Lipstick on a pig

It’s to the credit of policymakers that they have steadfastly refused to kiss this pig called ‘software patents’, despite it being dressed up in the lipstick of ‘innovation’.

Lipstick on a pig” is a popular Americanism for making superficial or cosmetic changes that disguise the true nature of a product. The pig in question is the regime of software patents being advocated by some multinational corporations (MNCs) and their highly paid lawyers, while the lipstick is the much abused term—“innovation”.

Ever since the Indian Patent Office (IPO) issued the revised Computer Related Inventions Guidelines, a host of MNCs has been busy trying to lobby the Indian government to overturn these guidelines. At stake is India’s future in the digital age.

Patents are a state-granted monopoly on an invention, for a limited period of time. Those who have been granted these monopolies then get the right to prevent others from using the ideas and methods they have patented. Software developers, and researchers who study innovation, contend that the US, which has the most permissive patenting system in the world, made a huge mistake by bringing software under the ambit of patentability.

James Bessen and Michael Meurer, two Boston University professors, found that almost 38% of all patent litigation in the US is around software. In their book,Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk, the authors explain how software falls within the realm of abstract ideas, and that it is impossible to draw boundaries around abstract ideas.

For example, if a property developer is planning to build a skyscraper on a piece of land, he can do a title search and find out the boundaries to the east, west, north and south of that piece of land. A clear title enables the developer to invest money with peace of mind. However, software being an abstract field, even law-abiding software developers cannot do a conclusive patent search in the areas they are working on, which increases the risk of software development in countries that allow software patents.

The US patent system has come to such a pass that even a respected inventor like Andy Grove of Intel was compelled to say, “The patent product brings financial derivatives to mind. Derivatives have a complex relationship with an underlying asset. While there’s nothing wrong with them in principle, their unfettered use has damaged the financial services industry and possibly the entire economy.” This was right after the financial crisis in 2008 that was caused by housing derivatives.

How did the US patent system go so wrong that one of its most venerated inventors became its harshest critics? In their book, Innovation and Its Discontents: How Our Broken Patent System is Endangering Innovation and Progress, and What to Do About It, two Harvard University professors Adam B. Jaffe and Josh Lerner explain how the 1980s were a time of great concern about US “competitiveness”, as well as a general movement to shrink government and make it more efficient. The government responded to these concerns by making the United States Patent and Trademark Office (USPTO) run more like a business, so that its processes would become easier for inventors. The effect was that patent seekers turned into “clients” and not applicants at USPTO. The authors add that USPTO (much like IPO) has been chronically strained for resources, with patent examiners often having just a dozen hours to assess a patent application.

As a result, the number of patents granted in the US has reached 326,000 in 2015, up from 66,170 in 1980. The flood of poor quality patents in the US has led to a surge in lawsuits, and the rise of patent trolls—organizations that make nothing, and whose sole business is to acquire patents and use them to extract royalty payments from unsuspecting users.

Under the Patent Cooperation Treaty, if India allows software patents, it will have to give priority to the existing patents that have been filed in other countries. Bessen and Meurer estimate that there are around 4,000 patents on e-commerce and around 11,000 patents on online shopping in the US. If these patents are granted in India, MNCs will have the right to exclude Indian companies from using their claimed inventions. This will slow down the pace of innovation, and nip India’s growing software product ecosystem in the bud.

It is to the credit of Indian policymakers that they have steadfastly refused to kiss this pig called “software patents”, despite it being dressed up in the lipstick of “innovation”. This gives Indian software developers the freedom to innovate without worrying about patent lawsuits.

Software Patents: Evil, Necessary or an Evil Necessity? iSPIRT OEQ Hangout

iSPIRT organized a OEQ(Open Ecosystem Hangout) on 20th April, 2015, to understand the role of software patents within the software ecosystem.Software patents are a much debated subject in the technology world today. In some jurisdictions like India, software is not part of patentable subject matter, while in other jurisdictions like the US, software patents are rampant. Do Indian startups need software patents? In a globalizing world, what strategies can they adapt to navigate through the software patents conundrum?

I moderated the session and asked the software entrepreneurs in the discussion to share their cost-benefit analysis of software patents.

Rushabh Mehta of ERPnext responded by saying that as a young startup, they find the cost of software patenting (estimated at around $ 15,000-$20,000 or between Rs 9.3 lakh to Rs 12.4 lakh) to be too high.

Srivibhavan Balaram of Vocera Communications, an entrepreneur, who has worked with open source and closed source software companies, said that patenting makes sense only if there is something unique that is worth patenting. However, he also added that the market for enterprise software was tilting more to open source now because companies were more inclined to go with time tested open source software, which find much faster acceptance. He added that companies are wary of proprietary software from startups.

Subramaniam Vutha, a veteran IP Lawyer and founder of the Technology Law Forum, said that India should actively encourage open source software, while accumulating as many patents as possible in jurisdictions that allowed it. He called this strategy, “Running with the hares and hunting with the hounds.”

Samuel Mani, Partner at Mani Chengappa & Mathur, said that defensibility is the only reason to file software patents. In a study that his organization did, he found that most areas that could be patented were already staked out. He pointed out that the cost of patenting is between $15,000-$20,000 which is the cost of hiring one employee for two years. He suggested that companies that aim to create a defense against software patents could join a defensive patent pool like the Open Invention Network (OIN).

Mishi Choudhary of the Software Freedom Law Center agreed with Mani on defensive patent pools like OIN. She added that most Free and Open Source Software are copyright licenses, but some also contain patent grants. She suggested that participants review the Debian Patent Policy.

This was the first such Hangout on software patents from iSPIRT, and there are plans to organize more such Hangouts to generate greater understanding of this topic.