November 14, 2012
Preview of Our "Solutions to the Software Patent Problem" Conference
By Eric Goldman
On Friday, we're having our big academic conference of the semester, "Solutions to the Software Patent Problem." At the conference, experts will propose their ideas of how to fix software patents. Ultimately, we hope there will be enough enthusiasm among the participants to coalesce around one or more proposals and see if we can actually make progress.
In preparation for the conference, we held a "preview" for the students so that they would understand the conference background better. Without previews like this, students often don't get as much out of the conference because so much of the discussion goes over their heads. Colleen Chien was supposed to do the preview but she had a major conflict, so I stepped in. Below, I've included my talk notes. If you're really interested, I've also posted the audio from the talk. I hope to see you on Friday!
Solutions to the Software Patent Problems Preview
1. The case for patents
* Patents = legally constructed right to exclude competitors. 20 year right to exclude = powerful sledgehammer to control markets.
* Why do this? Counterintuitive solution! By giving monopolies, we improve social welfare by preserving innovators’ ability to recoup R&D costs.
* How? Quid pro quo: in exchange for right to exclude, we get innovations now + information disclosure now + unrestricted innovations into public domain in the future.
2. Problems with the patent story
* Empirical Q: do we get the quid pro quo? No way to prove that we’ve calibrated patent law properly. Tempting to think that because patents are good, more patent rights are better! Patents are faux metrics of innovation. Plus, patent owners have incentives to vitiate the quid pro quo.
* High transaction costs + deadweight losses from monopoly
* Public choice/rent-seeking
* PTO doesn’t do great job of protecting public interest.
Field effect #1: prisoner’s dilemma. Hardware/software companies don’t want patents, but they aggregate defensive patent portfolios as threat of mutually assured destruction if competitors sue. In these cases, patents aren’t about the quid pro quo; instead, companies acquire patents solely to procure freedom to operate. This may be socially wasteful activity. Companies allocate their scarce capital from R&D to buy more freedom + create rights thickets for others.
Field effect #2: opportunists (“trolls”) use legal enforcement to extract payments from operating companies. Predictable consequence of any scheme that creates payoffs from legal enforcement, and complaints about patent trolls in other art units go back decades.
3. The case against software patents
* Software doesn’t need patents to recoup R&D costs
* Software “ideas” may be harder to describe than physical devices
* Patent examiners didn’t know how to identify patentable innovations
* aggregated effect of patents may create unworkable rights thickets
4. What to do about software patents?
Background on the conference:
Key Q: is it possible to codify software exceptionalism? Fine line between hardware/software, and software is everywhere (ex: millions of lines of software code in cars). If we can’t carve off software from universe of patentable innovations, then changes to patent system must be uniform, bringing in more opponents to any change. Colleen's research shows that broad systemic changes to the patent system rarely are possible.
But our only option isn’t to kill software patents altogether, although some favor that. Other vectors of attack:
* patent eligibility
* change financial calculus
* change scope of rights
[Photo credit: troll warning sign / Shutterstock]
Posted by Eric at November 14, 2012 09:16 AM | Patents
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