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Tackling software patents innovatively

July 03, 2008 09:13 IST

The contentious issue of software patents is rearing its head again, both in India and globally. The Indian Patent Office, for instance, invited companies and institutions to comment on its Draft Manual 2008 - Patent Practice & Procedure (software patents included) this April.

The responses from companies are varied since they address the patents' issue across sectors. Of relevance here are those pertaining to software patents.

"We find that the draft manual seeks to introduce software patents, and we believe this is not in consonance with the current legal situation which states that "a mathematical or business method and or a computer program per se or algorithms are not patentable"," notes Red Hat.

Incidentally, the Bilski case - which is being contested by the likes of IBM, Red Hat and even Microsoft globally - is about the patenting of business methods.

Former Supreme Court judge V R Krishna Iyer goes a step further in his response to the Prime Minister, citing the "irrelevance" of the manual since "neither the controller nor the central government has authority or sanction of law to publish a manual of the kind put on the website". A meeting in this regard has been called for in Mumbai on August 7.

Internationally, though, technology giants like Google, Cisco, Hewlett-Packard, Motorola, Sun Microsystems, Ericsson, and Verizon Communications, are innovatively working around the thorny issue. They set up the 'Allied Security Trust' this June to address the risk of patent-infringement suits by buying those patents which they feel are most important to their businesses. Currently, there are 11 members in AST.

Software patents are an emotive issue. Its proponents argue that patents promote investment in research and development; accelerate software development by making previously unknown and not obvious software inventions public; protect intellectual property of software companies; encourage the creation of software companies and jobs; and increase the valuation of small companies.

The patent system is also perceived as a hindrance to open source. Open source firms like Red Hat too acquire patents. However, they argue that it's for "the sole purpose of asserting defensively in the event of a future lawsuit".

Developers face the risk that the original code they have written in good faith could be deemed to infringe an existing software patent, especially since it's estimated that there are over 200,000 software patents.

Critics counter that traditional copyright has provided sufficient protection to facilitate massive investment in software development; that most software patents cover either trivial inventions or inventions that would have been obvious to persons of ordinary skill in the art at the time the invention was made; and that patent applications are often undisclosed until after a new invention becomes widely used.

The AST, meanwhile, is working around the hurdles. Its job is to try to buy patents that its members have expressed interest from the patent holder, and the cost would be deducted from those companies' escrow accounts.

Each company will pay about $250,000 to join and then put about $5 million into escrow for future patent purchases, according to the Wall Street Journal which first reported the news.

The AST argues that non-practicing entities or NPEs (also known as "patent trolls") produce no products or services of their own, and yet acquire patents - sometimes hundreds of them - with the sole intention of asserting them against companies and conduct patent litigation to extract settlements or licensing fees.

It estimates that it costs operating companies an average of $3.2 million through the end of discovery and $5.2 million through trial to defend these cases when there is more than $25 million at stake. The costs of determining if a particular piece of software infringes any issued patents are too high and the results too are uncertain. A software patent costs, on average, around $20,000.

One such case was that of patent-holding company NTP's suit against Research In Motion which threatened to shut down its popular BlackBerry e-mail service, until RIM agreed in 2006 to pay NTP $612.5 million, four years after a federal jury had sided with NTP.

Other recent high-profile cases include the recent suing of computer makers Acer, Apple, Dell, and HP for violating four patents held by Saxon Innovations - an intellectual property licensing company.

Such lawsuits, argues the AST, are not only a huge distraction for management, but they also draw R&D and other resources away from other projects and may hinder a company's ability to provide new products in a timely manner. India can take a cue from this move.

Leslie D'Monte in Mumbai