An article in the Washington Post reveals that we are in danger of losing the fight against software patent trolls. Ironically, it was the sponsor of the bill in the House, Bob Goodlatte (R-VA), who gave in to corporate lobbying pressure and removed a key provision of the law.
Unfortunately, WaPo doesn’t do a particularly good job of explaining the problem, so here it is in a nutshell:
- Because the patent examiners in the government didn’t really understand software, a huge number of software patents were awarded for ideas that are (if you will excuse the phrase) patently obvious. Or overly broad. Because software was new, the patent office was fairly liberal in awarding patents, assuming that if the patent was invalid then someone would sue the patent holder and invalidate the patent.
- As a result, patents were issued for such obvious and overly broad ideas as sending and receiving streaming audio and video over the internet, and for real-time, multi-player games! There was even a patent on hyperlinks (the basis of the world wide web), but luckily that patent was eventually struck down.
- Patent trolls, which are companies who don’t actually make or sell anything, bought thousands of these patents (especially during the dot-com bust) for pennies. They then proceeded to send out what amounted to extortion letters to real software companies (especially small ones) claiming that the target company was violating one or more of their patents and demanding money to settle. So if you are a small company who does something as common as putting video on your website, you could get attacked for violating a patent.
- Now, if you are a new, small software company, having a threatened patent suit can destroy your company. Nobody will invest in your company if you have a threatened lawsuit against you, and many customers will not buy your products because if the company is indeed violating a valid patent, you could likely be forced out of business. And you probably don’t have the money or the lawyers to fight a patent lawsuit anyway.
- As a result, the target company would often settle, because fighting even an invalid patent can be very expensive and can take a long time, destroying the company even if they win the patent suit. Also fighting an invalid patent requires going to court, and since many courts (and especially juries) don’t really understand software either, they are often not qualified to decide whether a particular software patent is valid. The risk of losing the suit (even for patents that to an average software engineer are obviously invalid) is just too high to risk a lawsuit.
- Once a few small companies settle, the patent troll can then go after larger and larger companies. Because the troll doesn’t actually produce any products themselves, this can effectively destroy whole classes of software products that allegedly violate a patent (even an invalid patent), stifling innovation. For example, imagine an Internet where nobody can put any video on their website without fear of reprisal. Indeed, even this blog could be easily forced to pay up or (far more likely) shut down, since it contains many videos.
I have worked at or with many small companies who were attacked by patent trolls and were forced to pay ransom. Other companies never even got started because of the threat of patent trolls made it impossible to raise funding. It can be difficult to find an emerging software company that has not been affected by patent trolls.
The solution was something called the CBM (“covered business method”) program, which provides an expedited process for the government patent office to review and get rid of invalid patents. The CBM program was created in 2011 by Congress, but was limited to a narrow class of financial patents (where it has been effective without harming valid patents). The new law would have expanded CBM to cover software patents.
This is a great solution, because it makes it possible for the target companies to contest the validity of patents they are accused of violating. The process is much faster and less expensive than going to court to fight a patent and even fairer, because the program would have utilized examiners with actual expertise in software who could understand the patents to review them. It would have the added benefit of getting rid of patents that probably never should have been granted in the first place, decreasing the risk to companies trying to innovate with new software.
Unfortunately, a group of companies (including IBM, Xerox, and Microsoft) lobbied very hard against expanding the CBM program. Why? The group is made up of a laundry list of companies that are not the powerhouses of innovation they used to be. Once upon a time they were top dogs in the computer business, so they have huge numbers of patents (many of which are likely invalid). They don’t want to lose the right to milk their extensive patent portfolios.
Hypocritically, their argument against expanding the successful CBM program is that it would harm US innovators by undermining the rights of software patent holders. But one only needs to look at the names of the companies opposing this to realize that they are not the drivers of innovation they claim to be. Instead, they are the dinosaurs of the software industry who spend more money on lobbying than they do on innovation (some on the list are even legal firms). Of course, the CBM would not take away their right to defend valid patents.
Shame on them.
Luckily, the fight is not over. The sponsor of the bill in the Senate, Chuck Schumer (D-NY), who was the driving force behind the original CBM program, has stated that he will work hard to get this provision reinstated in the final bill. But there is a pile of lobbying money against this. Unless we let our Senators and Representatives in Congress know that we support getting rid of patent trolls we could lose this fight, to the detriment of one of our most vital (and job producing) national industries.
UPDATE: An excellent article in Ars Technica gives a fascinating look into a real patent trial, pitting patent troll TQP against internet commerce site Newegg. It gives a rare glimpse into how a patent trial works. The article is a must read for anyone interested in the fight against patent trolls.