Software Patents and Innovation

by Mark Chadurjian
Senior Counsel, IBM Software Group Intellectual Property Law

We've heard a lot lately about software patents. Some folks say software should not be patentable. Others say that any business method run on a computer should be patentable. Why all the controversy?

First, no one is arguing about the importance of software in today's economy. Simply put, software is the backbone of the information age. It has enabled the extension of computing power upward (into the cloud) and downward (into handheld devices). The growth of robust operating systems and middleware has enabled the proliferation of applications that support everything from complex airline reservation systems to music downloads.

Key to that growth has been the existence of a robust patent system. Patents protect innovators who take business risks in bringing new products into the marketplace. In fact, there's a synergistic relationship between the strength of the patent system and a vibrant economy that rewards innovation and risk taking. So clearly, the U.S. economy benefits from a patent system that recognizes innovation wherever it exists, be it in hardware or in software.

So why the controversy? A strong patent system strikes an appropriate balance between private incentives to innovation, public benefit from encouraging dissemination of ideas, and restrictions the resulting patent places on the public. Right now, things are a bit off kilter in the U.S. For example, we've suffered from the issuance of overly broad software-based patents for methods of doing business. Such patents, with their attendant lack of technical content, tend to skew the scales in favor of private benefit to the detriment of associated public benefit. The question of business method patentability is now being considered by the U.S. Supreme Court in the Bilski v Kappos case, which involves a dispute over whether a method for hedging commodities trading risk is patentable subject matter. More broadly, the US patent laws are in need of updating to deal with issues such as facilitating challenges to bad patents and dispensing with archaic rules regarding who is entitled to a patent if multiple parties claim to have invented the same thing...that's why patent reform is so important.

While the courts struggle with whether business methods should be patentable, in Bilski some argue that we should throw the baby out with the bathwater, and revise the law to say that all software inventions should be unpatentable. That would be a mistake, because most software-based inventions embody compelling technical advances that strike the appropriate balance between private incentives and public restrictions. Holding all those innovations to be unpatentable would disincent software development, just when we're seeing software truly emerge as a platform for major advances in technical innovation.