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Software patents: foolish business

This article is more than 12 years old
Editorial
Companies find it more attractive to make money suing each other for infringement than actually making things

Most people understand the origins and rationale of ordinary industrial patents. They give, say, a pharmaceutical company which has spent a fortune developing a new drug a window to profit from its investment before the rest of the world can make cheaper versions. But software patents, though legally similar, are very different in practice. Google's $12.5bn purchase of Motorola's mobile phone activities last week caused a stir in the business and technology worlds alike, because the reason for it was not to acquire Motorola's phones but its portfolio of up to 17,000 "software patents", which have become the gold dust of the digital age.

Patents are now a multibillion-dollar industry in which companies find it more attractive to make money suing each other for infringement than actually making things. Until the mid-1990s the computer industry – including Microsoft – was opposed to such licensing. This was mainly because the industry was so innovative without the protection of patents, which in any case involved often quite trivial advances in technology that were regarded as a standard part of an engineer's work.

Then temptation reared its head. Corporate lawyers realised that they could sue others for infringing patents often purchased as a job lot. They were joined by "troll" companies formed just to buy up patents and sue companies and developers, knowing that most would settle rather than face the huge cost of hiring defence lawyers. Today the corporations that formerly opposed patents are in an arms race to acquire them. Microsoft has amassed a vast patent arsenal and can charge a manufacturer like HTC a reported $5 for every phone it sells – even though the Android system (developed by Google) used in HTC phones is "open source" and supposedly available to everyone. With hundreds, if not thousands, of patents now inside a mobile phone it is almost impossible not to infringe some patent in some way. Meanwhile Google, faced with its rivals vacuuming up all the patents in sight, has been forced to buy its own portfolio in self-defence.

Patents were supposed to protect innovation. Now they risk throttling it. Such acquisitions may drag technology companies ever further from their original core competences. Academic research by the Berkman Center for Internet and Society has found that software patents have provided no net benefit to the software industry, let alone to society as a whole. Tragically, because so many corporations which formerly opposed software patents have now joined the system, an effective solution will be harder to find. Once again consumers are pitted against the corporations. Where are the regulators when they are needed?

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