Nilay Patel, on the This is my next podcast:
Nobody has ever told me exactly why the patent system is fundamentally broken.
Here’s why: it is simply not possible to create any non-trivial piece of software1 that doesn’t violate hundreds2 of patents. As a result, you can’t release software without putting yourself into a position where you might suddenly lose all of your money.
Essentially, thanks to the patent system, you can be put out of business at any time, for no good reason.
From our experience, it’s entirely possible that all the revenue for a product can be eaten up by legal fees.
This is bad for innovation, and it’s bad for the economy.
And it’s not like you’re getting anything in return for those expenses. You aren’t paying licenses in return for profiting from somebody else’s patent. You’re getting into trouble for ideas you came up with on your own, simply because somebody else had a similar idea at some point in the past, or decided to patent a bunch of things that already existed.3 Every year, more than 15,000 new software patents are issued, each of which increases the risk for software developers. Your smartphone alone violates as many as 250,000 patents.
So let’s turn this around. Nobody has ever told me exactly why the patent system is doing any good.4 In fact, there is more and more evidence that it costs a lot of money, but is not doing any good in return, especially when it comes to software.5 For example, this Boston University School of Law report notes:
This report examines changes in the patenting behavior of the software industry since the 1990s. It finds that most software firms still do not patent, most software patents are obtained by a few large firms in the software industry or in other industries, and the risk of litigation from software patents continues to increase dramatically. Given these findings, it is hard to conclude that software patents have provided a net social benefit in the software industry.
Software patents aren’t just harmful, they’re also expensive. Stephan Kinsella estimates that patents in general cost the US economy US$42 billion per year. An increasing portion of this cost is generated by software patents.
But are software patents really a fundamental threat to the software industry, or are they just another slightly shady business practice? Writing about Google’s patent issues, John Gruber asks:
It’s OK for Google to undermine Microsoft’s for-pay OS licensing business by giving Android away for free, but it’s not OK for Microsoft to undermine Google’s attempts to give away for free an OS that violates patents belonging to Microsoft?
I’d argue that, indeed, the first is okay, but the second is a problem. Making your product free does not make it impossible to compete with you,6 and it does not prevent innovation. The patent system, on the other hand, does both.
Myrvold has raised $5 billion and has only made $2 billion so far in settlements and judgements. His VCs no doubt expect a 10x return or greater. You can do the math. He’s got to extract at least another $48 billion. He’s just getting started. That ultimately has to chill the investment environment in tech.
Because of software and process patents any company could be sued for almost anything. It is impossible to know what the next patent to be issued will be and whether or not your company will be at complete risk. It is impossible to go through the entire catalog of patents issued over the last 10, 15, 20 years and determine which will be used to initiate a suit against your company.
It no longer makes sense to take great ideas and create, sell and support software products. Instead, at modest expense and low risk you can obtain software patents covering your ideas in all their variations. Then just sit back and wait.
(You can discuss this article on Hacker News.)
Or, perhaps more likely, thousands. I’ve provided some sources and more information for this claim.
In The Myth of the Sole Inventor, Mark A. Lemley writes that «surveys of hundreds of significant new technologies show that almost all of them are invented simultaneously or nearly simultaneously by two or more teams working independently of each other.»
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