Evans LayneFarrar (2004) - Software Patents And Open Source

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Reference

• Evans, D.S. and Layne-Farrar, A. (2004), "Software patents and open source: the battle over intellectual property rights", Va. JL & Tech., Vol.9, pp.10--13

@article{evans2004software,
  title={Software patents and open source: the battle over intellectual property rights},
  author={Evans, D.S. and Layne-Farrar, A.},
  journal={Va. JL \& Tech.},
  volume={9},
  pages={10--13},
  year={2004},
  abstract={In the wake of a series of court cases extending patents to software, open-source software proponents have proposed a number of arguments for limiting or even eliminating software patents. In particular, they claim that the U.S. Patent and Trademark Office (USPTO) has done a poor job of reviewing software patent applications, resulting in obvious, trivial patents. Open-source proponents also maintain that software patents hinder the standards-setting process important for high-technology industries, and that patents will lead to intellectual property rights “thickets” that slow down or stop the innovative process in the software industry. We evaluate these claims, examining relevant empirical evidence where available. While it is clear that problems exist with the patent-granting process, they do not rise to the level of justifying a ban on software patents. Instead, other reasonable––and far less drastic––measures are available. The USPTO has already begun reforms that should improve its software patent-review process. As for patent thickets, theory suggests they could form in the software industry, but empirical evidence suggests that in fact this has not occurred. Moreover, tools such as patent pools and cross-licensing can increase innovation sharing and are available to limit the development of thickets. While the academic literature is still debating the link between patents and innovation, patents have been shown to have some positive effects, including increased venture capital funding for small firms. In the end, reform is far more attractive than abolition, because it retains the good while minimizing the bad.},
  discipline={Mgmt},
  research_type={Discussion},
  industry={Software},
  thicket_stance={},
  thicket_stance_extract={},
  thicket_def={},
  thicket_def_extract={},  
  tags={},
  filename={Evans LayneFarrar (2004) - Software Patents And Open Source.pdf}
}

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Abstract

In the wake of a series of court cases extending patents to software, open-source software proponents have proposed a number of arguments for limiting or even eliminating software patents. In particular, they claim that the U.S. Patent and Trademark Office (USPTO) has done a poor job of reviewing software patent applications, resulting in obvious, trivial patents. Open-source proponents also maintain that software patents hinder the standards-setting process important for high-technology industries, and that patents will lead to intellectual property rights “thickets” that slow down or stop the innovative process in the software industry. We evaluate these claims, examining relevant empirical evidence where available. While it is clear that problems exist with the patent-granting process, they do not rise to the level of justifying a ban on software patents. Instead, other reasonable––and far less drastic––measures are available. The USPTO has already begun reforms that should improve its software patent-review process. As for patent thickets, theory suggests they could form in the software industry, but empirical evidence suggests that in fact this has not occurred. Moreover, tools such as patent pools and cross-licensing can increase innovation sharing and are available to limit the development of thickets. While the academic literature is still debating the link between patents and innovation, patents have been shown to have some positive effects, including increased venture capital funding for small firms. In the end, reform is far more attractive than abolition, because it retains the good while minimizing the bad.

Review

Definition of patent thicket

"...over-patenting has been dubbed the 'tragedy of the anticommons,' as too many people with exclusionary rights can cause underutilization of resources. Shapiro uses another metaphor: the 'patent thicket.'

Legal Discussion

Paper presents a policy discussion of patenting in the U.S. software industry based on a review of previous literature on the subject.

• Opponents of software patenting claim that patent thickets will develop and allow players to disrupt further innovation.

"...When small pieces of software that are adaptable to a multitude of applications can be and are patented, it becomes increasingly likely that each complex program will infringe someone’s patent. Therefore, opponents argue that developers have incentives to 'over-patent' for strategic or defensive reasons in order to gain leverage in cross-licensing negotiations."

• However, (according to work by Ziedonis) top executives in the software industry reject the idea of patent thickets.

• Eliminating patents in the software industry may make software more freely available in the short run, but could drastically reduce future innovation.

Social Welfare Consequences:

• While patents can create barriers to entry for small business, they are very important to the initial financing of innovative companies.

"Without patents, the industry would move back to complete reliance on copyrights and trade secrets, both of which could be much worse for the industry and open source."

"While copyright may be sufficient for some developers, patents can encourage the licensing of software that would otherwise remain hidden."

Policy Advocated in Paper:

• Any reforms should complement existing voluntary market mechanisms as antitrust regulators have been hard on patent pools.

"Evidence [literature review] does not support the argument that patents simply are not needed to spur innovation, or that patents block future innovation by causing non-negotiable thickets of rights and reducing the software commons…Means of working around the exclusionary effects of patents––such as patent pools and cross-licensing––are available to the software industry."