Why We Need To Abolish Software Patents

During my tech days, I co-authored four computer software patents. Each cost my startup about $15,Office 2007 Professional Plus Product Key,000—which seemed like a lot of money in individuals days. I did not genuinely anticipate these to provide me any advantage; in the end if my competition had 50 percent a brain,Last Call To Speak At SMX Advanced London,Office Professional 2010 X86, they would just understand all they might from my patent filing and do points much better. But I essential to boost financing, and VCs wouldn’t give me the time of day unless of course I could tell a convincing story about how we, on your own, owned the intellectual property for our solution sauce.   We acquired the funding, and the plaques in the patents looked fantastic in our reception area, so the expense was well worth it. But there was undoubtedly no competitive benefit.
Patents create a whole lot of perception in many industries; they may be necessary to guard the patterns of industrial equipment, pharmaceutical formulations, biotechnology merchandise and methods, biomedical gadgets, client goods (toothpaste, shampoo, contact lenses, and so on.), superior resources & composites,Microsoft Office Standard 2007 Key, and of course, widgets (lighting fixtures & elements, batteries, toys, tools, and many others.). But in computer software these are just nuclear weapons in an arms race. They don’t foster innovation, they inhibit it. That’s because issues change rapidly in this industry. Speed and technological obsolescence are the only protections that matter. Fledgling startups have to worry more about some big player or patent troll pulling out a big gun and bankrupting them with a frivolous lawsuit than they do about someone stealing their ideas.
New research by Berkeley professors Stuart J.H. Graham, Robert P. Merges, Pam Samuelson, and Ted Sichelman highlights the extent of this problem. They surveyed 1332 early-stage technology companies founded since 1998, of which 700 were in the software/internet space. Here is what they found:
In application, only 24% of startups even bothered to file a patent. In medical gadgets, this proportion was 76%; and in biotech, 75%.  Far more venture-backed companies file patents:  in software program, 67%; in medical devices, 94%; and in biotech, 97%.
Venture-backed companies also file more patents than others that file patents. They file, on average, 5.9 patents as against the all-company average of 1.7. In medical gadgets and biotech, this is 25.2 vs. 15.0 and 34.6 vs. 9.7, respectively.
Computer software executives consider patents to be the least important factor for competitiveness. They perceive gaining first-mover benefit to be the most important factor, followed by acquisition of complementary assets; copyrights; trademarks; secrecy; and making application difficult to reverse-engineer.
Companies file patents to prevent rivals from copying their goods,Office 2010 Standard Product Key, to improve their chances of securing an investment or liquidity event (IPO, acquisition, and so on.), improving the company’s reputation, and to gain bargaining power against others. Surprisingly, companies that held patents—even venture backed—didn’t believe that patents made them more likely to innovate. Even more surprising, a quarter of companies that licensed technology from others said they did this to avoid lawsuits—not to gain technology or knowledge. In other words, the patent constituted a weapon or a trophy rather than a way to obtain revenues from others’ commercial adoption of their technology.
Pam Samuelson, one from the co-authors of the report, says that her conclusion from the research is that the world may be better off without computer software patents; that the biggest beneficiaries of software patents are patent lawyers and patent trolls, not entrepreneurs.
Meanwhile, the U.S. patent system is clogged and dysfunctional. John Schmid, from the Milwaukee Journal Sentinel, analyzed U.S. Patent and Trademark Office data and found that as of 2009, there were more than 1.2 million patents awaiting approval—nearly triple the number a decade earlier.  In 2009, the patent agency took an average 3.5 years to deal with a patent request—more than twice the 18-month target. What is most alarming is that the patent office automatically publishes applications on line after the 18 months—outlining every innovation in detail regardless of whether an examiner has begun considering the application. Opponents anywhere in the world can steal ideas. This effectively undermines the entire purpose of the patent system: the patent office is charging applicants serious money for giving it the privilege of giving away their commercial secrets.
To make matters worse,Microsoft Office 2010 Sale, the patent office is rejecting applications at an unprecedented pace—with fewer than 50% being approved, compared to 70% a decade ago. One estimate is that this costs entrepreneurs at least $6.4 billion each and every year in “forgone innovation”: legitimate technologies that cannot get licensed and start-ups that cannot get funded. So the agency charged with protecting U.S. intellectual property and aiding innovation is often doing the exact opposite.
Brad Feld, managing director at Foundry Group, says that we should simply abolish software program patents.  He believes that the system has spun completely out of control, with the vast majority of filings not passing the fundamental tests of a patent (that it be non-obvious, novel, and unique innovation).  Copyright and trade secrets have historically been the primary protection mechanisms for software program intellectual residence, and they are still the best solutions.  Feld notes that technology companies are now forced to divert huge resources to defend themselves from patent trolls rather than advance their innovations.
The founders of the United States considered intellectual home worthy of a special place in the Constitution—“To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” They had the concept right, but they surely never conceived of Amazon.com patenting clicks in an online shopping cart and approaches for having an online discussion, or Microsoft patenting approaches for activating double click applications with a single click. It’s time to do as Brad Feld suggests: just abolish these abominations.
Editor’s note: Guest writer Vivek Wadhwa is an entrepreneur turned academic. He is a Visiting Scholar at the School of Information at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University. You can follow him on Twitter at @vwadhwa and find his research at www.wadhwa.com.