Bonum Certa Men Certa

US Patent Cartel Recognised, Legally Challenged, Software Patents Gradually Die

Summary: The cartel being formed against Linux and other disruptive new players is noticed and more software patents are dying in the US

"Good starting to stop devil things," tells us a reader who found out about the downfall of software patents, at least perceptually. For those who have not followed news in this area, Charles from The Guardian wrote a very influential piece that helped change public attitude towards software patents (more on that later as the situation gets worse in the US [1, 2]). It's about the harm of software patents to the US economy. Additional Lodsys attacks (now against Best Buy and Adidas) further motivate this sentiment and "Software Patents: Death Of American Dream" is a self-explanatory headline.



"Developers remove apps from US store, fearing patent lawsuits," says another headline and even terminology has gone mad when O'Reilly's group says that "Intellectual property gone mad". It's about patents:

Patent and copyright law in the U.S. derives from the Constitution, and it's for a specific purpose: "To promote the progress of science and useful arts" (Article I, section 8). If app developers are being driven out of the U.S. market by patent controlling, patent law is failing in its constitutional goal; indeed, it's forcing "science and the useful arts" to take place elsewhere. That's a problem that needs to be addressed, particularly at a time when the software industry is one of the few thriving areas of the U.S. economy, and when startups (and in my book, that includes independent developers) drive most of the potential for job growth in the economy.

I don't see any relief coming from the patent system as it currently exists. The bigger question is whether software should be patentable at all. As Nat Torkington (@gnat) has reported, New Zealand's Parliament has a bill before it that will ban software patents, despite the lobbying of software giants in the U.S. and elsewhere. Still, at this point, significant changes to U.S. patent law belong in the realm of pleasant fantasy. Much as I would like to see it happen, I can't imagine Congress standing up to an onslaught of lobbyists paid by some of the largest corporations in the U.S.


Surely it becomes evident that the US is harming itself by going along with ludicrous laws.

"The market for software patents is hardly dead. Indeed, as shown by recent transactions, including the princely sum ($4.5 billion) bid for Nortel's portfolio by Microsoft, Apple, and others, it's acting very healthy. But it could be coming down with something serious. Stay tuned," writes Rob Tiller in relation to other news. To quote:

When the Supreme Court declined to speak to software patenting in the Bilski case, there was wailing and gnashing of teeth in the open source software world. The new Bilski test for patentable subject matter looked at first like the status quo for software patentability. But, being the sort of person who tries to check clouds for a possible silver lining, I noted a possibility that courts and the Board of Patent Appeals and Interferences would read the test to invalidate some software patents. Later I noted that there were a number of early decisions finding software unpatentable.

That trend is continuing in a good direction. A new study of the first full year of decisions applying Bilski to software confirms that the direction of the case law is toward finding software is not patentable subject matter. The study by Robert Greene Sterne and Michelle K. Holoubek is titled The Practical Side of ۤ101 : One year post-Bilski: How the decision is being interpreted by the BPAI, District Courts, and Federal Circuit. [PDF] It contains brief summaries of 182 decisions of the BPAI, 6 federal district court decisions, and 3 Federal Circuit decisions. The majority of the BPAI and district court decisions concern software. And many of those software decisions apply Bilski to find that the subject matter is too abstract to be patented.


We already covered software patents getting killed by Bilski rulings (at various levels) even years ago. It is good to know that this is still going on. Since Tiller mentioned the cartel formed around Nortel's portfolio it is worth taking note of what Professor Webbink had to say:

Two weeks ago we asked why the Nortel patent sale to Microsoft, Apple, and others wasn't getting Federal Trade Commission and/or Department of Justice Scrutiny (see, Nortel Patent Sale - Why Isn't It Getting FTC/DOJ Scrutiny?). Well, we don't have to ask that question any more. And the government concern is not just in the U.S.; Canada is also looking into the sale.


As we noted this month, both the Canadian and US regulators scrutinised the deal and reports about it being approved were perhaps not entirely sound. Maybe the opposition to the deal comes from multiple levels. Regulators are still lurking. "There must be informed Federal CIO that there must be investigations in patent system and must be informed about problems of companies that is suing about patents and software patents as soon as possible must be stopped and this guy can help," says one person. An outgoing federal CIO meanwhile warns of 'an IT cartel', based on this article in relation to a similar problem:

In a wide-ranging discussion Friday with President Barack Obama's top science advisors, Federal CIO Vivek Kundra warned of the dangers of open data access and complained of "an IT cartel" of vendors.

He also believes the U.S. can operate with just a few data centers.

Kundra, who is leaving his job in mid-August, offered a kaleidoscopic view of his concerns about federal IT in an appearance before President's Council of Advisors on Science and Technology.

In particular, Kundra is worried about the "mosaic effect," the unintended consequence of government data sharing, where data sets are combined angd layered in ways that can strip away privacy and pose security threats.


How come they don't go after patent cartels first? These surely do exist. And how come the government, while it's at it, cannot seem to pursue Microsoft for its avoidance of tax? Even the Indian government has done something about it and one reader gave us some links about it [1, 2], adding: "How Microsoft India avoids taxes through "Gracemac": goo.gl/upsbD and IT Tribunal taking note of it: goo.gl/NRn3t"

We already wrote about Microsoft avoidance of tax many times before.

Check out this new article which says: Are programming languages, program functionality, and data interfaces protectable by copyright law or not? These questions were highly contentious in the United States during the mid-1980s to the mid-1990s. Plaintiffs in several cases argued that because these were parts of the “structure, sequence, and organization” (SSO) of programs, they should be within the scope of copyright protection accorded to programs as “literary works.” The EU is now confronting these same questions in the SAS Institute v. World Programming Ltd. case which is pending before the European Court of Justice (ECJ)."

Thanks to Carlo Piana for spotting this and noting: "Think #swpats are a nightmare? If SAS/World Progr. gets bad we'll have SWpats w/out pre-exam. http://ur1.ca/4qarq ACT NOW: RT!"

The threat just never goes away, does it? But we are gradually winning this fight. More on this subject in the next post...

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