Empirical Evidence about Sof tware Patents by James Bes en …

Empirical Evidence about
   Sof tware Patents


   by James Bes en
               s
A re s tware patents
       of
j t like other patents
us                    ?
            C laim:
O ther techs had initial problems
 PTO is adapting to s tware
                     of
    U nique opposition
computer co. s in 60s & 70s
   mos SW co. s in 90s
      t
    s tware developers
     of
   Sof
     tware developers supporting
           patents f .
                   or..
                               1992   1996
Source code                     2%     4%
Object code                     2%     4%
Pseudocode                      1%    10%
Module design                   9%    11%
Algorithms                     12%    28%
User interface commands         1%     0%
Icons                           0%     0%
User interface layout           1%     2%
User interface sequence         1%     2%
Look and feel                   0%      --
User interface functionality    4%     6%
Computer generated images       1%     0%
       Technology Diferences
                    f

                    Probability   Mean
                     patent in patent value
                       suit       ($92)
ALL                   2.0%       $78,168
Chemical              1.1%      $332,790
Complex               2.0%       $52,024
Other                 2.2%       $79,570

Software               4.6%      $55,421
 business methods     13.7%
                                            A dapting?
              Probability software patent in suit within 3 years of issue

2.0%




1.5%




1.0%




0.5%




0.0%
       1984   1985   1986   1987   1988   1989   1990    1991     1992      1993   1994   1995   1996   1997   1998   1999
                                                        Patent Issue Year
W hat s right about SW patents?
                        SW patent value (U S public f )
                                                    irms
                                                        Rents from US SW patents

               0.3




               0.2
$92 billions




               0.1




               0.0
                     1984   1985   1986   1987   1988    1989   1990   1991   1992   1993   1994   1995   1996   1997   1998   1999
Private value  innovation
A nything wrong with SW patents?
Rob Merges:

...software professionals such as Dan Bricklin and
the members of the League for Programming
Freedom were mostly, but not completely, wrong
about the prospects for software patents. Patents
have not killed the software industry; they have not
led to a slowdown in entry; and they do not appear
to have had much if any effect on industry
structure.
Few SW f patent
        irms
     < 25%
Do SW patents contribute to thickets ?
  Manufacturing                 75%
     Chemicals                       5%
     Machinery (inc. computers)     24%
     Electronics                    28%
     Instruments                     9%
     Other manu.                     9%
  Non-manufacturing             25%
     Software publishers             5%
     Software services               2%
     Other non-manu.                 4%
        Is
        s ue:
Future ofSW industry
                                                 C os & Benef
                                                     ts     its
               6.0




               5.0




               4.0

                                     Rents from US SW patents
$92 billions




                                     Cost of US SW patent litigation to
               3.0                   alleged infringers




               2.0




               1.0




               0.0
                     1984   1985   1986   1987   1988   1989   1990   1991   1992   1993   1994   1995   1996   1997   1998   1999
                     ?

"uzzy" boundaries => inadvertent inf
 f                                 ringement
         C hemicals
Trans6-2- or 4-
     - [ (3-      carboxamido-
 s tituted pyrrol--
  ubs            1yl)alkyl]4-
                           -
    hydroxypyran- ones
                 2-
            Software
     point ofs location
               ale
         material obj ect
inf
  ormation manuf  acturing machine
      Patent boundaries
                       Relative
                    frequency of
                        claim
                    construction
                       appeal
ALL                      1.0
Chemical                 0.8
Complex                  0.9
Other                    1.1

Software                  2.2
 business methods         6.7
Biotechnology             2.4
  I
  nadvertent inf
               ringement:
SW patents TA X innovation
                                 Patent Laws Filed
                                            uits
3500




3000




2500




2000




1500




1000




500




  0
       1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
       SW patents &
       patent ref
                orm
                    Percent of
                     lawsuits
                      (2002)
Chemical               13%
Complex                34%
Other

Software              26%
 business methods      4%
Biotechnology          3%