Down To Business: Tech Patents Run Amok

Opposition to software patents, especially the specious ones, makes for strange bedfellows. Big business aligning with digital freedom fighters. The open source faithful breaking bread with the commercial software elite. All in the name of defeating so-called patent trolls whose lawsuits extract billions of dollars each year from U.S. industry--and thus every one of us.

There's a reason so many diverse interests are in agreement. This isn't just a "software industry" problem. Every company that develops software or uses a Web site that implements software processes is a potential target of the trolls.

Case in point is a suit filed last week by University of California spin-off Eolas Technologies related to its patent for technology, developed 15 years ago, that lets Web browsers "act as platforms for fully interactive embedded applications." The suit reaches beyond software industry giants such as Adobe, Apple, and Google (Eolas reached a settlement with Microsoft years ago) to the likes of Blockbuster, Frito-Lay, JPMorgan Chase, and JCPenney. As my colleague Paul McDougall reported, an Eolas victory "could give the company a claim on virtually every Web site that hosts interactive applications." I'm in no position to judge the validity of the Eolas suit, but it's worth noting that it was filed in U.S. District Court in Eastern Texas, known for its favorable patent rulings.

Of course, not every tech patent is for trivial work and not every suit is frivolous, but reasonable guidelines must prevail on what can be patented and how much patent holders can collect in damages. The alternative is a software development landscape much like the healthcare one, where costs are spiraling out of control and where providers are afraid to do their jobs in some measure because litigants are calling the shots.

The good news is that after many years in which just about any novel idea was considered patent-worthy, the momentum is turning in the other direction. A federal appeals court decision last year holds that for a process--and by extension software--to be patentable, it must be "tied to a particular machine or apparatus" or must "transform a particular article into a different state or thing." That is, there must be some there there, not just the germ of a conceptual notion.

That so-called Bilski case--named for Bernard Bilski, who with Rand Warsaw filed for a patent in 1997 for a method to hedge risks in commodities trading--is now headed to the Supreme Court. In an amicus brief filed with the high court in September, Linux distributor Red Hat makes its case for why the lower court ruling should stand: "Our patent system is supposed to foster innovation, but for open source and software in general, it does the opposite. Software patents form a minefield that slows and discourages software innovation. The Bilski case presents a great opportunity for the Supreme Court to rectify this problem."

But what of small inventors whose software patents are the product of considerable sweat and ingenuity? Aren't they entitled to compensation for their work, even by way of a professional patent troll? Let's go back to the main purpose of patents. The system wasn't conceived to enrich inventors. It was set up to encourage innovation, and stimulate the job creation and broader economic and societal value derived from innovation. Letting companies assemble a portfolio of other people's patents for the express purpose of suing alleged violators hardly serves that interest.

Rob Preston,
VP and Editor in Chief
[email protected]

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