This post came about because I've been thinking a bit about some of the most common myths and fallacies surrounding my area of practice, and in particular the poor maligned patent. This post has been prompted by some of the stuff I’ve read or been told by clients about patents.
So out of a desire to set things straight I offer you my wisdom, or lack of it. And I won't even charge you for it.
Here are (in no particular order) just some of the most common myths about patents.
If you have a patent then that gives you an unfettered right to exploit the patented invention
No. A patent is really a negative right. It gives you the right to exclude others for the life of the patent (20 years from filing in most countries). You can still infringe someone else's rights when you make, use or sell a patented invention. For example, if your patented invention is an improvement on an existing technology, you may not be able to exploit the improvement without infringing any patent rights in the underlying technology.
I can get a worldwide patent for my invention
No. Patents are territorially limited. A New Zealand patent won’t stop anyone from doing anything they like in Australia, for example. But you can file patent applications in more than one country for your invention.
If someone gets a patent for their invention then that automatically increases its value
No. The claims of a patent describe the scope of the monopoly right given to the owner. The claims describe what is protected, and if the claims don't cover the most important and innovative features of the invention then the protection offered by the patent will be worthless. That's why you're a mug if you invest in something because it is patented but without getting someone to analyse the scope of the claims of the patent.
But a well-drafted patent that encompasses the essential features of a valuable invention will potentially be extremely valuable.
Once I get my patent granted I can't have it taken away from me
No. Just because you get a granted patent doesn't mean you can enforce it, or that it won't be challenged or even revoked. If you try to enforce a patent against an infringer and they decide to fight back the first thing they will do is look for grounds to invalidate your patent. They will look for any prior art or prior publications to show your invention wasn't novel, and might try a host of other arguments.
But a well-drafted patent that takes into account the prior art can be hard to knock out. It may have a deterrent value, discouraging potential infringers.
So if I am going to spend all this money and my patent still isn’t bullet-proof, why should I bother?
If you have an invention that you want to make money off, and if you want to take it offshore, then unless you can secure some form of IP protection for it you're probably not going to make a great deal of money. Someone will always be able to make it cheaper than you, and someone will do it if they think it is good.
I once had a client who thought his invention was so powerful and so revolutionary that people would fall over to throw money at him, even though the invention wasn't protectable in any way. He was convinced that once he released his invention onto the market people would be queuing up to sign licensing deals with him, even though he had no IP rights to license. I asked him why people wouldn't just copy his invention without permission and give him the one-finger salute. His response was that people in business were generally honourable and just wouldn't do such a thing. Heh.
Savvy investors understand the importance of IP protection. When they look for businesses or technologies to invest in they will hunt out opportunities that provide a competitive advantage. It's not enough for a product to be innovative, if the day after it's released onto the market a dozen or more competitors start to copy it.
The only people who make money off patents are patent attorneys and multinationals
No. I have a number of SME clients who’ve done very well out of their patent portfolios. And for a number of well-known New Zealand companies, their patent portfolios are of critical importance.
Contrary to what some people may think, the vast majority of patent attorneys are responsible and professional, and will steer a client away from trying to patent something that either can’t realistically be protected, or that has no prospect of making any money.
Patents are expensive. Maybe I'll wait until my invention starts to make money and has demonstrated that it is commercially viable, before taking this step
This is a very bad idea. You can only patent things that are novel. Generally speaking, if you have disclosed your invention, published any details of it, or made sales of any products encompassing it, it will be too late to get patent protection. So you have to either take the plunge early, or not do it at all.
It can be expensive to secure good patent coverage across the world for an invention. But the costs don't all come at the beginning. You can file a provisional application initially in New Zealand, which might cost a few thousand bucks, and then you will have 12 months to file a complete specification that fully describes your invention and includes all the claims. If the countries you want protection in are signatories to the Patent Cooperation Treaty (PCT) you can further defer the cost of filing in those countries. That gives you time to work out whether the technology is commercially viable, and gives you time to find licensees or investors before spending serious dollars.
But I’ll just require people I’m disclosing my invention to to first sign a confidentiality agreement
Confidentiality agreements can be useful where you aren’t ready to disclose your invention to the world. But they have their limitations. If you make an offer to someone to license or sell your invention and you haven’t got a patent application in place for it, then in some countries you will be prevented from getting any protection for the invention in the future.
The other big limitation is the fact that some people just won’t sign confidentiality agreements. This isn’t because they plan to screw you over, but because some people receive so many ideas that they just don’t want to be tied down. Many large companies have a policy of never signing confidentiality agreements with inventors who knock on their door. This can be a problem for you if the company that won’t sign is the only logical business partner to progress your idea. In those situations you can either choose not to do business with them, or first file a patent application to cover what you are going to disclose.
Some people say you should never discuss any new business opportunity with a person who won’t sign a confidentiality agreement with you. In my opinion this is not always the best advice. There are sometimes good reasons for a person not to sign a confidentiality agreement. Sometimes it’s corporate policy and the person you’re dealing with has his/her hands tied. Likewise the people who say you should never let yourself be tied up by confidentiality agreements, and that such matters demonstrate a lack of faith and trust, are probably being a bit naïve.
I've heard patents can take years to be granted. My invention might be obsolete by that time
It can take years in some countries for an application to be granted. You can't sue for infringement of a patent until it has been granted, but in most countries the damages you can claim for infringement are calculated from the date the patent application was published. This means that as soon as a patent application is published it will have a potential deterrent effect.
I don’t need a patent, because I can keep my invention a trade secret
Actually this is sometimes true. We all know about the Colonel’s secret recipe or the Coke formula. Those are good examples of trade secrets that have stayed out of the public domain.
But the trouble with trade secrets is that your protection is lost once someone spills the beans. In some cases it just isn’t possible to maintain trade secret protection. For example, if the very act of putting your product onto the market tells would-be copiers everything they need to know about the product, your trade secret won’t be very secret.
Treating something as a trade secret can often work for formulations and recipes, but only where the secret is known by only a few people, and only where consumer protection laws (e.g. product labelling laws) don’t require the disclosure of the secret (e.g. an ingredients list) to customers.
I don't need a patent, because copyright will protect my invention
New Zealand is an odd country when it comes to industrial copyright laws. If someone copies a product in New Zealand then, in some cases, the copier can be held liable for infringing the copyright in the design drawings of the product. Most countries don't have similar copyright laws, so industrial copyright protection is of limited value outside New Zealand. Relying on industrial copyright might not always be the best strategy if you want to export your product.
Copyright is a particularly useful form of protection in some industries. For example, the source code in a piece of software will attract copyright protection, preventing any direct copying of the software without a licence.
And of course copyright is also particularly valuable in protecting the work of designers, artists, writers and others involved in the creative arts.
I don't need a patent, because a registered design will protect my invention
Registered designs protect the shape and appearance of a product, rather than the way in which it works. In many cases it can be useful to seek both patent and registered design protection for a product.
But if the innovative features of a product aren't really down to its visually-apparent design features, a registered design may be of limited value.
I don't need a patent, because a good brand is more important
There is no reason why having strong patent protection and a good brand can't go hand in hand. But relying on branding alone requires you to have the marketing expertise to create a perception that your product is better in some way than the others. If there are no IP rights in existence to stop someone else with a powerful brand from copying and selling your product, you may lose much of any market share you had established.
Software patents are a bad idea
This is perhaps the one area of patent law that attracts the most heated debate. The draft Patents Bill before Parliament will exclude software from the list of patentable matter.
For some in the open source movement the essential evil of software patents is an article of faith. But this faith is based on a number of arguments that don’t really make much sense. The most popular are:
- Only big bad nasty multinationals benefit from software patents. This is untrue, because a lot of SMEs seek patent protection. A number of smaller companies have also had big paydays thanks to those big nasty multinationals infringing their rights. For example, i4i recently slammed Microsoft (yes, the evil baby-eating Microsoft) for US$280 million. In 2009 a jury awarded Uniloc US$388 million against the same baby-eaters, and although the damages in that case have to be reassessed after Microsoft appealed, they're still likely to be huge.
- Software doesn't need protection because it already has copyright protection. There is copyright in aspects of the software, namely the source code and the screen display and graphic interfaces. But there is more to software than code. Copyright doesn't protect algorithms or functionality. There's nothing more demoralising to a software developer than to see someone else copy his/her software, but doing so without actually copying the code user interface. In those cases there's nothing the developer can do if he/she doesn't have patent protection.
- Why allow two types of protection over software? Other creative endeavour doesn’t have such dual protection. This is completely untrue. It is common for different types of IP to protect different aspects of an invention. It’s the same for software. Software patents don’t protect source code, whereas copyright does.
- Software patents stifle innovation. The evidence for this is largely anecdotal. There is no reliable data to support this proposition. There has been almost no software patent litigation in New Zealand, which doesn’t make sense if the existence of software patents is crushing innovation.
P lawyers are successful, well-adjusted, good-looking and popular; and their opinions on all matters, IP and non-IP related, deserve to be listened to; because when an IP lawyer speaks on a subject his/her authority is irrefutable; and that is why if there is a God He/She will almost certainly be an IP lawyer
Actually, I think that one’s true.
"If someone copies a product in New Zealand then, in some cases, the copier can be held liable for infringing the copyright in the design drawings of the product."
ReplyDeleteOne small addition: you have to prove that they COPIED your product in order to be held liable. If they came up with the idea independently, then copyright doesn't apply.
A patent will offer protection regardless.
Of course, as a patent lawyer, you stand to benefit from the status quo. So when you say something like "The evidence for this is largely anecdotal. There is no reliable data to support this proposition.", one wonders whether that means, "I have heard anecdotal evidence, and cannot be bothered seeing if there is any reliable data, because I would not like the ideas that I already hold to be challenged."
ReplyDeleteHave you seen, for example, this paper? The abstract says:
Software patents have grown rapidly and now comprise 15 percent of all patents. They are acquired primarily by large manufacturing firms in industries known for strategic patenting; only 5 percent belong to software publishers.... We find evidence that software patents substitute for R&D at the firm level; they are associated with lower R&D intensity. This result occurs primarily in industries known for strategic patenting and is difficult to reconcile with the traditional incentive theory of patents.
In this working paper, the authors "argue that if innovation is both sequential and complementary—as it certainly has been in [software]—competition can increase firms’ future profits thus offsetting short-term dissipation of rents. A simple model also shows that in such a dynamic industry, patent protection may reduce overall innovation and social welfare."
Here, the author says:
The theoretical research shows that when research is sequential and builds upon previous discoveries, stronger patents may discourage research on valuable, but potentially infringing, follow-on inventions. In this case, the enhanced ability to enforce patents may impede rather than promote innovation, contrary to conventional belief.
When you say, "Most of the arguments against software patentability are really just arguments against the entire patent system in disguise", I disagree. Consider Webbink's paper:
Compare the number of pharmaceutical patents required to protect a couple of blockbuster drugs to the number of patents obtained by one company on one selected software feature—the positioning and/or movement of a cursor. Pfizer's blockbuster, multi-billion dollar Viagra is covered by just one patent. Similarly, just one patent covered Merck's blockbuster, multi-billion dollar Zocor. By comparison, Microsoft has 14 separate patents on the positioning and movement of a cursor, and they have two additional applications pending on it. Rather than producing broad innovations to advance the software industry, like the earlier-mentioned inventions such as the word processor, spreadsheet, or presentation graphics, information is being sliced and diced to the point that every trivial combination or extension of prior software technology is being accorded the same protection as a groundbreaking drug. In the summer of 2004, when Bill Gates announced that Microsoft would be increasing its annual patent filings from 2,000 to 3,000 per year, it was notable that there was no corresponding 50% increase in Microsoft spending for research and development.
The author essentially defends traditional patents on pharmaceuticals.
I think Richard Stallman's comments on this area are instructive. On patents in general:
ReplyDeleteWhen you hear people describe the patent system, they usually describe it from the point of view of somebody who is hoping to get a patent—what it would be like for you to get a patent, what it would be like for you to be walking down the street with a patent in your pocket, so that every so often you can pull it out and point it at somebody and say “Give me your money!” There is a reason for this bias, which is that most of the people who will tell you about the patent system have a stake in it, so they want you to like it. There is another reason: the patent system is a lot like a lottery, because only a tiny fraction of patents actually bring any benefit to those who hold the patents. In fact, The Economist once compared it to a “time-consuming lottery.” If you have seen ads for lotteries, they always invite you to think about winning. They don’t invite you to think about losing, even though losing is far more likely. It is the same with ads for the patent system: they always invite you to think about being the one who wins.
To balance this bias, I am going to describe the patent system from the point of view of its victims—that is, from the point of view of somebody who wants to develop software but is forced to contend with a system of software patents that might result in getting sued.
On software patents:
The best way for a nonprogrammer to understand what this is like is to compare the writing of these large programs with another area in which people write something — very large symphonies. Imagine if the governments of Europe in the 1700s had wanted to promote progress in symphonic music by adopting a system of music patents. So that any idea that could be described in words could be patented if it seemed to be new and original. So you'd be able to patent, say your three note melodic motive which is too short to be copyrighted, but it would have been patentable and maybe they could have patented a certain chord progression and maybe patented using a certain combination of instruments playing at the same time or any other idea that somebody could describe.
Well, by 1800 there would have been thousands of these music idea patents. And then imagine that you are Beethoven and you want to write a symphony. To write a whole symphony, you are going to have to do lots of different things and at any point you could be using an idea that somebody else has patented. Of course, if you do that, he'll say “oh! You are just a thief, why can't you write something original”. Well Beethoven had more than his share of new musical ideas. But he used a lot of existing musical ideas. He had to, because that is the only way to make it recognizable. If you don't do that, people won't listen at all. Pierre Boulez thought he was going to totally reinvent the language of music and he tried and nobody listens to it because it doesn't use all the ideas that they were familiar with. So you have to use the old ideas that other people have thought of.
and an amusing anecdote:
This is not just theoretical. Around 1990, a programmer named Paul Heckel sued Apple, claiming that Hypercard infringed a couple of his patents. When he first saw Hypercard, he didn’t think it had anything to do with his patents, with his “inventions.” It didn’t look similar. When his lawyer told him that you could read the patents as covering part of Hypercard, he decided to attack Apple. When I gave a speech about this at Stanford, he was in the audience. He said, “That’s not true, I just didn’t understand the extent of my protection!” I said, “Yes, that’s what I said.”
One of my readers, who goes by the name bmk, emailed me a question because he was having trouble getting his comment posted. I have reproduced it below.
ReplyDeleteAs a student learning software development I have learnt that the core functions of software revolve around algorithms so I was wanting to know if you can patent software can you patent the algorithms contained in the software? If you can do this then can you patent mathematical formulas?
Patent laws differ from country to country but generally you can potentially patent a software algorithm in most countries (although in NZ the Patents Bill, once law, will make that very difficult), and you can't generally patent pure mathematical formulae on their own.
I worked on open source software in the early 00s, and while i may be a bit out of touch, I wouldn't say those are the most "popular" (unpopular?) arguments aginst software patents at all.
ReplyDeleteFrom memory, the top three would be:
* Patents were routinely granted (in the US) for inventions that are not novel to an "expert" in the field as they are mere applications of established software engineering principles to new application areas ("lets apply known algorithm X to dog food sales and patent that").
* They're not inventions, they're discoveries (i.e. you can't patent a mathematical formula).
* Submarine patents, and the risks of infringing a patent that hasn't been published yet.
Gordon
PS: Your preview isn't working for me, I hope this works.
I knew when I blogged about about patents that people would focus on software. I considered leaving that part out. Lesson learned, I guess. The last thing I want is a lengthy debate on software patentability, because from past experience I know it will end in a shouting match, and I don’t like shouting. Anyway, to deal with Allen's comments:
ReplyDeleteOf course, as a patent lawyer, you stand to benefit from the status quo. So when you say something like "The evidence for this is largely anecdotal. There is no reliable data to support this proposition.", one wonders whether that means, "I have heard anecdotal evidence, and cannot be bothered seeing if there is any reliable data, because I would not like the ideas that I already hold to be challenged."
The fact that the people who most often challenge open source advocates are IP lawyers is unavoidable. IP lawyers actually understand how patents work (unlike many people in the open source movement, who regularly conflate patent rights and copyright). The “of course you would say that” response to criticism of the open source movement to me sounds like an attempt to shut down criticism.
I perhaps should have been clearer when I mentioned anecdotal evidence. I was meaning in relation to the NZ patent system, which is quite different to the US one. There’s no documentary evidence (as far as I know, but happy to be corrected) showing that software patents are causing harm or stifling innovation in New Zealand.
I would caution against over-reliance on US data. Most people in the IP industry would agree that the US patent system is in need of reform. Some bad patents get through, while good ones get held up in endless rounds of examination. They also have a damages regime that encourages patent troll behaviour and patent litigation, and that probably encourages a lot of defensive filings in turn. That doesn’t make software patents bad per se.
It’s quite true that patent protection may be more useful overall in some industries than in others, so it would not greatly surprise me if there is little evidence of an increase in R&D spending within many firms patenting software. In the pharmaceutical industry you have nothing if you don’t have patent protection, whereas in other areas of industry (e.g. the software industry), other forms of protection may be viable. In fact in many cases pursuing software patent protection will be a waste of time.
Webbink seems to argue in the article you cited that pharmaceutical patents are less harmful than software ones because pharmaceutical companies don’t try to patent numerous features of their products. It is true that sometimes a key pharmaceutical product will have only one critical patent, but in other cases there will be patents directed to all sorts of different aspects of the product, such as methods of manufacture or composition. In that respect there isn’t much difference between software and pharmaceutical patents. Patenting all sorts of aspects of an invention is a common feature of patents generally.
I can’t access the Gallini article, so can’t comment on it.
Even with the flawed US system I remain unconvinced that patents stifle innovation in that country. The US software industry still leads the world, despite having a patent system that, according to open source advocates, ought to be crippling it.
Open source advocates like Stallman will always have an anecdote at hand about some poor sod who got sued for doing something that seemed entirely innocent and reasonable. But that happens with other types of patents too. This is another feature that is not unique to software patents.
I have nothing much to say about Richard Stallman otherwise. He is an open source extremist who uses emotive arguments, so I tend to ignore his arguments.
I should also add though that I'm not hostile to the idea of open source software. It is a business model that works for some companies, and I do a bit of work for clients from time to time in relation to open source developments.
Gordon:
ReplyDeleteThere are plenty of arguments against software patents. I just mentioned a few. The first one you mention is a common objection to all sorts of patents. There’s a system in place to get rid of bad patents. It doesn’t always work, but that doesn’t mean we should throw the entire system out. A good analogy would be bail laws. Should we get rid of all bail just because some people offend while on bail? Or is the better approach to look at reforming the law on bail to try to minimise the risk of people on bail offending?
As for your second argument, it’s correct that you can’t generally patent a mathematical formula. Most software patents will need to include more than just a bit of formula if they are to be granted. Of course, bad patents sometimes still get through. And often a bad application will be much reduced in scope by the time it is granted.
And the third argument is one applicable to the entire patent system. It’s not a problem unique to software.
Look, the patent system isn’t perfect, as anyone who works in it will tell you. It sometimes leads to results that seem unfair. But if we abolished the patent system we would remove incentives for a lot of people to innovate. I am happy to accept that software patents may not be as economically useful or efficient overall as patents in other areas of industry. But I’m not convinced they’re a bad thing.
Kia shapeshifter. Would you care to comment on patents for indigenous flora and fauna in relation to medicinal (if that's the right word)formulae, methods of healing etc. The claim before the Waitangi Tribunal on this issue springs to mind, tho I think that's more about intellectual property rights. However, there will be potions used by any number of indigenous people, and maybe techniques as well, that might be able to be patented. Are flora and fauna per se not able to be patented? Is it just the combination of ingredients from various plants into a particular recipe that can be patented?
ReplyDeleteWould you care to comment on patents for indigenous flora and fauna in relation to medicinal (if that's the right word)formulae, methods of healing etc. The claim before the Waitangi Tribunal on this issue springs to mind, tho I think that's more about intellectual property rights. However, there will be potions used by any number of indigenous people, and maybe techniques as well, that might be able to be patented. Are flora and fauna per se not able to be patented? Is it just the combination of ingredients from various plants into a particular recipe that can be patented?
ReplyDeleteThe topic of patentable subject matter really isn’t my forte, but I’ll attempt to answer your question briefly.
Patent protection is available generally for medicinal formulations, even if derived from native flora or fauna, though methods of medical treatment of humans are not patentable. Some non-medical treatment methods, such as cosmetic treatments, may still be patentable. There is also an exception for what are called “Swiss form claims” (e.g. claims directed to “the use of Compound A in a medicament for the treatment of X”).
The flora and fauna themselves are not patentable, because they exist in nature and are not inventions. However, compounds from flora and fauna that are isolated or that have a particular property may be patentable to the extent the compounds don’t exist in that form in nature. There’s a lot of controversy in this area currently over the patenting of isolated genes, as an example.
The difficulties with patenting traditional potions and remedies under current IP laws are numerous. The law requires no prior use or disclosure for something to be patented, which will immediately knock out a lot of traditional potions and remedies
The Wai 262 claim before the Waitangi Tribunal is raising the issue of indigenous knowledge and to what extent it should have recognition under our laws. It’s fair to say that our current laws don’t really recognise indigenous knowledge. Whether or not they should is a debate I’d rather avoid, as it’s not one I’ve given much thought to.
Scott:
ReplyDeleteI don't want to have those debates again either (flashbacks of 2001!), but you did state your examples were "the most popular" arguments, before proceeding to demolish the strawman ;-).
A problem for countries like New Zealand is that the US system of software patents is not the best, and plenty of New Zealand software workers have worked there and experienced the negatives (and despite your comments about "anecdotal" evidence, there are plenty of examples). They are therefore suspicious of any software patent system.
Gordon
Gordon, I wouldn't call the arguments I raised "strawmen". I've heard them again and again from people vehemently opposed to software patents. I didn't invent them. We can debate which are the most popular objections, but I can't think of anything less productive, frankly.
ReplyDeleteBut I agree that the entire debate is tiresome. Let us all just agree to disagree on this issue (he says hopefully).