Software Patents are a tax on innovation

It’s no secret that the patenting system, for software at least, is a mess.

I have talked to a number of entrepreneurs, CEOs, CTOs, and even Intellectual Property lawyers and have yet to  come across any credible examples of where software patents have had a positive effect. Here are the reasons for taking out software patents that I have so far come across:

Marketing: Having a patent granted gives you something to talk about in your promotional material.

Sales FUD: Having a patent application in (not necessarily even granted) lets you talk bigger in front of prospects.

Because the VCs told me to: Investors may feel an exit will be more valuable if there are some patents amongst the firm’s assets.

For defence: If one of your competitors tries to screw up your IPO by threatening a patent infringement suit then you’ll probably find some way that they are infringing one of your patents and can beat them off that way.

IBM makes a lot of $$$$ by licensing their IP: By extension, so could you. If you wanted to operate that kinds of businesses.

Nowhere (or just incredibly rarely) does “to protect and reward the inventor” figure. Much innovative software is developed for free under “open source” (*).

Now look at the commentary on the Ariba/Emptoris pissing contest patent wars and tell me that someone other than lawyers benefits from this broken patent system.

P.S. This tirade is just directed at patents. I suspect the solution to the IP mess might be addressable through copyright.

P.P.S. At TradingPartners we have taken the view not to apply for any patents. I’d prefer to spend the $$$ on building better e-auction software. If someone wants to rip us off then I’ll take it as a compliment, and it will just spur us to innovate harder.

(*) Setting aside for a moment the thorny issue of whether some open source code infringes on others’ intellectual property.


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2 responses to “Software Patents are a tax on innovation”

  1. Read the article on Marty Goetz: Holder of first software patent in today’s Computerworld (Dec 3, 2007) at

    “When asked what he was proudest of, this father of the software patent and pioneer fighter against monopolies had no hesitation. “I helped ADR grow into a $200 million company. I was instrumental in helping the software industry become the third-largest manufacturing industry in the world,” Goetz says. “And most importantly, I’ve enjoyed 34 years of happily married life.” “

  2. Very interesting article. Thanks, Erwin, and a very choice quote.

    I’m not sure from your comment whether you agree or disagree with my posting. The Computer World article, towards the end, does seem to take issue with how out of hand things have become over the past decade:

    In addition, Goetz has watched with ire the new wave of “software business method patents.” He says he never meant to open the door to that one. “Amazon’s ‘one-click’? Come on, we’ve been doing that forever,” he says. “That should have been obvious to everyone from Day One.”

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