During the last few years, the United States has witnessed a proliferation of patents in industries that are central to the information economy, despite a wide belief that the rush to patents and business models based on 'Intellectual Property Rights' has the effect of restricting the flow of information and inhibiting innovation.

In 1999, the United Nation Development Program's 'Human Development Report' came to the conclusion[1] that "the relentless march of intellectual property rights needs to be stopped and questioned" because of the regressive effects of patent law on health, trade and economies in the developing world.

A generic mousetrap

Software evolved in a climate free of patents, but a relaxing of the rules by the United States Patent and Trademark Office (USPTO) has lowered the bar for patent claims. During the last two decades, thousands of software patents have been issued on business methods, data structures and process descriptions that take no account of how software is developed - and this effect has been enforced around the world through the auspices of the World Intellectual Property Organisation (WIPO) and the World Trade Organisation (WTO).

Because software deals in language and the expression of mathematical constructs and ideas, advocates of free software have argued that code should be treated in the same way as the written word, which is subject to copyright. Patents on software are, in effect, a tax on ideas. We are obliged to search and exclude the idea that someone else may have claimed ownership to, or pay the price for having the same idea. Eben Moglen of the Software Freedom Law Center (SFLC) takes the view[2] that: "Software patenting has been a scourge in the global technology industries," and that "computer programs should be as ineligible for patent protection as mathematical equations or precise descriptions of physical laws."

This position is elucidated[3] in the opening paragraphs of the UK Open Rights Group's page on software patents where it says that: "Advances in software are advances in abstraction. While traditional patents were for concrete and physical inventions, software patents cover ideas. Instead of patenting a specific mousetrap, you patent any 'means of trapping mammals' or 'means of trapping data in an emulated environment'[4]. The fact that the universal logic device called a 'computer' is used for this does not constitute a limitation. When software is patentable, anything is patentable."

I own the world

The problem for computer professionals is that almost everything has become patentable. A succinct expression of this truth was provided by Bill Gates in the much quoted Microsoft internal 'Challenges and Strategy' memo[5], dated May 16,1991. "If people had understood how patents would be granted when most of today's ideas were invented and had taken out patents", he wrote, "the industry would be at a complete stand-still today."

Rather more revealingly, Gates concluded that the "solution" to the problem of patents was "patenting as much as we can... A future start-up with no patents of its own will be forced to pay whatever price the giants choose to impose. That price might be high: Established companies have an interest in excluding future competitors." Microsoft has since put this lesson into effect[6].

A timely reminder of what is at stake in the Bilski case is provided by the lawsuit for patent infringement that has been filed by Eolas Technologies Inc. against 23 technology companies[7] for embedding plug-ins into browsers. Eolas did not invent the browser or the embedded technologies which have come since, but owns a patent on a broad and obvious programming concept which has been applied to technologies that were unimagined at the time. This patent has the capacity to inhibit the progress of the Web for years to come, as Tim Berners-Lee explained in his submission to an earlier court[8] - and if the patent is upheld Eolas can expect a return in the billions of dollars.

This effect, of inhibiting innovation and the interchange of ideas, is not offset by the theoretical ability of individuals and SMEs to take out patents of their own. The patent industry is dominated by the giants and the lawyers they employ, as Robert Barr, vice president and worldwide patent counsel for Cisco Systems, explained in 2002[9] :

"Obtaining patents has become for many people and companies an end in itself, not to protect an investment in research and development, not to license technology to others who need it, but to generate revenue through licensing ('holding up') other companies that actually make and sell products without even being aware of their patents... This provides opportunities for contingency fee litigators, for licensing companies and consulting firms who claim to help people 'mine' their patent portfolios for patents that even they didn't know they had."

"It's hard to see how this contributes to the progress of science and the useful arts," Barr concluded.

Abstractions and transformations

The significance of "In re Bilski" is that it offers an opportunity to restore some critical balance to the patent industry. The Bilski case revolves around the definition of what constitutes a patentable idea. More specifically, it revisits the idea that abstract ideas are not patentable.

Bernard L. Bilski and Rand A. Warsaw made an application in 1997 for a business method patent which was rejected by the USPTO on the grounds that "the invention is not implemented on a specific apparatus and merely manipulates [an] abstract idea and solves a purely mathematical problem without any limitation to a practical application, therefore, the invention is not directed to the technological arts." The claim was for a method of hedging risks in commodities trading[11] , "managing the consumption risk costs of a commodity sold by a commodity provider at a fixed price comprising the steps" as follows (summarised for clarity):

1. Initiating a series of transactions between the commodity broker (or reseller) and the users of the commodity whereby the users purchase the commodity at a fixed rate based upon the historical average price of the commodity,
2. Identifying producers of the commodity
3. Initiating a series of transactions between the producers and the commodity broker at a fixed rate such that the risk is balanced against the risk price of the consumer transactions

Bilski and Warsaw appealed the USPTO's decision to the Board of Patent Appeals and Interferences (BPAI) and the United States Court of Appeals for the Federal Circuit (CAFC) where the decision was upheld.

The judgement of CAFC focused on the meaning of a "machine-or-transformation test", and states:

"The proper inquiry under section 101 (of the patent statute) is not whether the process claim recites sufficient 'physical steps,' but rather whether the claim meets the machine-or-transformation test. As a result, even a claim that recites 'physical steps' but neither recites a particular machine or apparatus, nor transforms any article into a different state or thing, is not drawn to patent-eligible subject matter. Conversely, a claim that purportedly lacks any 'physical steps' but is still tied to a machine or achieves an eligible transformation passes muster under section 101."

The conclusion to be drawn from this judgement is that "a general purpose computer is not a particular machine, and thus innovative software processes are unpatentable if they are tied only to a general purpose computer." The Bilski decision re-establishes the precedent that abstract ideas are not patentable, and an abstract idea does not become patentable merely by implementing it as software.  

The ruling is now before the Supreme Court, and is due for "oral argument" by the Supreme Court judges on 9 November of this year. The decision, if upheld, will have the effect of invalidating many thousands of business method and software patents, and will set a precedent for the evaluation of all future patents. In such a case, interested parties (known as Amicus Curiae) can make representations (known as Amicus Briefs) to the Court. A full list of the Amicus Briefs relating to Bilski can be found on the website of the American Bar Association[12] .

Unsurprisingly the majority of the Amicus Briefs in favour of Bilski, the petitioner, and some that claim to support neither the petitioner nor the respondent, come from patent lawyers and large companies with a vested interest in preserving the status quo. Equally, the arguments in favour of the respondent, nominally the Director of the USPTO, are dominated by organisations in favour of limiting patents because of their negative effect on a variety of industries, not just software.

Explosive growth

IBM patents for the past 15 years compared to nearest competitors IBM, in its role as the world's leading advocate of "Intellectual Property"[13], may cause some embarrassment to its many employees who thrive and survive on the development and use of free and open source software by its contention[14] that patents have "fueled the explosive growth of open source software development."

IBM's brief will also be troublesome to many of those to those that have worked closely with them in the fight for open standards, with its contentious assertion that the advent of software patents has allowed firms "to selectively license innovations on favourable terms to the community of standards users, thus encouraging other firms to participate in and adopt standards,", and that "disclosure of software inventions," as the result of patent acquisitions, "promotes collaboration among software developers (such as open source development) and interoperability among software platforms (such as software interoperability standards)."

Users of free and open source software would argue that it has blossomed despite, not because of, the existence of patents on software. Open standards have tended to be inhibited, not encouraged, by the proliferation of patents on APIs and data formats. A standard that is patent-inhibited is neither open nor serving the interests of anybody but the patent holder.

World domination

Simon Phipps makes the observation[16] that "The Microsoft/Philips brief[17]  is especially interesting, complete with a new way to define software patents so that the loss of the Bilski case doesn't mess up their world domination plans."

The Microsoft/Philips brief seeks to prove that software is patentable because it replaces tasks that could once be described as mechanical, and while declaring Bilski's claim to be invalid, insists on the patent eligibility of software, while taking the reader through the history of computing from Babbage to the semi-conductor. "As with any patentable process," it contends, "it is the real-world implementation - the actual acting out, or physical execution - of the process that makes it new and useful," and therefore concludes that software is patentable.

Speaking of Philips, George Monbiot has noted elsewhere how Europe's largest corporations, including Philips[18], emerged "during the period (1850-1907 in Switzerland; 1869-1912 in the Netherlands) when neither country recognised patents."

"In the 1890s," he recounts, "Gerard Philips, unhampered by intellectual property laws, started manufacturing the incandescent lamps developed by Thomas Edison in the United States. The absence of patent protection did not prevent him either from holding off European competition or from developing several important new designs." Curiously, the electric light bulb was invented and demonstrated by Joseph Swan[19] at least ten years before Edison made his claim for a US patent.

The brief for Armanta, Asentinel LLC, CyberSource Corp. and Hooked Wireless Inc, who title their brief 'Entrepreneurial Software Companies'[20], quotes a recent study that puts "the average value of a US Patent at between $93,463 and and $118,988," and notes that 10 per cent of patents in the US are on "data processing". This is seen as a justification for maintaining the past hegemony, and complains that "an overly narrow and limiting test" will result in many software related inventions "being left without adequate patent protection". In contrast the brief of Knowledge Ecology International[21], an NGO which claims no financial interest in the outcome, seeks to remind the Court that "The goal of the patent regime is not to reward inventors, but to encourage progress," and laments the negative impact of patents in the biotech and health industries, reminding us that patents on software are not the only issue before the Court. 

The briefs on the flip side of the argument, such as the FFII brief[22], and the briefs for Red Hat[23] and the Software Freedom Law Centre[24] eloquently present the case against patents on software.

"Software is an abstract technology, and translating software functions into patent language generally results in patents with vague and uncertain boundaries," wrote Red Hat vice president Rob Tiller, the author of Red Hat's brief. "Under the Federal Circuit's previous erroneous approach, the risk of going forward with a new software product now always entails an unavoidable risk of a lawsuit that may cost many millions of dollars in legal fees, as well as actual damages, treble damages, and an injunction that terminates a business. Only those with an unusually high tolerance for risk will participate in such a market."

Back to work!

When Nathan Myhrvold left his job as chief strategist and CTO for Microsoft to form IV (Intellectual Ventures), a company that was entirely devoted to acquiring and exploiting patents, he is reported to have said that "intellectual property is the next software". The dilemma before the Supreme Court is to determine whether the constitutional interests of "science and the useful arts" are better served by a patent regime where "intellectual property" can be regarded as "the next software" - where ideas are distributed because the inventor or the "owner" of an idea has the protection of a patent - or by one that limits patent monopolies to allow greater participation in the application and development of ideas.

Traditionally, academic innovation and discovery has depended on the open accumulation and distribution of knowledge. Most scientific developments – and for that matter, artistic, political or social ideas – have evolved from a common pool of knowledge where new developments are built upon free access to the developments of your contemporaries and those that have gone before. It can be argued that a liberal patent regime, where anything can be patented, works against this philosophy, accumulating the ownership of ideas into fewer and fewer hands.

The dilemma was recognised by Thomas Jefferson. "That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature," he wrote in a letter to Isaac McPherson in 1813. "Society may give an exclusive right to the profits arising from them, as an encouragement to men to pursue ideas which may produce utility, but this may or may not be done, according to the will and convenience of the society, without claim or complaint from any body."

Coincidently, the European Patent Office (EPO) is asking itself a similar set of questions[26] about the patentability of software. The Foundation for a Free Information Infrastructure (FFII), and some parliamentarians, are taking the view[27] that the EPO is bypassing the European Parliament in order to broaden the legitimacy of software patents across the European Union. There is a distinct possibility that EPO may loosen its definition of software patentability at the same time as the US takes the decision to tighten its definition of patentability.

In 1994, Richard Stallman told the USPTO hearings[28] "A decade ago, the field of software functioned without patents. Without patents, it produced innovations such as windows, virtual reality, spreadsheets, and networks. And because of the absence of patents, programmers could develop software using these innovations. We did not ask for the change that was imposed on us. There is no doubt that software patents tie us in knots. If there's no clear and vital public need to tie us up in bureaucracy, untie us and let us get back to work!"