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5/8/2007
02:37 PM
Chris Murphy
Chris Murphy
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Patent Impact: How Innovation Is Different In IT

In researching the Supreme Court's major patent ruling last week, some of the most interesting interviews and comments centered around how innovation is different in IT than in other industries. One of the defining differences-reinforced by Amazon's surprising settlement with IBM announced today-is the degree to which IT technologies and innovations build on each other.

In researching the Supreme Court's major patent ruling last week, some of the most interesting interviews and comments centered around how innovation is different in IT than in other industries. One of the defining differences-reinforced by Amazon's surprising settlement with IBM announced today-is the degree to which IT technologies and innovations build on each other.Given how the Justices ruled in the KSR v. Teleflex case, courts may be paying more attention to these differences in deciding IT-related patent cases. The ruling calls for less rigid tests for obviousness, which could lead to considering factors such as the market demand and the research approach of the typical person in an industry. That makes it all the more relevant to consider how invention and innovation happens in one industry versus another, and the role patents play in different industries. Here are a number of views.

On Scotusblog, Brian Kahin, a senior fellow at the Computer & Communications Industry Association, notes that anything that could change the value of patents could have a particularly strong impact on IT:

"Patents can protect assets but they also can impair assets. In fact, patents can impair the value of other patents, so it risky to concrete the asset value of patents without considering the possibility of blocking patents, undiscovered prior art, or other deficiencies. This is especially important in IT, given the cumulative and interdependent nature of the technology, and in the opaque patent environment that we find in IT today, it is very difficult and costly to ascertain and measure what the impairment might be."

Mr. Kahin goes on to note another problem in IT-namely, that tech innovators tend to ignore or avoid patents as a source of information (in part because it might get them accused of stealing an idea, thus the "willful infringement" Kahin references below):

"In the long run, of course, it means fewer but more valuable and more meaningful patents. Hopefully, it will improve the value of the patent database, which may convince IT professionals that it cost-effective to read patents (at least if the willful infringement problem gets fixed). And if IT patents were sufficiently high quality and actually read as a source of useful knowledge about the state of the art, that could go a long toward fixing the disconnect between IT and pharma/biotech."

On the Cato Institute site , Timothy Lee, while arguing for legislation blocking the patenting of software, also notes that the cumulative nature of IT development means dealing with patents is different than many industries:

"Software patents are particularly ripe for abuse because software is assembled from modular components. If the patent system allows those components to be patented, it becomes almost impossible to develop a software product without infringing numerous patents. Moreover, because of the complexity of software, it is often prohibitively expensive to even find all the patents a given software product might be infringing. So even a software firm that wanted to find and license all of the patents relevant to its products would likely be unable to do so."

On IPBiz, Lawrence Ebert offers this vivid distinction between the patent environment in biotech-where there are fewer patents and less accumulation of patents for defensive measures-and software and related IT:

"… outside of pharma/biotech, such as in tech, where patents are acquired in vast numbers for defensive portfolios, their "value" as individual valid assets that could actually be asserted all the way through a lawsuit is pretty questionable to begin with... and their value for sheer noise/confusion/deterrent effect is unimpaired. These patent portfolios are like the yellow and black pattern on the back of a wasp--harmless in itself, but a warning that the bearer *can sting."

And in my own conversation with David Kappos, IBM's lead IP attorney, he noted that the IT industry is different because it doesn't have a well-defined language that provides the basis for discussing new innovations. Other sciences have the language of chemical composition, for example: "You can understand exactly on an atomic level what's being described." Compare that, he says, with the logical constructs of software design-programming layers, objects, macros, etc.-and there's no single, base vocabulary in the IT industry, which makes it much harder for a patent examiner to research a claim and compare prior art.

The Supreme Court is working to update the patent system to changes in how innovation happens-where it's more often crossing lines of scientific disciplines, companies, or national borders. IT is one of the lead examples of that, and therefore is likely to be among those most affected by any changes to the system. "The world is really moving fast toward collaborative innovation in ways people haven't before," Kappos says. "The Internet is the prime motivator for that. The patent system has a long way to go to catch up to that."

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