Comment Articles

Software patents need shelter from the storm

John Carroll ZDNet.com

Published: 17 Sep 2003 16:35 BST

Regarding the R&D effect
Most ideas are built, in some fashion, on older ones. This is particularly true of software. The kernels of most operating systems are reported to be very similar, which doesn't apply to the higher-level technology that has grown around this core like coral around a sunken ship. In addition, simple Remote Procedure Calls (RPC) are an old concept, but Soap and XML-RPC calls are ehancements of that model, building on basic principles laid out in the "ideas" associated with RPC.

In addition, the market for software creation is huge. It is estimated that there are 10 million active programmers in the world. This is a truly massive number, dwarfing the number of innovators in other technical disciplines. This large number is driven both by the demand for software product as well as barriers to entry which are unusually low. Anyone with a cheap computer can acquire the tools required to build software. This means that R&D in the software industry is noticeably cheaper than R&D in other industries, and this, combined with large numbers of programmers, leads to a lot more contributors to global software R&D.

This leads to a fast-paced software market composed of large numbers of competing products. These products compete by creating new "features" to include in new releases. In other words, software is uniquely dependent on the creation of new ideas, and as such, will be naturally inclined to high levels of R&D. The question, therefore, is if there is any R&D gain to be derived from the economic expedient of software patents.

Evidence suggests that there isn't. James Bessen and Robert Hunt, in a "Research on Innovation" study titled "An Empirical Look at Software Patents", found that R&D was actually REDUCED in the presence of a vibrant software patent system. From their introduction...

"...software patents substitute for firm R&D; they are associated with substantially lower R&D intensity. Overall, the predominant use of software patents appears related to strategic "patent thicket" behaviour."

This makes logical sense if you keep in mind that software is extremely reliant on the creation of new ideas. In the absence of patents, old research which slowly worked its way into the public domain (even proprietary software gets reverse engineered) would force companies who wished to remain competitive to maintain high-levels of R&D. In contrast, a strong patent system allows companies to generate longer-term revenue benefits from patentable IP, giving them less incentive to conduct the same levels of research.

In addition, remember that new ideas are reliant upon the presence of older ones. If those older ideas are patented, then someone has a 20 year lock on that core idea. This can be dangerous for innovation in the software market, a market characterised by rapid changes and a proliferation of new ideas. Licensing tollbooths on the foundations of new ideas can greatly hinder the appearance of new ones.