradigm". You don't go into the word-processing business; you invent Writely (now part of Google Apps?). And, "big companies are extremely good at denial". They will go to great lengths to pretend that you don't exist, to "keep you in their blind spot". Suing a startup would mean you realized they were dangerous. He cites IBM as an example; it would have been demeaning for them to sue microcomputer developers. Also, for Microsoft to sue web-app developers (or smartphone developers) would be to admit that Windows is fading.
3. Hacker opinion is against big patent lawsuits. If you're a big high-tech company, you'll lose a lot of your best people if you're seen "doing evil". This might be true for Google; it's less clear at Microsoft (though the employees there do care about principles). It's probably not true at Eolas.
   

Note that patents are for the use of an idea in a specific context:

• prime factorization for the purpose of encryption
  
• xor for the purpose of redrawing the mouse
  
• digital scanning for the purpose of storing bank records (see below)
  
• RF links for the purpose of email [NTP v RIM; it's not clear this is the entire issue]

Patent problems

submarine patents: you don't hear about them until too late!

prior art: hard to find, hard to document, trivial ideas were never written down! This problem, at least, will go away with the passage of time.

non-obviousness: difficult to contest.

Many ideas go into one program! Technology evolves extremely rapidly.

Violates settled expectations (important part of law!) What's patented seems to be more a matter of chance than anything else.

ignorance is no defense: "submarine" patents entire process is secret: you can be making good-faith effort to be noninfringing and get hit with a huge verdict.

willful: you had advance notice of infringing. Your belief that the patent was invalid may NOT be a defense, although it has been accepted as a defense in some cases. Damages automatically triple.

Europe

Stakeholders

Who are the stakeholders in software patents? Are we stakeholders? Compare pharmaceuticals. http://www.pbs.org/cringely/pulpit/2005/pulpit_20050818_000863.html: "Do you feel helped by patent reform?"

If the Eolas patent had succeeded earlier in the game, Firefox might never have been started, and then Internet Explorer would still likely lack tabs, plug-ins, and other core features.

WHY does the situation seem so different from pharmaceuticals?

Barriers to entry

Patent Trolls: companies that have no assets but patent claims, and don't attempt to produce anything but simply collect. Is this bad? Or are such companies just creating a market for small inventors to sell their inventions?

I4i is not such a company; they did produce an XML-based product.

Patent and open source

The open-source community is a strong proponent of eliminating software patents.

Is the open-source community entitled to:

• an applet-aware browser?
• an mp3 player?
• a gif viewer?
• other ideas that are patented?

Is the open-source community entitled to the Asterisk phone switch?

Does MS intend to destroy or hobble or marginalize linux through patents?

It is very well documented that the patent process can have a very NEGATIVE impact on open-source development, and on generally accepted software adoption.

So if the purpose of software patents is to aid technological process, and it doesn't do that, are software patents a good idea?

What happens if the software in question is made available through a site in Europe, which (as of now) doesn't have strong software-patent laws? Should the site warn visitors from the US?

Is this at all like thepiratebay.org?

DataTreasury (datatreasury.com)

They have developed technology for storage of digital images of bank checks. They actually did develop the whole system, although again the inevitability issue arises here. They did not develop any of the actual root technology: scanners, or data security, or digital storage systems with enough capacity to hold images for negligible cost.

From their website:

That said, it is clear that none of DataTreasury's ideas are revolutionary.

From politico.com/news/stories/0308/9202.html: The company had benefited from a controversial 1998 court ruling that broadened the definition of a patent to include business processes.

The proposed (but never passed) patent-reform act of 2007 singled out this patent for congressional revocation.

It appears that DataTreasury is claiming a business-method patent on the use of electronic image scanning for check processing. They are looking for very significant licensing fees. Again, every piece of the technology has been around from well before the patent (scanning, secure storage, ???)

Should a new (but straightforward) application of existing technology be patentable?

The DataTreasury patent has been singled out by Congress for action, but it is not clear what will happen.

Patent reform:

• PTO trying to learn more prior art
• Watchdog groups doing same
• Trivial prior art is harder and harder to patent, simply due to the passage of time and better documentation of trivial techniques
• Still problems with patented protocols (and business methods)

Patent Reform Act of 2007: H.R. 1908 and S. 1145 (this did not pass). This was the first [?] patent-reform act proposed.

Those in bold are the most significant.

This did not pass.  Here are some of the proposed changes in U.S. patent law

• 1.1 Switch from first-to-invent to first-to-file
  
• 1.2 Expand prior user rights, to compensate
• 1.3 Publish patent applications
• 1.3.5 Allow corporate filers (ie inventor's employer)
• 1.4 Allow pre-issuance protests by third parties
• 1.5 Expand use of post-issuance reexamination and opposition proceedings
• 1.6 Eliminate the "best mode" requirement (obscure)
• 1.7 Modify the patent law doctrine of willful infringement. "willful" is a serious problem, because it vastly increases the damages and is applied rather inconsistently.
• 1.8 Modify the patent law doctrine of inequitable conduct
• 1.9 Allow patent applications to be submitted by an assignee
• 1.10 Limit access to injunctions
• Damages: must be in proportion to incremental improvement over prior art
• Bars "tax planning" patents [!] See US Pat 5206803
  
• Bars DataTreasury from bank extortion

Discuss: first-to-file: who benefits? how are small inventors affected? How are prior-art rules affected?

This has again been introduced in 2009; apparently the issues are the damages calculation, post-issuance reexamination proceedings, and defining inequitable conduct. At least the last provision has been removed from the 2009 bill. A good-faith defense for believing a patent was invalid is also included. Also included is a definition of prior art to include anything "available to the public"; publication no longer would have to occur.

[Note that NTP argued that RIM's conduct was held to be inequitable simply because NTP had sent them a letter outlining its patent claims, and RIM had disagreed.]

In 2011, Congress passed the America Invents Act. This included the following features:

• switch from first-to-invent to first-to-file (though the first-to-file inventor must be an original inventor, not someone who got the idea from the real inventor and rushed to patent).
  
• prior art expanded to include any public use, or foreign offers for sale. The "publication" rule is thus relaxed.
• allows pre-patent-issuance filings by third parties, and also post-issuance review
• bars tax-planning patents
• small inventor ("micro-entity") fee reduction
  
• deny patent holders the right to appeal post-grant re-examination reversals to the District Courts.

KSR v Teleflex, Supreme Court, April 30, 2007

This Supreme Court case altered the legal standard for disproving "non-obviousness" in favor of defendants. It is now quite a bit easier to challenge patents on this basis. In particular, KSR v Teleflex makes it much easier to argue that software patents are simply a combination of pre-existing ideas; all the defendant has to come up with are the prior art for the pre-existing inventions and some rationale for why it would have been obvious to combine them. The defendant does not have to prove that it would have been obvious which pre-existing inventions to combine.

Teleflex had a patent on a pedal coupled to an electronic throttle control (basically cruise control). The question was whether that was "obvious".

The proper question to have asked was whether a pedal designer of ordinary skill, facing the wide range of needs created by developments in the field of endeavor, would have seen a benefit to upgrading [a prior art patent] with a [throttle-control] sensor

not thought of it by themselves, and not motivated to implement the change, but simply saw the benefit. Furthermore, the conclusion of obviousness needed only to be supported by ordinary evidence, not written documentation. The old "nonobviousness" standard often in effect required proving that a patent was "prior art". This test was known as the "teaching-suggestion-motivation" test. All three pieces had to be there. Another sentence from the KSR decision:

By comparison, my obvious-in-context approach means that the idea (or combination) is obvious to anyone facing a later  Does that suggest that not clicking the mouse is obvious?

The KSR decision has made it straightforward to establish the obviousness of an invention that consists of two parts if

• There exists prior art for each part
• Combining the parts would have been obvious, because it would have been obvious that the two parts together would have been useful.

Bilski case

Federal Circuit decision released October 30, 2008
Supreme Court decision released June 28, 2010 (decision here)

This was a very significant case. It was decided at the appellate level by an en banc sitting of the Federal Circuit. They proposed a "machine or transformation" test for patentability of abstract processes. The Supreme Court then heard the case, and while they did not uphold the "machine or transformation" test, they ruled that Bilski's invention was not patentable because it was too abstract. There had been widespread speculation that the Supreme Court would use the Bilski case to rein in business-method patents, or at least make the patentability rules a little clearer. They apparently did not do either.

Bilski patent: Claimed method of managing the risk of bad weather in commodities trading.

He submitted a patent application seeking exclusive rights to a method of using hedge contracts to reduce the risk that a commodity's wholesale price might change.

Again, the technique fails under both prior-art and obviousness standards. But those don't apply in the same way to business-method patents.

The patent was rejected by the Patent Board of Appeals. The Board, in rejecting the claim, asked the Federal Circuit court for assistance in determining patentability of non-technological method claims.

The federal circuit court did the following:

The court by its own action grants a hearing en banc. The parties are requested to file supplemental briefs that should address the following questions:

1. (1) Whether claim 1 of the 08/833,892 patent application claims patent-eligible subject matter under 35 U.S.C. §101? (the patent-eligibility rules)
2. (2) What standard should govern in determining whether a process is patent-eligible subject matter under section 101?
3. (3) Whether the claimed subject matter is not patent-eligible because it constitutes an abstract idea or mental process; when does a claim that contains both mental and physical steps create patent-eligible subject matter?
4. (4) Whether a method or process must result in a physical transformation of an article or be tied to a machine to be patent-eligible subject matter under section 101?
5. (5) Whether it is appropriate to reconsider State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998), and AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352 (Fed. Cir. 1999), in this case and, if so, whether those cases should be overruled in any respect?

The appellate court did affirm the need for a physical transformation. Their central doctrine is "Machine or Transformation". This would have been a problem for business patents, and perhaps software patents.

Note that their reasoning was taken straight from the few SCOTUS cases on record.

The following question arises whenever a patent is applied for on an abstract process: 

Benson: NO
Diehr: YES (one of the prior SCOTUS cases)
Bilski: NO

This part of the Federal Circuit's reasoning may still stand.

Part of the Benson ruling:

Transformation and reduction of an article 'to a different state or thing' is THE clue to the patentability of a process claim that does not include particular machines.

The Diehr patent was for making rubber, using a computer to control the process. It wins the "different state or thing" standard hands down.

The federal circuit dismissed the "useful, concrete, or tangible result" test: that is NOT enough to establish patentability.

They also reject the "technological arts" test (see above) that was once-upon-a-time part of the method-patent rules. They agree that it is too hard to tell whether something involves the technological arts; however, unlike the USPTO, they end up ruling the OTHER WAY; that is, to reject MORE broadly than the TA test.

machine-or-transformation test: emphasize the OR.

We will, however, consider some of our past cases to gain insight into the transformation part of the test. A claimed process is patent-eligible if it transforms an article into a different state or thing. This transformation must be central to the purpose of the claimed process. But the main aspect of the transformation test that requires clarification here is what sorts of things constitute "articles" such that their transformation is sufficient to impart patent-eligibility under §101.

Tanning leather curing rubber (Diehr case)

The raw materials of many information-age processes, however, are electronic signals and electronically-manipulated data. And some so-called business methods, such as that claimed in the present case, involve the manipulation of even more abstract constructs such as legal obligations, organizational relationships, and business risks. Which, if any, of these processes qualify as a transformation or reduction of an article into a different state or thing constituting patent-eligible subject matter?

Note that while the Bilski decision does not claim to reverse State Street (the case that led to business-method patents), most commentators seem to feel that it has that effect. It is less clear that Bilski would have had a significant effect on software patents.

Applying the Machine-or-Tranformation test to famous cases

RSA? material transformation in "real" terms The transformation is to a file. While it is electronic, it is decidedly material.

MP3? material transformation in "real" terms? An mp3 file isn't a physical thing, but it does have a certain "thingness". People think of them as things, and buy them as things. An mp3 file is material.

NTP? maybe no? The argument can be made that there is no "material thing" on the table here. Email messages are NOT it; the patent only addresses the delivery of email.

Supreme Court

Mayo Labs v Prometheus Labs, Supreme Court, March 20, 2012

Myriad Genetics

Abstract Patents

CLS Banc International v Alice Corp

    account1 = 200;
    account3 = 300;
    read(exchange_value);
    if (account1 < exchange) {print("insufficient funds"); exit(1);}
    account1 -= exchange; 
    account3 += exchange;
    print("Institution 1 should debit account 2 by " + exchange_value);

• So general as to have no specific implementation, as in Ultramercial's patent
• Representing a method for how people are to act
• Not tied to any specific physical invention (some people argue all software is in this category)

Trolls Again

The Alice decision has created problems for patent trolls; a large number of weak patents have been thrown out based on this ruling.

Some Patent-Troll Examples

This is a touchy subject; I do not believe all patent-holding companies are "trolls". RSA, for example. Something all the trolls below have in common is that the patent claim is very weak.

• 7418504: secure DNS (not distributed!)
• 7921211: more on secure DNS
• 6502135: This is the VPN patent. But VPNs were prior art; PPTP was invented in 1996, two years before this patent filing.
• 7490151: more on secure DNS (read the claims, not the abstract)

Lawsuit Venue