Monday, January 09, 2006

Extending software patents: Those who live by the sword, die by the sword

The software industry is poised near the top of a slippery slope. Aggressively extending software patents around the world will be disastrous for software giants, confounding their expectations. I believe that our intuitions fail us with intangibles like software, and we don’t yet have enough tools and experience to make good strategic decisions.

It will take time for the adverse impacts to appear, but they will materialize at an exponential rate, matching the combinatoric structure of software programs. (Non-linear growth is another area where our intuitions are not very good.)

For the avoidance of doubt: I’m not against intellectual property rights, nor do I believe that software patents in particular are illogical or immoral. They may be imprudent, though.

In an eight page note on my web site I argue as follows:
  1. The economics of software patents is qualitatively and quantitatively different from previous intellectual property. Since there is no good metric for knowledge, and since our intuitions are weak, companies are underestimating the costs of an extensive patent regime.

  2. Companies that see themselves as technologists will lose control of the development process, ceding power to patent lawyers and off-shore developers.

  3. It’s necessary to make a return on investments in innovation. However, patents are the wrong tool for large software companies because they address only a tiny part of the innovation process, and a part where these companies do not have a competitive advantage.

  4. Software patents have some utility as a defensive strategy, but fail to deal with patent trolls, the biggest threat to software giants

  5. We didn’t encounter this problem with earlier technologies because life cycles were longer, and products didn’t consists of endlessly interlinked components

Software takes us into uncertain realms of law and philosophy. It is advisable to tread carefully in extending the current intellectual property regime. I recommend that large software companies do the following:
  1. Back off their initiative to extend the scope of software patents, both in subject matter and global coverage. I’m not arguing that such an expansion is illogical, just that it’s inadvisable given our current ignorance. Large companies like Microsoft are taking the lead, and are creating the very situation that they may come to regret: Those who live by the sword, die by the sword.

  2. Rely on copyright rather than patents to protect their innovation. It’s a better fit with their strengths in the innovation process.

  3. Support and advocate the limited time coverage for both patents and copyright on software. Terms should be just long enough to recoup investment on v1 products; inventions should move into the public domain pool so that everyone (including the software giants themselves) can re-use in recombinant ways for later versions.