A digression on Software Patents

I wrote some software to make collaboration with Excel easier and have been writing up a few posts here about how it works. I’ve been struggling recently with how much of the details to describe on this public forum. Essentially I have this little niggling voice in the back of my head telling me: “Protect your IP, file a patent, protect your IP, file a patent”. Any sensible person would surely file a patent before going public with anything.

Yet I loathe software patents. And perhaps I’m not all that sensible.

Patents take a lot of time and distraction and cost lots of $$. The patent process moves at such a glacial pace that they are all but meaningless when you’re trying to get an idea off the ground. Interestingly it wasn’t always as bad as this. From “The Victorian Internet” by Tom Standage;

[Alexander Graham] Bell worked for several months to build a working prototype [of a “harmonic telegraph”, i.e. telephone]. On 14 February 1876, when it became clear that [a competitor] was pursuing the same goal, Bell filed for a patent, even though he had yet successfully to transmit speech. He was granted the patent on 3 March, and made the vital breakthrough a week later, when he succeeded in transmitting intelligible speech for the first time.

Now if I read that right it took less than a month to get a patent granted. Whereas now it takes years during which time who knows what could happen to your business. How many businesses do we take for granted today that barely existed five years ago?

If patents could be decided and genuinely only granted in non-obvious cases in a few weeks then I might see some value around the certainty they could provide. But they take forever and they seem to be as likely to be about something trivially obvious as they are about something genuinely ground-breaking.

And anyway. Even owning a patent doesn’t mean much unless you have the $$ to take someone to court over infringement.

So when it comes to the real world, at least where software is concerned, patents are a tax on innovation. They divert resources away from where they are best used. They are a brake on innovation.
Arguments I’ve heard in favour of patents include:

1. The revenue stream argument: If you own a patent you can license the IP.
2. The risk mitigation argument: If you are lucky enough to be successful and are about to IPO or similar then some fucker (technical term) somewhere will try to scupper you by claiming you are infringing a patent somewhere along the line. So better to have some patents that say you are allowed to do what you are doing, or failing that let you counter-sue the fucker by claiming that he is infringing on your patents.
3. The ego-trip argument: The idea that you must be cleverer than the other guys if you have more patents than them. Never mind that (as I am reliably informed) the number of patents you own is irrelevant – what is important is the number of claims across the patents. You could have one patent application with 1,000 claims in or you could file 10 patents each with 100 claims and you would be in an equivalent IP position. So why people insist on counting patents is surprising. Still they do.

Those are all valid arguments to a degree. If you want to build a business around selling some IP then you need to license it. If someone is going to value you based on a not very meaningful metric then, whatever, don’t hate the player, hate the game and all that. Just a bit of a depressing game.

So to cut a long story short I have now excised from my psyche any thinking about software patents. Not interested. I do hate the game and so will do my best not to play in it.

BTW – in case any lawyery types are reading – I don’t have a cavalier attitude to IP protection in general. I just think that in the world of software, copyright is the correct approach, not patents.

Lots of love

Alan

 

On The Ariba / Emptoris Patent Spat

It’s a sad indictement of the state of vision and innovation in the industry when the two top players in the e-sourcing space start competing on the basis of who has the best lawyers rather than who has the best product offering.

Spendmatters covers the judgement in Ariba’s favour against Emptoris as the latest step in the Ariba/Emptoris pissing contest patent spat here , here , and here (and the commentary, as usual, is lively and entertaining).

I am not a lawyer but have had the good fortune to have to read through some patents in my time. So I figured I’d read the patents in question: 6,499,018 and 6,216,114. Just for fun. They are written in impenetrable patentese so here is what I can figure out.

The two patents claim protection for the following features. You’ll forgive me if I appear flippant, but it really is a surprise to me that you can patent such generic, obvious and trivial enhancements to the basic auction process:

1. Dynamic Lot Closing Extension: Suppose you have  5 lots in your auction, each with their own closing time such that Lot 2 closes 10 minutes after Lot 1 (etc). If Lot 1 goes into overtime then Lot 2’s closing time is dynamically extended so that it always stays 10 minutes behind.
2. Flexible Overtime: This means that you can extend an auction not just on “winning bid” or “any bid” but you can have a rule that says “Lot 1 extends by 3 minutes if a bid that is 1st – 4th place is received in the last 2 mintues, and Lot 2 extends by 5 minutes if a bid is received that is within 2% of the current leading bid.”
3. Flexible  Bidder-Determined Line Item Decision Rules: As a bidder I can set line item rules so that for example I can decrease my total bid for Lot 1 by $50,000 and have that decrease apportioned, flexibly, across the line items that make up that lot based on the rules I have specified (e.g. Item #12345 must never go below $1.50 each).
4. Pending Status: The idea here is that when an auction completes it goes into “pending” status during which the buyer and suppliers can discuss whether the auction really is over or not. If they decide that the auction needs to continue they can move the auction back to a live status.
5. Auction Pause: Allowing the buyer to pause an auction (while the clock continues ticking) in a lot, several lots or the auction as a whole.
6. Bidder Specific Bid Limitations: In a reverse auction the idea is that you can set different ceilings above which you won’t receive a valid bid from a supplier. Apparently this is different to simply starting an auction with any “pre-bids” offered by suppliers.

Freemarkets (who readers will know I hold in very high regard for starting off the whole reverse auction industry) applied for both patents on the same day in May 1999. Even writing back in 1999, though, the points the patents cover are pretty trivial to say the least.

According to Ariba’s press release the judgement centered around “the use of individual bid ceilings and certain auction overtime rules“. As Jason describes in his coverage of the Emptoris patch this covers:

1. A feature that prevents a supplier submitting a bid higher than a pre-set amount
2. A feature that keeps staggered lots open when a prior lot gets extended

Some thoughts on this:

1. These two points are very trivial aspects of e-auctions. They are far from “key patents for electronic auctions” mentioned in Ariba’s press release on the subject.
2. But at least the really obvious parts of the patents (e.g. pausing an auction) were either considered invalid or not infringed.
3. This is another reason why such “software business process patents” are considered controversial by many in the industry.
4. Interestingly this news from early November seems to cast some level of scepticism over whether process patents, like the ones at the centre of this case, are even allowed in the USA. It will be interesting to see how this develops.

Lest anyone misunderstand me:

1. I’m not an Emptoris apologist. Their gorilla marketing when Ariba swallowed Procuri was no different to Ariba’s swipe this time round. And Emptoris have (at least attempted to) apply for equally embarrassing patents in the past, if memory serves.
2. I am not anti-intellectual property. But I think that software in general is more suited to copyright than patents. Far from encouraging innovation, as I’ve written before, business process software patents are a tax on innovation and should be stopped.

US vs Europe on what software is patentable

I once heard a business manager from a large, global organisation based in the UK speak about his dilemma about how to protect his IP globally. This is a summary of what he explained.

In the USA you can patent so-called “software business processes”. Perhaps the most notorious of these is Amazon’s 1-click ordering saga. In Europe the rules governing what software you can patent are much tighter.

So here’s the dilemma:

If you have a clever software business process then do you patent it in the USA? If you do make a patent application in the USA then all your competitors can now read that patent application and learn your special process. Your European competitors can even go ahead and copy that process with impunity, thereby lessening your competitive advantage in Europe.

Now, suppose you decide to go down the route of protecting your special business process by keeping it secret. You are now risking that one of your competitors may come up with the same process independently and that they might patent it in the USA. This would mean that the special process you were using is now subject to a patent owned by one of your competitors. You can no longer use that software business process in the USA, thereby lessening your competitive advantage in the USA.

What’s the answer? There isn’t a good one, unfortunately.

But this issue does highlight an important issue in the use of software patents globally.

My personal view is to hope for a brighter future where IP protection for software is covered more by Copyright rather than Patent protection. For three reasons:

• A piece of software is, in my view, more akin to a book than to hovercraft landing gear
• Copyright is automatic and so nowhere near as complex or costly to implement than a patent application, meaning businesses can focus on running their businesses rather than on retaining lawyers
• I’m not aware of any example where a software business process patent genuinely helped innovation and progress

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.

http://www.combinenotes.com/site/comments/ariba_sues_for_patent_infringement/
http://www.spendmatters.com/index.cfm/2007/11/26/Patent-Suites-Continue-Should-Customers-be-Concerned

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.