August 15, 2011

Google+Motorola = Software Patent Indictment

Filed under: code, open, patent, phone — wseltzer @ 6:47 pm

Google’s announcement this morning that it had agreed to purchase Motorola Mobility for $12.5Billion sent MMI’s stock price soaring and set off another conversation about software patents and the smart-phone ecosystem.

Larry Page himself emphasized the patent angle of the merger in the corporate blog post:

We recently explained how companies including Microsoft and Apple are banding together in anti-competitive patent attacks on Android. The U.S. Department of Justice had to intervene in the results of one recent patent auction to “protect competition and innovation in the open source software community” and it is currently looking into the results of the Nortel auction. Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies.

Android-users already faced several patent lawsuits, and after a coalition of Google’s opponents, including Microsoft, Apple, and Oracle, purchased Nortel’s patent portfolio for $4.5 Billion, Google and its Android partners (including HTC and Motorola) had reason to fear a deepening thicket. Without many patents of its own, Google couldn’t make the traditional counter-strike of suing its attackers for infringement. Motorola’s mobile portfolio (17,000 issued patents and 7,500 pending applications) adds to Android’s arsenal.

Of course Motorola also makes hardware — smartphones that run Android — but few analysts are emphasizing that point. There, the acquisition raises strategic questions for Google: Can it convincingly offer the Android platform to others with whom it now competes? Even if Google maintains Motorola as a separate business, as Page says it intends, will now-competing vendors such as HTC, Samsung, and Acer be reassured of Google+Motorola’s neutrality among them?

Owning a handset maker could improve Android, if it shortens the feedback loop for problem-reporting and new ideas, but it could hurt the platform — and its end-users — more if it scared off competing hardware vendors, shrinking the base to which new applications are written and reducing the diversity of options available to end-users. As proprietor of an open, multi-sided market, Google needs to serve Android’s hardware vendors, app developers, and end-users well enough that a good-sized group of each continue to bring it value — and so the end-users watch the ads whose sale puts money into Google’s pocket from it all. (Oh, and maybe the acquisition will revitalize GoogleTV, as Lauren Weinstein points out.)

The patent motivations are more straightforward. As we know, it doesn’t take deliberate copying to infringe a patent, and patents are granted on small enough increments of software advance that an independently developed application may incorporate dozens to hundreds of elements on which others claim patents, and at millions of dollars a lawsuit, it’s expensive to disprove them. At least if those others are also making phones or software, Google is now more likely to have patents on what they are doing too, paving the way for a cross-license rather than a lawsuit.

Wouldn’t we all be better off skipping those patent threats and cross-licensing transaction costs? As Google’s pre-Motorola travails showed, it’s almost* impossible to opt-out of the patent system by choosing to publish and not patent your own inventions. Unlike in copyright, where you can share under Creative Commons, for example, and just have to prove you never accessed another’s work if accused of infringement, you can only save yourself from patent claims by assuring that every bit of technology you use was published more than 17-20 years ago! (*Rare but not impossible: Richard Hipp of SQLite says he only uses 17-year old, published algorithms to keep his code free of patent clouds.)

In work-in-progress, I argue that patent’s incentives aren’t working right for software, because they come at too early a stage in development. Patents for software motivate lawsuits more than they induce or reward product development. Google+Motorola may prove to have non-patent benefits too, but its early indications shine a spotlight on the thorny thickets of the patent landscape.

July 16, 2010

Bilski and the Value of Experimentation

Filed under: innovation, patent — wseltzer @ 7:40 am

cross-posted from Freedom to Tinker, where I’m delighted to be joining the crew on a more frequent basis

The Supreme Court’s long-awaited decision in Bilski v. Kappos brought closure to this particular patent prosecution, but not much clarity to the questions surrounding business method patents. The Court upheld the Federal Circuit’s conclusion that the claimed “procedure for instructing buyers and sellers how to protect against the risk of price fluctuations in a discrete section of the economy” was unpatentable, but threw out the “machine-or-transformation” test the lower court had used. In its place, the Court’s majority gave us a set of “clues” which future applicants, Sherlock Holmes-like, must use to discern the boundaries separating patentable processes from unpatentable “abstract ideas.”

The Court missed an opportunity to throw out “business method” patents, where a great many of these abstract ideas are currently claimed, and failed to address the abstraction of many software patents. Instead, Justice Kennedy’s majority seemed to go out of its way to avoid deciding even the questions presented, simultaneously appealing to the new technological demands of the “Information Age”

As numerous amicus briefs argue, the machine-or-transformation test would create uncertainty as to the patentability of software, advanced diagnostic medicine techniques, and inventions based on linear programming, data compression, and the manipulation of digital signals.

and yet re-ups the uncertainty on the same page:

It is important to emphasize that the Court today is not commenting on the patentability of any particular invention, let alone holding that any of the above-mentioned technologies from the Information Age should or should not receive patent protection.

The Court’s opinion dismisses the Federal Circuit’s brighter line test for “machine-or-transformation” in favor of hand-waving standards: a series of “clues,” “tools” and “guideposts” toward the unpatentable “abstract ideas.” While Kennedy notes that “This Age puts the possibility of innovation in the hands of more people,” his opinion leaves all of those people with new burdens of uncertainty — whether they seek patents or reject patent’s exclusivity but risk running into the patents of others. No wonder Justice Stevens, who concurs in the rejection of Bilski’s application but would have thrown business method patents out with it, calls the whole thing “less than pellucid.”

The one thing the meandering makes clear is that while the Supreme Court doesn’t like the Federal Circuit’s test (despite the Federal Circuit’s attempt to derive it from prior Supreme Court precedents), neither do the Supremes want to propose a new test of their own. The decision, like prior patent cases to reach the Supreme Court, points to larger structural problems: the lack of a diverse proving-ground for patent cases.

Since 1982, patent cases, unlike most other cases in our federal system, have all been appealed to one court, United States Court of Appeals for the Federal Circuit. Thus while copyright appeals, for example, are heard in the circuit court for the district in which they originate (one of twelve regional circuits), all patent appeals are funneled to the Federal Circuit. And while its judges may be persuaded by other circuits’ opinions, one circuit is not bound to follow its fellows, and may “split” on legal questions. Consolidation in the Federal Circuit deprives the Supreme Court of such “circuit splits” in patent law. At most, it may have dissents from the Federal Circuit’s panel or en banc decision. If it doesn’t like the test of the Federal Circuit, the Supreme Court has no other appellate court to which to turn.

Circuit splits are good for judicial decisionmaking. They permit experimentation and dialogue around difficult points of law. (The Supreme Court hears fewer than 5% of the cases appealed to it, but is twice as likely to take cases presenting inter-circuit splits.) Like the states in the federal system, multiple circuits provide a “laboratory [to] try novel social and economic experiments.” Diverse judges examining the same law, as presented in differing circumstances, can analyze it from different angles (and differing policy perspectives). The Supreme Court considering an issue ripened by the analysis of several courts is more likely to find a test it can support, less likely to have to craft one from scratch or abjure the task. At the cost of temporary non-uniformity, we may get empirical evidence toward better interpretation.

At a time when “harmonization” is pushed as justification for treaties(and a uniform ratcheting-up of intellectual property regimes), the Bilski opinion suggests again that uniformity is overrated, especially if it’s uniform murk.

September 16, 2009

Software Patent Research in Boulder

Filed under: innovation, law, markets, patent — wseltzer @ 4:34 pm

I’ve moved to Boulder, Colorado, for a year with the Silicon Flatirons Center for Law, Technology, and Entrepreneurship at the University of Colorado. I’m here to research software patents and user innovation (and no, innovative methods of trolling aren’t quite what I think the Founders meant by “promote the progress of science and the useful arts.”)

Boulder at sunrise Boulder’s a particularly good place for this study, because along with its beautiful mountains and open spaces, it has an intense entrepreneurial community, with frequent New Tech Meetups, Ignites, and informal gatherings. Plenty of innovation, how much fueled or swamped by patent?

I’m particularly interested in the cases of strategic behavior, where a patent is used not to secure limited-time exclusivity for the developer bringing a product to market, but instead as a bargaining lever, to spread FUD, or to extract value by threat. Are these indirectly promoting progress, such as by providing a market for research investment, or do they just get in the way? If you’re in the area and thinking about these issues, please let me know!

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