of Patents for Software, by my colleague Tim Lee, in today’s New York Times: “A Patent Lie.”
But donâ??t software companies need patent protection? In fact, companies, especially those that are focused on innovation, donâ??t: software is already protected by copyright law, and thereâ??s no reason any industry needs both types of protection. The rules of copyright are simpler and protection is available to everyone at very low cost. In contrast, the patent system is cumbersome and expensive. Applying for patents and conducting patent searches can cost tens of thousands of dollars. That is not a huge burden for large companies like Microsoft, but it can be a serious burden for the small start-up firms that produce some of the most important software innovations.
No one should blame software companies for patenting their work, since if they don’t, they can be effectively barred from enjoying the fruits of their own labor. But there’s something dysfunctional about a system in which people patent in order to protect themselves from the patents of others.
It’s worse than that. Companies even seek patents with the express goal of licensing the technology to somebody else in the future. That may not sound so bad, except large companies use this strategy to extract licensing fees from smaller companies, even if the smaller company invented similar technology independently.
It rarely works the other way around, because when a small company tries to sue a larger company on a patent infringement, the larger company will fill a wheel-barrow of patents, roll it into the room and ask the opposing counsel to go through them and see if there are any infringements on their end. This scene has been described to me by lawyers claiming to have seen it first-hand.
Even if it’s just a lawyer’s story — you never know with those guys — I have no doubt the litigational aspects of it are true. I have worked for larger companies that stated this kind of tactic as part of their IP strategy.
I’m split on the whole IP debate, but it seems there is at least some Public Choice going on.