Reforming Software Patents

Abstract

While many believe the patent system has hit a historic and unprecedented low, discontent with patents is nothing new. In 1966, a Presidential Commission recommended prohibiting software patents because of the PTO’s inability to vet them. In 1883, the Supreme Court railed against “speculative schemers who make it their business to watch the advancing wave of improvement and gather its foam in the form of patented monopolies, which enable them to lay a heavy tax.” In the past two patent crises that bear the greatest resemblance to the present day, in the late 1800s, farmers were sued by “patent sharks” en masse over their use of basic farming tools that were covered by scores of patents. Railroads found themselves under attack as well, by competitors and patent speculators, who benefited from a patent damages doctrine called the doctrine of savings. In short, the problems that now confront the patent system are well-known. What is less well-known, however, is that many of the very reforms being considered—abolishing certain types of patents, fee-shifting, and increasing maintenance fees for example—have been called for and in many cases tried before, under similar and different conditions. During this historic moment, what can the past teach the present and the future about how to solve the software patent crisis? Based on my research, quite a lot.

After three decades of chaos, the functional design patents that caused the agrarian patent crises were “abolished” according to a recent account. This did not happen by changing § 101 of the patent law but rather by tweaking the standards for granting a design patent. In the case of railroad patents, tweaks to the law and court leadership was key. So was industry organization, and collective action, in resolving the crisis. In both cases, history teaches away from broad based legislative reform and towards narrowly tailored incremental reform with lessons for today.

For example, rather than trying to enact an independent invention defense, patent reformers could consider bolstering protection for users, which are in some situations protected in other countries and in the U.S. in the case of medical method patents, by encouraging courts to stay cases brought against them rather than the manufacturer. In addition to pushing for new changes to the law, modern day patent targets could better use industry organizations and collective action in their favor to pool information and prior art and capture economies of scale in taking advantage of the multiple ways a patent can be challenged after issuance. These and other suggestions and available historical and empirical evidence about what has been tried, what has worked, and what has not, are detailed in this paper.