[Fsfe-ie] Morning Ireland piece on Software Patents

Ben North ben at redfrontdoor.org
Thu May 6 14:41:33 CEST 2004

Ciaran O'Riordan wrote:
> [...] I'm missing (at least) one piece of info: why would a venture
> capitalist want software to be patentable?

This is one possible argument for why venture capitalists might be in
favour of software patents.  It is pure speculation on my part, of

Suppose the world is set up so that it's nigh-on impossible to create a
new software product without infringing on a bunch of patents owned by
players like Microsoft, IBM, and so on.  Then suppose I have a great new
idea about how to make some significant improvement in the way, say, a
program like Adobe Photoshop works.  Maybe a new image-processing
algorithm which automates some process which at the moment takes a
skilled operator half a day to do.  Now, I seek VC funding to develop
and patent this idea.  I cannot sell "Ben's SuperPhotoShop" because it
would infringe a load of Adobe's patents, but I can go to Adobe and sell
them the rights to my patent, or license it, or similar.  The VC then
gets their required return-on-investment.  It's a reasonably workable
model, with small players coming up with ideas, patenting them, and
selling them to the large players who actually make the software.
EXCEPT that this is now the only thing I can do with my idea.  If Adobe
doesn't want it, I'm out of luck.  I can't really sell it to anybody
else either, if Adobe is the only real player in the image-manipulation
market.  And if it's an idea which would in some sense be a Good Thing
for the world at large, but doesn't happen to fit into Adobe's business
plan for whatever reason, the world loses out.  But if you're only
interested in the patent system as a way to make (some) investments pay
off, that doesn't matter too much.  The end product would be what we're
seeing in the US, where "pure-IP" companies exist, who do nothing but
license patents they've bought.  Again, this is a workable business
model, but it's not clear that it's good for innovation.

It's not true to say that software patents would be bad for everybody.
They would be very good for large companies, and the "pure-IP" type of
business.  The lucky "pure-IP" companies who get patents on ideas that
large companies want (and who have enough VC backing to make credible
threats about taking the large company to court if they don't license;
James made this point in his email) would win big.  The large companies
get to decide which ideas are fit for public consumption.  Patent
offices would need bigger budgets to examine all these new patent
applications.  (As a separate point, there is no real incentive for a
patent office to decline an application --- nothing bad happens (to the
patent office) if a patent is overturned, and it's more work to properly
look for prior art, so their incentives are such that they are better
off just issuing the patent and letting the courts sort it out.)  Patent
lawyers would get increased business advising their clients.

But none of this is good for innovation, which is supposed to be the
whole point of the patent system.

Right, sorry, that turned into quite a ramble.  I hope to read through
Ciaran's patent letter soon.


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