Software patent reform needed to stop legal bullying

The recent Microsoft/TomTom patent infringement suit has sparked a renewed call for software patent reform.  

The subject has been under discussion by the last three sessions of Congress. On March 3, another attempt was made in the form of a bill aptly called The Patent Reform Act of 2009. The software industry's watchdog organization, the Business Software Alliance, has implored Congress to pass it.

"BSA members continue to be the targets of patent-related lawsuits and demand letters from entities that make no products and have no intention of engaging in commerce," the BSA said in a written statement. "The bill reported by the Committee addresses three key areas: making our laws more similar to those of other major patent-granting jurisdictions; improving patent quality by enabling the US Patent and Trademark Office (PTO) and inventors to challenge weak patents; and addressing some of the principal abuses increasingly associated with enforcement of patents."  

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The recent Microsoft/TomTom patent infringement suit has sparked a renewed call for software patent reform.  

The subject has been under discussion by the last three sessions of Congress. On March 3, another attempt was made in the form of a bill aptly called The Patent Reform Act of 2009. The software industry's watchdog organization, the Business Software Alliance, has implored Congress to pass it.

"BSA members continue to be the targets of patent-related lawsuits and demand letters from entities that make no products and have no intention of engaging in commerce," the BSA said in a written statement. "The bill reported by the Committee addresses three key areas: making our laws more similar to those of other major patent-granting jurisdictions; improving patent quality by enabling the US Patent and Trademark Office (PTO) and inventors to challenge weak patents; and addressing some of the principal abuses increasingly associated with enforcement of patents."  

When it comes to abuse in the courts, the BSA is right. The typical patent lawsuit costs $5 million, according to Natalie Hanlon-Leh, a patent attorney with Faegre & Benson in Boulder. The initial electronic discovery portion of a software patent lawsuit can run $1.5 million alone.

For all that, patents are weak protection. "Software patents are four times more likely to be litigated than patents covering an industry for which patents work relatively well, chemical processes," says Michael Meurer, professor of law at Boston University.

But it's not just a problem for the software vendors. IT professionals have felt the FUD created by patent squabbles between IT vendors. Microsoft caused quite a stir two years ago with its patent-based threats against users of Linux (albeit no lawsuits ever materialized).

Research in Motion was nearly paralyzed by its patent fight with NTP -- a company unkindly characterized as a "patent troll."  Patent trolls acquire patents to earn license fees, not to make products. Vonage was also nearly paralyzed in its patent fight with Verizon.  

Beyond these high-profile cases, venture capitalists say that software patents have created legalized bullying. Bigger companies that own patents can use them to sue, thereby shutting the doors of promising young upstarts that may not have violated anything, but do not have the money to defend themselves. Some patent attorneys advise their clients that if they do not have assets of at least $50 million, they should not engage in patent litigation of any kind -- as plaintiff or defendant, sources say.

Software vs. other patents

Against this backdrop, patent attorneys recently joined with professors from Stanford University, George Washington University, Boston University, Tilberg University and the University of Colorado, among others, for a conference on software patent reform held by the Silicon Flatirons Center for Law, Technology and Entrepreneurship at the University of Colorado in Boulder.

While experts want to see the entire patent system overhauled, software is particularly ill served today. Patents do a bang-up job protecting hardware, drugs or chemicals -- any invention where the R&D costs are high, manufacturing is expensive and difficult to duplicate and where the intellectual property (a chemical formula, for instance) is easily identified. Infringement in these cases takes longer, costs more and can be easier to prove.