Patent advocates, large successful businesses, and politicians are so enthusiastic about the patenting of software that it’s hard to accept arguments from people like the FFII and Free Software Foundation who claim that the software industry simply does not need software patents and would be far better off without them. In this article I’ll try to explain why software patents are necessary, and in the sake of fairness I’ll look at the other side of each argument. Here is the “defense of Software Patents”. I report, you decide.

We have the natural right to own our work

To which some might answer:

• It was the French who first decided that ideas could be property by natural law. The French patent law of 1791 said, that every novel idea whose realization or development can become useful to society belongs primarily to him who conceived it, and that it would be a violation of the rights of man in their very essence if an industrial invention were not regarded as the property of its creator.
• However common sense tells us there are fundamental differences between owning a table and owning an idea and the “naural right” to own ideas seems very far-fetched. While the post-revolution French raised ideas to the status of private property, and called for them to be granted for ever, and hereditary, in 1863 the Society of German Economists dismissed patents—already marketed as “intellectual property” even then—as an untenable political fabrication.
• Further, there is no such thing as a natural law of property, even for tables. Property is a pure construction of the state, and property laws can be good (the right to own a business) or bad (the right to own other people), or insane (all property belongs to the state). As Prince-Smith, the leading German free-trade economist of the time said, Any claim for protection of private property is a demand for the intervention of the power of the state, which should follow exclusively the dictate of common welfare. With regard to property in things the dictate of common welfare is firmly established. How is it with regard to the so called intellectual property, and above all, patents of invention?
• The use of the word “property” to cover ideas was part of a propaganda campaign to establish patent laws in France in 1791 and again in 1843. The previous, more accurate term was “exclusive privilege”, perhaps not the best thing to discuss after the French Revolution.

On balance, it does seem difficult to justify “owning” ideas simply on the basis that some natural law gives us that right. Still, the term “intellectual property” has stuck, and in some countries the theft of patented ideas is indeed punishable under criminal law. Is this good or bad? Well, let’s look at some more arguments.

It is fair and just to reward software inventors

To which a skeptical and ungrateful programmer who seeks only to avoid destitution through obscurity might answer:

• What on earth do you mean by “software inventor” and “invention”? Software is written, like any creative work, by assembling bits and pieces into original compositions. There is no “invention” in a computer program. But, OK, for the sake of argument, let’s assume there is... Sigh.
• Does society really have a moral obligation to reward the mythical software inventor? How about musicians, writer, poets, philosophers, and mimes? What is special about software inventors, apart from being mythical? Why should a just society allow talented composers to die in poverty, while granting these invisible inventors the exclusive right to certain ideas? This does not make a lot of sense. Besides, hungry inventors, if they even existed as a species, are likely to be a lot more creative. Let them starve, I say!
• Invention has social origins. We work together to create new ideas. The expression of those ideas—music, poetry, writing, and software, of course!—can be an individual work. But ideas never are. So how can a just society award exclusive ownership of an idea to single person? This seems highly unjust.
• Inventors, if they really are original and not purely mythical, surely get a head start in the market. The first-to-market advantage is huge in most industries. Everyone knows Viagra. No-one knows its competitors, even if they use the exact same formula.
• Even if the mythical software inventor needed rewarding, and competition could wipe-out a head-start advantage too rapidly, what proof do we have that exclusive privileges are the best reward? As the Economist once wrote, ...what the community requires is that inventors be rewarded; that skillful men who contribute to the progress of society be well paid for their exertions. The Patent Laws are supported because it is erroneously supposed that they are the means to this end.
• We’re assuming that patents are a better reward than say, prizes, but there is no way to be sure patent rewards go to the real inventors (the real mythical inventors, I guess) and it’s impossible to prevent such exclusive privileges from doing real damage to others, albeit of mythical proportions. R.I.P. Vonage.

So all in all, the argument that the patent system delivers fair rewards seems a bit weak. In too many cases the rewards go to the wrong people or even a totally mythical category of people, hurt too many other people, and are not necessary in the first place. Well, we’re not going to give up. There have to be some valid arguments for software patents. Let’s keep digging...

It is the best incentive to innovate

To which the economist with a taste for history and geography might reply:

• Historically, Germany, Switzerland, and the Netherlands built up strong industrial sectors when they had no patent system at all. It seems more likely the US, UK, and Sweden became strong industrial powers because they have excellent geography—for commerce—and never suffered heavy damage from war.
• Where are the economic studies to show a causal relationship between patents and innovation? It could just as well be the other way around—new technologies like biotech and software attract the patent advocates like flies to... well, like wolves to the flock.
• Let me break down the patents “promote innovation” argument. You assume industrial progress is desirable, which is fair enough. You assume invention is a necessary part of industrial progress, which is fair enough in most industries if not in software. Then you assume that not enough invention will happen unless effective incentives are used, unless the state actively messes with the market. Now here we have solid counter evidence: the software industry is most innovative in those sectors with the least intervention, namely free software. In general, invention will happen with or without legislative interference. Lastly, you assume patents are the cheapest and most effective form of incentive. Where is the proof? What about prizes like the X-Prize?
• Most people who file software patents are not software developers at all, but patent lawyers working for large firms or “patent trolls”. In the USA by 2003, 80% of software startups had not claimed a single patent after four years of getting venture capital funding in 1988-89. So software patents don’t go to those who innovate, just those who file the patents.

It looks like my defense of software patents is actually undermining the whole basis for the patent system. Maybe the key question is costs and benefits. If we could measure the cost of patents, and their benefits, we would know whether they worked or not. And in fact some people are now doing that, across different industries. James Bessen has concluded: “Pharma plus, software minus minus”.

Without admitting defeat, we should maybe consider the costs of the patent system:

• The cost of having to divert activity away from patented areas;
• The cost of having to abandon investments when patents are granted to others;
• The bureaucratic cost of administering the patent system;
• The economic cost of monopolies sustained by patents;
• The cost to the market from not having access to the most efficient processes;
• The cost to society of not developing the best ideas more widely.

As a thought exercise, imagine software was the only industry, and we had the web, someone came along and proposed to institute the above costs, in return for granting “inventors” the exclusive right to any ideas they could get onto paper.

In 1851 the Economist wrote:

The privileges granted to inventors by patent law are prohibitions on other men, and the history of inventions accordingly teems with accounts of trifling improvements patented, that have put a stop, for a long period, to other similar and much greater improvements... Every patent is a prohibition against improvements in a particular direction, except by the patentee, for a certain number of years; and, however beneficial that may be to him who receives the privilege, the community cannot be benefited by it.

It is the best incentive to disclose

To which the skeptical programmer, who knows that ideas are cheap, whereas the really hard work goes into products, might respond:

• Most ideas develop simultaneously and independently in many places at once. No single disclosure is worth very much, and definitely not worth exclusive ownership of the whole domain covered by an idea. Useful inventions depend on general social progress, not key individuals.
• Technological secrets are very hard to keep for long in any case, so the bargain with society, if this is really the basis, is unfair. Why should society give exclusive rights in exchange for a secret that will leak in any case?
• In the cases when inventors think they can keep their techniques secret, they won’t claim patents in any case. The patent system in fact protects the otherwise unprotected ideas, and it does nothing to prompt disclosure of the true secrets.
• The patent system creates a disincentive for inventors to publish their ideas early on, since premature publication can ruin the chance of getting patents. So rather than promote disclosure the patent system actually hurts it.

Once again, I have to concede that the arguments in favor of software patents seem to undermine the rationale for the entire patent system. If there is no rational explanation for the patent system except “it exists, so we have to accept it”, there seems no rational explanation for allowing patents on software either. But before we reject software patents as an “untenable political fabrication”, let’s try the argument that was used to actually justify patents on software in the first place.

Industry needs continuity

When our economist, historian, and programmer sit together to discuss this argument, they see the historical demise of the industrial age, and the rise of a new digital age, and patents as a weapon in the war between these two domains. They reply:

• Past performance is no guarantee of future success. The computer giant IBM who worked to enable software patents in the US and then Europe, used this very argument to build up a large portfolio of software patents, and a huge licensing business. But today IBM is more and more dependent on free software and open standards, and patents no longer protect its business, except in a lose-lose escalation with enemies like Microsoft.
• Software is not like any other industry at all except maybe the music or movie industries: the creative push comes from small independent artists and the big bucks are made by the dominate marketing machines. Software depends a lot more on network effects, both during development and in the market. Music patents would be insane. Software patents doubly so.
• The appearance of continuity is itself an illusion, says the historian. The switch from hardware to software happens once, and then the economy floats in a sea of software. And it’s friction costs, says the economist, which makes the difference. Allow any barriers at all to stand, and you risk killing entire sectors of innovation. The programmer, meanwhile, just wonders whether he will still want to work in a business where he needs to consult a lawyer before publishing a program.

Miscellaneous arguments

While I’ve presented the main arguments in defense of software patents, you may come across several other plausible ones. These seem to convince politicians, see if they convince you.

• Pollution, cancer, divorce, noise, and stress are all measures of economic power as well. Do you seriously think promoting more of these would mean more prosperity? Does the term “correlation does’t imply causation” mean anything to you?
• If patents are just meant as a “mine is bigger” exercise, why do we need the exclusive privilege that does so much damage. Just give patents as prizes to the sexiest gadgets and cars. Surely that’ll be cheaper and easier for everyone.
• If you want to start measuring things, how about looking at the cost of patents. Think of patents as costly political interference in a free market. Now does “we interfere more in our market, so we’re a powerful country” still make sense?

• If all else fails, appeal to the xenophobes in the room. Surely if the Chinese are registering patents in our systems, that’s great. More is better, remember? Disclosure and all that?
• If it is true that Chinese patents are bad for Europe and the USA, then European patents are bad for the USA, and vice versa. Worse, patents filed by one firm are bad for other firms. If Chinese software patents are bad—which perhaps it is—then this is actually argument against all software patents.

• Focussing on patent licensing produces patent thickets, which destroy research, and patent trolls, which destroy product-making businesses. Firms that depend on licensing, like Qualcomm and Thomson, actually stop making products and stop innovating.
• Innovation is tied to the market, and to product making. Firms that don’t make products stop innovating, so a licensing business is a dead-end. So for a business, so for an entire country.
• A patent licensing economy is incompatible with free software. So if this is the way a country wants to go, it will lose its free software community. This was perhaps not significant in 2000, but in 2020 it will make a very big difference.

• Copyright is also property, and much more relevant to the software business. Fighting the attempts of patent advocates to expropriate my property does not make me “anti-property”.
• As for stealing ideas, or “using other people’s intellectual property”, kindly remember that patents are not property but rather a state-sanctioned monopoly right over a certain market. One cannot steal a monopoly right.
• The world works the way we make it work. We do not accept that software patents are a legitimate, fair, or necessary tool.

The arguments against software patents

In the interests of balance, I’ll summarize the key arguments against software patents:

• The economic evidence shows that software patents damage the software sector.
• They conflict directly with copyright law, creating uncertainty and risk for innovative firms.
• They are harmful to free software and open standards, both increasingly vital technologies.
• They promote litigation, especially from incumbents against startups, and patent trolls against product producers.
• They prolong monopolies, historically in the telecoms market, and more recently in desktop computing.
• They were instituted both in Europe and the USA by subterfuge, by dominant software firms and patent advocates, without proper economic analysis or legislative study.
• The time it takes to grant a patent, its lifespan, and its overall costs don’t match the needs of the software industry.
• Software patenting enables an arms race where litigation wins over innovation and small innovative firms are excluded.
• They are barely linked to real achievements, but instead to speculative claims for how technology might be used.
• Their proper examination is impossible—too little documented prior art, too little time to examine, and strong economic incentives to grant, not refuse, software patents.

We can also speak of the patent establishment’s independence and power, to the point where the European Patent Office sits outside any legislative or judicial system, lobbies governments, drafts legislative proposals for the EU and member states, and promotes patent “education” policies. Or the Court of Appeals of the Federal Circuit, which was recently slapped down by the Supreme Court for lowering barriers to patent beyond all common sense. But discussion of the capture of the patent system by its clients goes beyond software patents—it is a general concern, and we have enough of these already.

Prince-Smith wrote if the patent system was abolished then secret and isolated work on inventions would cease and its place would be taken by a cooperation of all qualified talent and predicted a meritocracy that looks more or less like today’s free software communities.

Conclusion

Continuing the historical theme, I can point out that the main arguments in support of patent systems, and the rather convincing counterarguments were developed in the mid-to-late 19th century when the European patent systems reformed and became simpler to use, and overall more friendly to their users, the patent lawyers known as “inventors”.

Modern patent systems sprung from the same belief system as trade protectionism. In the 1870’s people really did not know whether economic prosperity depended on free trade or on barriers. Economists argued that free trade was the basis for prosperity. Others argued that unrestricted competition was fatal to young, growing industries.

To be fair, politicians have held onto their protectionist beliefs for long after they seemed to be disproved. It is hardly the fault of the patent establishment that governments still prefer a kind of “gunboat free trade” in which poorer countries can import freely but not export. Patents are just a very convenient cover for the trade policies of the US and European governments.

Maybe the question of patents will become a defining political question of our age. Some, like the FFII, argue that the software sector is so dependent on network effects and so vital to the stack of service and product industries it supports that software patents will cause serious economic problems in countries that allow them.

Others hold onto their beliefs and argue that it’s the lack of enforcement, the cost and difficulty of translation, and the tendency of others to independently reinvent (“pirate”) ideas that really harms the software industry. Open standards and free software, they argue, exist only because those teams invest nothing real, steal the work of others, and create unfair competition to existing, established business models.

It is an interesting question. Does protectionism help aging industries survive technological changes? One would think that the answer was clear and the debate settled long ago, but there are still people arguing furiously on both sides.

Further reading

• How the French turned exclusive privilege into property, by Pieter Hintjens, (2007).
• The U.S. patent system in transition: policy innovation and the innovation process (PDF) by Adam B. Jaffe (2000).
• Study shows most VC-funded software startups don’t patent, by Pieter Hintjens, (2007).
• The Software Patent Experiment (PDF) by James Bessen and Robert M. Hunt (2003).
• Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk by James Bessen and Michael J. Meurer (to be published in 2008).