Inglourious Software Patents

Most articles arguing for the abolishment of software patents focus on how so many software patents don't meet the "non-obvious and non-trivial" guidelines for patents. The problem with this approach is that the same argument could be used to advocate for reform in how software patents are evaluated rather than the abolishment of software patents altogether.

Software patents should be abolished though, and I'm going to show this with an economic analysis. We'll see that even non-obvious and non-trivial software patents should never be granted as they can only cause economic loss.

Why do patents exist in the first place?

The patent system exists to provide an incentive for innovation where that incentive would not have existed otherwise.

Imagine you're an individual living in the 19th century. Let's say the patent system does not exist and you have an idea to make a radically better kind of sewing machine. If you invested the time to develop your idea into a working invention, the existing sewing machine companies would just steal your design and crush you in the marketplace. They have massive distribution and production advantages that you wouldn't be able to compete with. You wouldn't be able to monetize the initial investment you made into developing that invention. Therefore, you wouldn't have invented the radically better sewing machine in the first place.

From this perspective, patents are actually a rather clever hack on society to encourage innovation. By excluding others from using your invention for a fixed amount of time, you get a temporary monopoly on your invention. This lets you monetize your invention which makes your initial investment worthwhile. This in turn benefits society as a whole, as now society has inventions that it wouldn't have had otherwise.

The patent system does not exist to protect intellectual property as a goal unto itself. If the incentive to create the innovation was there without the patent system, then the patent system is serving no purpose.

After all, there is a cost to the patent system. There's no hard and fast way to determine whether an invention required the promise of a patent for its creation, so inevitably some patents will be awarded to inventions that would have been created anyway. The patent system creates monopolies out of these inventions that would have existed in a competitive marketplace otherwise. These are "accidental monopolies" in the sense that they are unintended consequences of a patent system trying to encourage innovation that wouldn't have occurred without the patent system.

Accidental monopolies are the cost of the patent system. For the patent system to be worthwhile, the amount of benefit from inventions that wouldn't have existed otherwise should exceed the cost of accidental monopolies. The purpose of the "non-obvious and non-trivial" guidelines is to try to minimize the number of patents awarded that create accidental monopolies.

Innovation in software

Patents are not necessary for innovation to occur in software. You'll have a hard time finding many examples of software innovations that wouldn't have been made without the promise of a patent. This means that every software patent creates an accidental monopoly.

A good place to look at the importance of patents to software innovation is startups. Startups must innovate if they want to become sustainable businesses. The question is -- do patents encourage innovation in startups by protecting them from having their ideas stolen?

Quite the opposite. Software startups are thriving nowadays in spite of software patents rather than because of them. Instead of helping startups get off the ground, patents are a cost. Startups must build "defensive patent portfolios" and worry about getting sued by patent trolls or businesses trying to entrench their position. Instead of patents being a protective shield for a startup, they're instead a weapon that causes economic waste.

It's hard for a big company to just steal a software idea. Being big just isn't the advantage in the software industry as it was in our sewing machine example. They don't have the same production and distribution advantages since the internet makes it cost practically nothing to distribute software. Furthermore, it's not that easy to just copy a software product. Look at what happened with Google Buzz.

At my company BackType, we're doing a lot of innovative things with Big Data systems. Rather than try to patent our ideas and achieve an exclusive monopoly on what we invent, we're doing the opposite. We're sharing these inventions with the world by open-sourcing them. We do this because it helps so much with recruiting: it establishes us as a serious technology company, and programmers want to work at companies where they can contribute to open source.

Vivek Wadwha has a good post showing the stats on how counter-productive patents are in the software industry.

Since massive amounts of software innovation occurs in spite of the patent system, software patents are irrational.

The openness argument

Another purported reason for the existence of patents is that it encourages inventions to be shared rather than be kept secret. This ensures the invention enters the public domain and prevents the invention from ever being lost.

This argument doesn't hold with software. Just look at the facts:

• The academic community publishes their innovations to the public.
• There is a massive and rapidly growing amount of innovative open source software.
• Companies have strong incentives to participate in open source.

When I'm looking for innovative software approaches, I search the Internet or I look at research papers. I never look at software patents, and I don't know anyone in the software industry who would.

Conclusion

The fashion industry is an excellent example of an industry that has no patents and thrives.

Even non-obvious and non-trivial software ideas should not be patentable, because the promise of a patent is not necessary for innovation in software. The economics are clear: software patents should be abolished.

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