The Economic Impact of Software Patents

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The UK's Patent Office – which now goes by the awful name of UK Intellectual Property Office, which means it's really the UK Intellectual Monopolies Office – is a curious beast. On the one hand, as its name suggests, it's tied into one of the biggest confidence tricks around, dressing up conceptual mutton as intellectual lamb. On the other, there are odd outbreaks of sanity that suggest someone in there understands some of the deeper issues concerning software patents.

Here's an interesting example of the latter, which takes the form of a press notice. It explains the Office's position in the light of the insane Symbian decision that I wrote about recently. Here are the key two paragraphs of the press notice:

3. The Court of Appeal did not give the UK-IPO leave to appeal to the House of Lords because in its view it would be premature for the House of Lords to decide what computer programs are patentable before the issue has been considered by the Enlarged Board of Appeal of the European Patent Office (EPO). The President of the EPO has now referred a series of questions on the patentability of computer programs to the Enlarged Board. This body has the ability to make a definitive statement of EPO practice and as such also carries significant weight in terms of the practice adopted by the UK-IPO and other national Patent Offices within Europe.

4. In the light of this development, the UK-IPO will not seek to appeal the Symbian judgment further. The UK-IPO agrees with the Court of Appeal in that it would now be premature to seek a view from the House of Lords when European practice is likely to be settled shortly by a decision of the EPO’s Enlarged Board of Appeal. The UK-IPO will have an opportunity to submit observations to the Enlarged Board of Appeal on the questions put to it. In order to inform any such observations the UK-IPO will undertake a study to determine the economic impact of patenting computer programs.

Most of this is standard stuff, and merely says everyone's waiting for some smoke signals to emerge from the EPO before proceeding with local discussions. But slipped in at the end is this very significant line:

In order to inform any such observations the UK-IPO will undertake a study to determine the economic impact of patenting computer programs.

Why is that important? Well, because independently of all the legal argy-bargy that software patents generate, the economics of software patents is unequivocal: they are a disaster. In aggregate, more money is spent litigating software patents than is earned through licensing them. Actually, that's not just for software: pharmaceutical patents are the only ones that can be justified on purely economic grounds – moral issues are quite another matter. In other words, software patents offer no economic benefit to the computer industry as a whole.

The only possible reason for large companies to use them is to threaten smaller companies that can't afford the lawyers to beat off legal bluster. It's not coincidence that Microsoft still maintains that GNU/Linux infringes on some 200 of its sacred software patents – and yet is strangely coy about naming them, since it doesn't want its bluff called.

Let's hope the study on the “economic impact” of software patent is unbiased enough to reflect the true nature of the situation.

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