Patenting Software: A View from Across the Pond Stuart Graham, JD, PhD Associate Professor Georgia Institute of Technology Innovation in the European Digital Single Market: The Role of Patents European Commission Brussels 17 March 2015
Software and technology development How does disembodied software fit into the developing technology landscape? How should policy makers understand software to make better policy choices? 2
Software Patent Policy in the US (1) Alice Corp. versus CLS Bank (US Supreme Court, 19 June 2014) At issue: Patent on computer implemented, electronic escrow service for facilitating financial transactions. Result: Claims were drawn to an abstract idea, and simply implementing on a computer was not sufficient to transform that idea to a patentable invention. 3
Software Patent Policy in the US (3) Issues US patent policy has been struggling with the patentability of computer implemented inventions for at least 40 years Supreme Court s CLS Bank decision has not clarified the situation Uncertainty is not ideal for investment Not entirely clear what such uncertainty / flexibility does to the technology development process 4
Graham & Vishnubakhat (2013): Several Findings - Observations US smart phone patent litigation does not appear driven by low-quality software patents Software characteristic of a General Purpose Technology (Bresnahan and Trajtenberg, 1995) Wide adoption; pervasive; spawns cumulative invention Empirical evidence shows that USPTO treatment of software patent applications during the past decade compares favorably to those in other technology areas. 6
Graham & Vishnubakhat (2013): Several Findings - Observations US smart phone patent litigation does not appear driven by low-quality software patents Software characteristic of a General Purpose Technology (Bresnahan and Trajtenberg, 1995) Wide adoption; pervasive; spawns cumulative invention Empirical evidence shows that USPTO treatment of software patent applications during the past decade compares favorably to those in other technology areas. 7
Software patent classes Claims are showing up everywhere - electronics, automobiles, biotech For us researchers, Type I and Type II errors abound 8
Graham & Vishnubakhat (2013): Several Findings - Observations US smart phone patent litigation does not appear driven by low-quality software patents Software characteristic of a General Purpose Technology (Bresnahan and Trajtenberg, 1995) Wide adoption; pervasive; spawns cumulative invention Empirical evidence shows that USPTO treatment of software patent applications during the past decade compares favorably to those in other technology areas. 9
Learning from startup companies TMTs of 1,332 U.S. young technology firms (<10 years), N=724 in software/internet sectors Among the D&B sample (N=535), 24.3% of software/internet firms are holding patents Among VC-funded sample (N=240), 68.6% of software/internet firms are holding patents. Even though all other means are available, and patenting is costly 14
VC-backed start-ups reported importance of patenting to competitive advantage X X Among software-internet start-ups selecting in to patenting: = 59.6% 26.5% 33.1% 33.1% 7.3% 15
VC-backed Software Start-ups CEOs & CTOs: Patenting to Avoid a Thicket of Patents? No. Top ranked reasons Not preventing infringement, not for cross licensing defense 16
VC-backed Software Start-ups CEOs & CTOs: Patenting to Avoid a Thicket of Patents? No. Top ranked reasons 78% Preventing copying 17
VC-backed Software Start-ups CEOs & CTOs: Patenting to Avoid a Thicket of Patents? No. Top ranked reasons 75% Securing investment 18
VC-backed Software Start-ups CEOs & CTOs: Patenting to Avoid a Thicket of Patents? No. Top ranked reasons 70% Improving chances of exit event (IPO, or acquisition) 19
VC-backed Software Start-ups CEOs & CTOs: Patenting to Avoid a Thicket of Patents? No. Top ranked reasons 70% Enhancing reputation 20
Concluding comments 21
Thank you graham@gatech.edu 22