Title: Optima
Full Citation
Permanent Link: http://ufdc.ufl.edu/UF00090046/00033
 Material Information
Title: Optima
Series Title: Optima
Physical Description: Serial
Language: English
Creator: Mathematical Programming Society, University of Florida
Publisher: Mathematical Programming Society, University of Florida
Place of Publication: Gainesville, Fla.
Publication Date: June 1991
 Record Information
Bibliographic ID: UF00090046
Volume ID: VID00033
Source Institution: University of Florida
Holding Location: University of Florida
Rights Management: All rights reserved by the source institution and holding location.


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of the
and the

George B. Dantzig
Donald Goldfarb
Eugene Lawler
Clyde Monma
Stephen M. Robinson


N 33
June 1991






PAGE 2 special edition JUNE 199

Background and charge

SHE Committee was
appointed in the
w spring of 1990
by George Nemhauser, Chair-
man of the Mathematical Pro-
gramming Society (MPS).
Its charge follows:
"The purpose of the committee
should be to devise a position
for MPS to adopt and publicize
regarding the effects of patents
on the advancement of research
and education in our field. The
committee may also wish to
comment on the recent
past history."
This is the report of the Commit-
tee. It comprises a main body
with our assumptions, findings
of fact, conclusions, and recom-
mendations. There are two
appendices, prepared by others,
containing a great deal of spe-
cific factual information and
some additional analysis.


MPS is a professional, scientific society
whose members engage in research and
teaching of the theory, implementation and
practical use of optimization methods.
It is within the purview of MPS to promote
its activities (via publications, symposia,
prizes, newsletter), to set standards by
which that research can be measured (such
as criteria for publication and prizes,
guidelines for computational testing, etc.),
and to take positions on issues which
directly affect our profession.
It is not within the purview of MPS to
market software products, and MPS should
not become involved in issues related to the
commercial aspects of our profession except
where it directly affects research and
The Committee is unable to make expert
legal analyses or to provide legal counsel.
The main body of this report is therefore
written from the perspective of practitioners
of mathematical programming rather than
from that of attorneys skilled in the law.
MPS is an international society. However,
the Committee has interpreted its charge as
applying specifically to U.S. patent law and
its application to algorithms. All comments
and conclusions of this report should be
read with this fact in mind.

Facts about patents and

The three principal forms of legal protection
for intellectual property are the copyright,
the patent, and the trade secret. Copyrights
and patents are governed by federal law,
trade secrets by state law. Setting aside the
issue of trade secrets, some of the distinc-
tions between copyrights and patents can be
summarized as follows.
Type of property protected: Patents protect
ideas, principally "nonobvious" inventions
and designs. It is well established that
"processes" are patentable. The Patent
Office currently grants patents on algo-


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JUNE 1991


rithms and software, on the basis of the
ambiguous 1981 U.S. Supreme Court
decision in Diamond v. Diehr.
Copyrights do not protect ideas. Instead,
they protect the expression of ideas, in
"original works of authorship in any
tangible medium of expression." The
principle that software is copyrightable
appears to have been well established by the
1983 decision of the U.S. Court of Appeals in
Apple v. Franklin.
How protection is obtained: Federal law is
now in essential conformity with the Bern
Copyright Convention. As a consequence,
international copyrights are created virtu-
ally automatically for most works of
authorship. Government registration of
copyrights is simple and inexpensive to
By contrast, patents are issued by the U.S.
Patent Office only after an examination
procedure that is both lengthy (three years
or more) and costly ($10,000 and up in fees
and legal expenses). An inventor must avoid
public disclosure of his invention, at least
until patent application is made, else the
invention will be deemed to be in the public
domain. Patent application proceedings are
confidential, so that trade secret protection
can be obtained if a patent is not granted.
Length of protection: U.S. patents are for 17
years. Copyrights are for the lifetime of the
individual plus 50 years or, in the case of
corporations, 75-100 years.

Facts about algorithms

Algorithms are typically designed and
developed in a highly decentralized manner
by single individuals or small groups
working together. This requires no special
equipment, few resources, and little cost.
The number of people involved is also quite
large compared to the needs of the market-
place. Independent rediscovery is a com-
monly occurring phenomenon.
There is a long and distinguished history of
public disclosure by developers of math-
ematical algorithms via the usual and
widely-accepted channels of publication in
scientific journals and talks at professional

meetings. These disclosures include the
theoretical underpinnings of the method,
implementation details, computational
results, and case studies of results on
applied problems. Indeed, algorithm
development is based on the tradition of
building upon previous work by generaliz-
ing and improving solution principles from
one situation to another.
The commercial end product of an algo-
rithm (if there is any) is generally a software
package, where the algorithm is again
generally implemented by a very small
number of individuals. Of course, a larger
group of people may be involved in
building the package around the optimiza-
tion software to handle the user interface,
data processing, etc. Also, others may be
involved to handle functions like marketing,
distribution, and maintenance.

C competition in the marketplace has
been traditionally based on the performance
of particular implementations and features
provided by particular software products.
The product is often treated like a "black
box" with the specific algorithm used
playing a rather minor role.
The cost of producing, manufacturing,
distributing and advertising optimization
software is often quite small. Even when
this is not the case, it is generally the
implementation of algorithms that is costly,
rather than their development. Software
manufacturers have a need to protect their
investment in implementation, but have
little need to protect an investment in
algorithmic development. In the absence of
patents, algorithms-like all of mathematics
and basic science- are freely available for
all to use.
Traditionally, developers of optimization
software have protected their investments
by keeping the details of their implementa-
tion secret while allowing the general
principles to become public. Software
copyrights are also an appropriate form of
protection, and are now widely used.
Moreover, despite unresolved legal ques-
tions concerning the "look and feel" of
software, the legal issues of copyright
protection seem to be relatively well settled.

Often an optimization package is a small
(but important) part of an overall planning
process. That process is often quite complex;
it may require many resources and great
cost to complete, and the potential benefits
may be uncertain and distributed over a
long time period. In such situations it is
usually quite difficult to quantify the net
financial impact made by the embedded
optimization package.

Public policy issues

Will algorithm patents promote invention?
Article I, Section 8 of the U.S. Constitution
empowers Congress "To promote the
Progress of Science and useful Arts, by
securing for limited Times to Authors and
Inventors the exclusive Right to their
respective Writings and Discoveries."
Inasmuch as patents are intended to provide
an incentive for invention, it seems appro-
priate to inquire whether patenting of
algorithms will, in fact, create an incentive
for the invention of algorithms.
Given the existing intensity of research and
the rapid pace of algorithmic invention, it
seems hard to argue that additional incen-
tives are needed. In fact, there is good
reason to believe that algorithm patents will
inhibit research, in that free exchange of
ideas will be curtailed, new developments
will be held secret, and researchers will be
subjected to undesired legal constraints.
Will algorithm patents provide needed
protection for software manufacturers?
Copyright and trade secret protection
appear to provide the sort of protection
most needed by software manufacturers. By
their nature, patents seem to offer a greater
potential for legal confrontation than
copyrights. Instead of providing protection,
algorithm patents actually pose a threat to
smaller software houses lacking the re-
sources to defend themselves in costly
patent litigation. It can be argued that
patents encourage an oligarchical industrial
structure and discourage competition.
Is the Patent Office able to deal with
algorithm patents? There is abundant
evidence that the Patent Office is not up to
the job. Many algorithmic "inventions" have

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PAGE 4speIc~IIBiaeiin UE19

been granted undeserved patents, greatly
increasing the potential for legal entangle-
ment and litigation. Moreover, it seems
unlikely that there will be any substantial
improvement in the quality of patent


It seems clear from the previous discussion
that the nature of work on algorithms is
quite different from that in other fields
where the principles of patents apply more
readily. This in itself is a strong argument
against patenting algorithms.
In addition, we believe that the patenting of
algorithms would have an extremely
damaging effect on our research and on our
teaching, particularly at the graduate level,
far outweighing any imaginable commercial
benefit. Here is a partial list of reasons for
this view:
* Patents provide a protection which is not
warranted given the nature of our work.
* Patents are filed secretly and would likely
slow down the flow of information and the
development of results in the field.
* Patents necessarily impose a long-term
monopoly over inventions. This would
likely restrict rather than enhance the
availability of algorithms and software for
* Patents introduce tremendous uncertainty
and add a large cost and risk factor to our
work. This is unwarranted since our work
does not generate large amounts of capital.
* Patents would not provide any additional
source of public information about algo-
* Patents would largely be concentrated
within large institutions as universities and
industrial labs would likely become the
owners of patents on algorithms produced
by their researchers.
* Once granted, even a patent with obvi-
ously invalid claims would be difficult to
overturn by persons in our profession due
to high legal costs.

* If patents on algorithms were to become
commonplace, it is likely that nearly all
algorithms, new or old, would be patented
to provide a defense against future lawsuits
and as a potential revenue stream for future
royalties. Such a situation would have a
very negative effect on our profession.


The practice of patenting algorithms is
harmful to the progress of research and
teaching in optimization, and therefore
harmful to the vital interests of MPS. MPS
should therefore take such actions as it can
to help stop this practice, or to limit it if it
cannot be stopped.
In particular:
* The MPS Council should adopt a resolu-
tion opposing the patenting of algorithms
on the grounds that it harms research and
* MPS should urge its sister societies (e.g.,
SIAM, ACM, IEEE Computer Society, AMS)
to take a similar forthright position against
algorithm patents.
- MPS should publish information in one or
more of its publications as to why patenting
of algorithms is undesirable.
* The Chairman of MPS should write in his
official capacity to urge members of
Congress to pass a law declaring algorithms
non-patentable (and, if possible, nullifying
the effects of patents already granted on
* MPS should support the efforts of other
organizations to intervene in opposition to
the patenting of algorithms (for example, as
friends of the court or with Congress). It
should do so by means such as providing
factual information on mathematical
programming issues and/or history, and
commenting on the impact of the patent
issue to our research and teaching in
mathematical programming. MPS should
urge its members to do likewise.

26 September 1990

~ II


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Appendix A

The case against
"software patents"

by Brian Kahin
Brian Kahin is an attorney and consultant specializ-
ing in intellectual property, information technology,
and policy development. He is currently an adjunct
research fellow and director of the Information
Infrastructure Project in the Program on Science,
Technology and Public Policy at Harvard's John F.
Kennedy School of Government. He recently prepared
reports on issues surrounding the development of the
National Research and Education Network for the
U.S. Congress Office of Technology Assessment.
Mr. Kahin was a principal in the founding of the
Interactive Video Industry Association and has served
as general counsel for the Association since its
inception in 1987. He is also counsel for the
International Interactive Communications Society, the
society for professionals in interactive media, and has
recently been appointed counsel to the Federation of
American Research Networks.
Mr. Kahin was instrumental in the conception and
development of the EDUCOM Software Initiative -
which has involved hundreds of universities and
publishers in addressing issues in the creation,
distribution, licensing, management, and commercial-
ization of software in higher education and is the
original author of the widely published "EDUCOM
Code" on intellectual property rights. He is currently
directing the EDUCOM project on software patents.
During the past three years, Mr. Kahin has chaired
subcommittees on user rights and derivative works
within the Databases Committee (PTC-702) of the
American Bar Association. He was formerly affiliated
with the Research Program on Communications
Policy at MIT, where he served in various capacities
for the Research Program, the MIT Communications
Forum, and Project Athena. Mr. Kahin received his
B.A. from Harvard College in 1969 and his J.D. from
Harvard Law School in 1976.
Mr. Kahin's telephone number is (617) 864-6606 and
his electronic mail address is
kahin@hulawl .harvard.edu.


SI i;: i agilililigiiiiii

New round in an old debate

S shortly after Diamond v. Diehr [1]
was decided by the Supreme Court in
1981, the twenty-year-old debate over
the patentability of computer programs
subsided. In that case, a 5-4 majority of
the Court, by accepting the patentability
of a process for curing rubber in which a
computer program was the major
component, had found their way
around earlier misgivings about the
patentability of mathematical algo-
rithms. [2]
The Patent Office, which had long resisted
granting software patents and struggled
regularly with the Court of Customs and
Patent Appeals (CCPA) over the patentabil-
ity of program-related inventions, subse-
quently underwent a change of heart. After
pending appeals to the CCPA were decided
in 1982, not a single case concerning a
rejected application for program-related
patent was heard by either the CCPA or its
successor, the Court of Appeals for the
Federal Circuit (CAFC), for the following
seven years. As the debate subsided, the
number of software patents granted by the
Patent Office began to grow (Table 1). By
early 1989, the trickle had become a torrent.

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PAGE 611ei1al edi JUN 199 11

Table 1. "Software Patents" Granted by
USPTO: 1981-1989

1981 21
1982 52
1983 64
1984 136
1985 153
1986 187
1987 227
1988 183
1989 (579)
(extrapolation from
1st four months of 1989: = 3 X 197)

Source: Electronic Data Systems, "Software
Patent Indexes January 1970 thru April
1989," prepared for the Computer Law
Committee of the State Bar of Texas. [3]

As these new software patents have drawn
attention, the debate has flared up. It now
takes place in an environment transformed
by the microcomputer, in which a fast-
growing, mass-market publishing industry
has emerged. Software has found its way
into almost every office and into tens of
millions of homes, performing common-
place and extraordinary functions through a
seemingly infinite repertoire of processes.
In this new round of debate, the hardware
and software industries have switched
sides. In 1978, when Parker v. Flook was
before the Supreme Court, ADAPSO
(representing software interests) filed an
amicus brief favoring patentability, while
CBEMA (representing hardware interests)
filed a brief opposing patentability. Since the
early days of computers, the hardware
industry (including IBM) had opposed
patentability of software in the belief that
software patents would inhibit software
development and so limit the market for
hardware. Software developers, while
endorsing patentability in theory, seemed
uninterested in pursuing patents in practice.

L the meantime, hardware manufactur-
ers, recognizing the growing economic
importance of software, have come to see
software as an extension of their hardware
business rather than merely as a comple-
mentary product produced by third parties.
Major hardware firms, accustomed to
patent-oriented strategies and armed with
in-house patent counsel, have filed for and
received hundreds of software patents. By
one count, IBM leads with 264 over a nine-
year period, followed by Hitachi with 69. [51
The new software publishing industry,
which developed without using patent
protection, has suddenly found itself
vulnerable to charges of patent infringe-
ment. Humble origins, rapid growth, strong
market orientation, international acceptance
of copyright, and the costs and uncertainty
of patenting -all led publishers to rely on
copyright. [6] Even today, only a handful of
patents have been issued to established
software publishers. But having seen
evidence of widespread patenting of
software processes, software publishers are
fearful that patents will increase develop-
ment costs, inhibit creativity and innovation,
and embroil the industry in litigation. [71

W thile the Software Publishers
Association has not taken a formal position
on the issue, Executive Director Ken Wasch
has spoken strongly against software
patents. [8] At this point, few software
developers understand the full impact of the
patent system on traditional practices, and
much of their frustration and anger is
vented at the seeming ineptitude of the
Patent Office. Indeed, both sides of the
debate share in widespread concern that the
Patent and Trademark Office lacks the
expertise and resources to process software
patents properly.
While the earlier debates focused on the
patentability of mathematical algorithms -
i.e., code-level processes, much of the
current debate concerns the user interface.
For example, computer-implemented
analogs of conventional practices such as
footnoting [9] and redlining [10] are
receiving patents which in many cases

appear broad enough to block most if not all
computer implementations of these prac-
tices. The late appearance of patents at this
level is a consequence of the user-oriented
design and functionality of microcomputer
Meanwhile, the academic literature on
software patents has waned. [11] There is
none that takes into account the scope and
breadth of the patents that have been issued
since Diamond v. Diehr. In the last three
years, considerable practitioner-oriented
literature has appeared (especially in The
Computer Lawyer, [121) and called attention
to the wide range of software processes now
susceptible to patenting. Largely unmindful
of policy issues, this literature presents
patent as a powerful tool for protecting
investments in software development. It is
oblivious to the criticisms and sense of crisis
that has arisen within the software publish-
ing industry since last year for which one
must look to the trade and general press.
The patent bar stoutly denies that there is
such a crisis and argues that the apparent
problems are merely typical of patenting in
any new technology until the Patent Office
acquires sufficient expertise in the subject
matter. [14] Of course, the patent bar has a
vested interest in expanding the scope of
patentable subject matter. Patent practice is
the only speciality within the law requiring
special certification and training (including
a degree in a science or engineering disci-
pline), and patent practitioners constitute a
close-knit community which gravitates
around a federal agency in Crystal City,

T he inauguration of the Court of Appeals
for the Federal Circuit (CAFC) in 1983 has
enhanced the special status and insularity of
patent practice. In the interest of promoting
uniformity in the law, the CAFC is assigned
jurisdiction over all appeals from patent
decisions in the District Courts, as well as
appeals from Patent Office decisions (which
were formerly heard by the CCPA). With
panels in patent cases led by members of the
patent bar, the CAFC has established a
strong pro-patent record and has greatly

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PAGE 7 special edition

strengthened the presumption of patent
validity. [15] Even a sympathetic observer
has noted the "evangelical fervor" with
which the CAFC has pursued its course of
action. [16] The CAFC, and the Reagan
Administration's general support for
patents, created an encouraging atmosphere
for the Patent Office's foray into software.

Capability of the Patent

In theory, given enough resources, it should
be possible for the PTO to process software
patents expeditiously within the present
framework of the patent system. However,
the 1966 Report of the President's Commis-
sion on the Patent System observed:
The Patent Office now cannot examine applica-
tions for programs because of the lack of a
classification technique and the requisite search
files. Even if these were available, reliable
searches would not be feasible or economic
because of the tremendous volume of prior art
being generated. Without this search, the
patenting of programs would be tantamount to
mere registration and the presumption of
validity would be all but nonexistent.

T o most of the software industry, these
observations hold true today. Despite the
PTO's embrace of software patents after
Diamond v. Diehr in the early 1980s, it has
made no apparent effort to address these
problems in any systematic manner. The
classification scheme remains undeveloped,
[18] and the problem of locating prior art
has only been exacerbated by the long delay.
Ironically, the PTO now maintains that there
is no problem, [19] and the presumption of
patent validity has been greatly strength-
ened by decisions of the CAFC.
It is difficult for the PTO, like other govern-
ment agencies, to find resources to meet
new challenges, and the 1966 President's
Commission in part echoed the PTO's own
anxiety about launching into an uncharted,
seemingly fathomless area. In theory, if only
sufficient funding were available, the Patent
Office could hire the right people, build a

comprehensive library to reference prior art,
develop a sophisticated classification
system, and invest in the best automation.
But while the funding of the Patent Office
has more than doubled in the past seven
years and average processing time has been
reduced to 18-19 months, average process-
ing time for software patents remains
substantially higher around 30 months.
[20] Indeed, since it has recently been taking
the Patent Office around two months after
the grant to actually publish patents, the
effective processing period is, in certain
respects, 32 months. [21] Despite the longer
processing period, there is widespread
concern about the quality of the review
process because so many of the patents
issued look obvious to industry observers.
Indeed, the lack of reported appeals from
Patent Office decisions since 1982 suggests
that most applications for software patents
are eventually granted.
One frequently cited problem is that the
Patent Office does not accept a computer
science degree as a qualifying degree for
attorney registration. Even if it did, there is a
question of how well the Patent Office can
attract and hold expertise in an area where
industry demand is high. Difficulty in
attracting qualified personnel naturally
creates problems in applying the
nonobviousness standard, since less
qualified examiners will tend toward a
lower standard in determining the hypo-
thetical "person having ordinary skill in the
art." Less qualified personnel are also more
likely to be influenced by sophisticated
patent attorneys in the ex parte review
process, and the point system for promotion
of personnel rewards dispositions, which
encourages the granting of patents in close
The problem of locating prior art noted by
the President's Commission is first of all due
to the lack of a base in the patent records
themselves. In a mature technology, the
patent records with their classification
system and cross-referencing provide the
most useful base of prior art. However, since
history passed the Patent Office by thirty
years ago, only an infinitesimal portion of
the art of computer programming is to be
found in the patent database. In most fields,

the prior art in the patent base is supple-
mented by published technical literature,
but in computer programming the literature
is scant and unorganized. There was long a
dearth of scholarly literature in the field,
and there is still no bibliographic database.

N or does the Patent Office maintain a
library or archive of software that might
provide a record of the prior art. However,
software alone does not qualify as a
"printed publication" establishing prior art,
and further evidence would be required to
show that the software was used publicly.
Locating and documenting such evidence is
often expensive and is usually undertaken
only in the course of patent litigation.
In addition, many programs used commer-
cially are licensed subject to trade secret
restrictions against reverse engineering.
When a software process is hidden and
contractual restrictions effectively preclude
its disclosure, it may be considered sup-
pressed and therefore not qualify as prior
art. [22] On the other hand, it may qualify as
prior art if the license is not effective in
precluding reverse engineering as may
well be the case with common shrink-wrap
licenses. [23]

Nature of the software

Since the patent system operates under the
principle of winner-take-all, only the very
first to invent gets the patent. The efforts of
the losers are wasted in that they must
design around the patent (if that is possible)
or pay the winner for the privilege of using
the patent.
If one knew who had invented what when it
happened, this would not be so bad.
However, patent applications remain secret
unless and until the patent issues. This
secrecy permits the applicant to maintain
trade secret protection if the patent applica-
tion is not granted. However, with no way
of knowing what patents are in the pipeline,
a software developer can never be assured
of avoiding patent infringements. While this

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problem is endemic to the patent system,
factors combine to make it exceptionally
severe in the case of software.
Product development cycles in the software
business are typically much less than the
current 32-month average time between
application and the publication of patent
grant. Indeed, the product life cycle may
well be less than 32 months. Even 20
months, the current average for all patents is
a very long time in the software business.
At the same time, the potential for waste is
uniquely severe in the software industry
because of the sheer number of players. The
highly decentralized nature of the industry
makes it likely that many different individu-
als or firms will come up with similar new
processes at about the same time. Structur-
ally, the software industry resembles
"industries" traditionally protected by
copyright, in which there are a large number
of diverse participants who accept indepen-
dent creation as a natural defense and risk.

T hus the blindsiding problem is, in the
first instance, a product of the number of
players times the length of the pendency
period. The third factor, the complexity of
software the growing number of patent-
able processes in software products will
be discussed below.
The highly decentralized structure of the
software industry may also be an accident of
history of the virtual absence of patenting
until recent years. Investment and develop-
ment practices were designed simply to
avoid unauthorized copying the essence
of trade secret and copyright. Trade secret
and copyright were widely accepted,
although there is certainly controversy
about copyright protection at higher levels
of abstraction the area of "look and feel"
and "structure, sequence, and organiza-
tion." But with widespread patenting, the
rules seem to have changed in the middle of
the game, albeit as the effect of court
decisions and patent office policy made
seven years ago.

Part of the delayed reaction is due to a
belated understanding of the significance of
patents. Patents are usually portrayed by
lawyers simply as another form of protec-
tion which developers are free to take or
leave depending on costs, the likely value of
the patent, and other strategic consider-
ations. [25] But that is only half the picture.
The costs of doing business under the patent
environment include the costs and risks of
avoiding infringement, which are borne by
every developer regardless of whether the
developer chooses to apply for patents. All
must adapt to a new paradigm of operation
in which defensive research precedes
If software had clearly been patentable from
the outset, there would be no surprise, no
defeated expectations. But now it appears
that the industry may have to be reshaped
to fit the patent system and that the rapid
development of software products may
have to be slowed to fit the review, process-
ing, and publication cycle of the Patent
Office. Most important, the low barriers to
entry which have characterized the software
industry will be raised significantly by the
costs of operating under the patent system.
Much of software development has been a
cottage industry, in which independent
genius flourished unencumbered. Visicalc,
1-2-3, WordPerfect, and many other
microcomputer programs were initially
created by individuals and small teams.
Software development requires no materi-
als, no special facilities, and no special tools.
To design it is to build it.
While it cannot be proven empirically, it is
widely accepted within the software
community that there are diseconomies of
scale in software development. [26] Under a
patent regime, software development is no
longer a place for individual authors with
good ideas and the skills to transform them
into marketable software. It is instead an
industrial enterprise, in which the cost and
risks of avoiding and claiming patents are
part of the cost of doing business.
True, it will remain possible for individuals
and small companies to pursue strategic
patents themselves, which they may in turn
license to large companies. But they will

increasingly need to license from other
patent holders in order to assemble a
marketable product. Only companies with a
full complement of patents for cross-
licensing and ample financial resources to
absorb the continuing costs and risks of
pursuing and defending against patents will
be able to innovate rationally. Investments
at the venture capital level will necessarily
be diverted from developing solid market-
oriented products to speculation in strategic

A although cross-licensing allows
efficient, competitive exploitation of patents
in industries where there are relatively few
firms of roughly similar size, cross-licensing
will not work for the many thousands of
small firms and tens of thousands of
individuals in the software industry -
because these small players have little or
nothing to bring to the table. The vision of
cross-licensing as a solution to the problem
of software patents implicitly assumes a
wholesale shakedown and restructuring of
the industry. In fact, since software publish-
ers hold so few patents, it may imply the
death of software publishing as an indepen-
dent industry and its absorption by hard-
ware manufacturers who have the arsenals
needed for meaningful "protection" in the
patent world.
Accordingly, "defensive patenting," the
strategy of acquiring patents for cross-
licensing is an option only for the largest
firms, those that can afford to acquire a
meaningful portfolio. While defensive
patenting may of value in whatever cross-
licensing scenario emerges over the long run
(or in selling out the company to a hardware
manufacturer), it is of limited value in the
short run. First, because of the time required
to prepare and pursue a patent application.
Secondly, because the particular "defensive
patents" must be needed by the company
that holds a needed strategic patent.
Defensive patents are completely ineffective
against firms such as Refac International
which have no interest in producing
software themselves.

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S ince a patent, unlike copyright, includes
the exclusive right to control the use of the
product or process, a patent holder may
pursue the users of an infringing product or
process independent of the manufacturer or
seller. In this respect, too, software publish-
ers may be victims of their own success. Not
only is their product likely to be used by
large companies with deep pockets, but
volume licenses are common, providing
patentees with an easy trail to infringing
users. This gives the patentee enormous
leverage over the publisher. Users will be
reluctant to deal with publishers that expose
them to lawsuits and that are unable to
indemnify them for patent infringements.
Once they understand this problem, users,
especially large corporate users, will be
reluctant to acquire software from small
Small developers currently have the option
of distributing through large publishers for
which they receive a royalty of 10-20% of
sales. This option, too, will be limited and
foreclosed. First, the publisher's customary
royalty is likely to be reduced to reflect the
publisher's risk of patent infringement. But
once royalties must be paid to patent
holders, the developer's margin disappears
very quickly. A "reasonable royalty" is
commonly used as a measure of damages
for patent infringement, especially when the
patent holder is not working the patent.
Although awards of "reasonable royalties"
vary, the trend is upward with recent CAFC
decisions affirming rates of 5 to 33 '3%. [27]
At these rates, royalties on only one or two
patents put the developer out of business.

A together, software developers face
new costs of operation at three different
At the first level are the costs of searching
and analyzing prior art to avoid patent
infringement. A precautionary search and
report by outside patent counsel may be
expected to cost $2,000. Bear in mind that this
cost and other calculations are per process
rather than per product. Other costs include the
risk of infringing patents which cannot be
found because they are still in the pipeline or
because of the deficiencies of the classification
system (or the PTO's misclassification of
particular patents). [28]

The second set of costs are the license fees
that must be paid to holders of valid patents,
including the costs of determining the
necessity and value of the license, negotiating
the license, and reporting to the patent holder.
If the patent holder refuses to license, there are
costs of designing around the patent, if that is
possible. Otherwise, there will be the greater
costs of reconceiving or even abandoning the
product. These constitute the direct costs
imposed by the patent monopoly which are
theoretically justified by the incentive to the
patentee and the value of the knowledge
contributed to the public domain.
The third set of costs are those incurred
only when the developer chooses to file for
patents. These include the usual first-level
costs (searching for prior art) plus all the
additional expenses of preparing, filing,
negotiating, and maintaining a patent. In
addition to the $10,000 to $15,000 that may be
expected for a patent attorney's services,
considerable time will be required from the
developer's staff to adequately prepare and
prosecute the application. Administrative fees
over the life of the patent will exceed $3,000.
Thus, the real cost can easily come to $25,000 or
more. And this will run substantially higher if
foreign patents are also sought.
The notoriously high costs of patent
litigation must be borne by both sides -
and so must be attributed to both the first
and third categories. Just to get through the
discovery phase of a lawsuit is likely to cost
each side $150,000, and a full trial will cost
each $250,000 on up into millions in
direct costs, not including the staff time
absorbed in litigation. While a small patent
holder may be able to secure a law firm on a
contingency basis or sell an interest in the
patent to speculators, the defendant has no
such options.

L litigation also involves the possibility,
and further expense, of an appeal. All
appealed patent cases now go directly to the
Court of Appeals for the Federal Circuit,
where the panels include patent lawyers
turned judges. Whereas patents once fared
poorly in the circuit courts, the CAFC has
found patents to be both valid and infringed
in over 60% of the cases that have come
before it.

These high costs give patentees considerable
leverage over small firms, who will, as a
practical necessity, pay a license fee rather
than contest a dubious patent. The patent
holder can then move on to confront other
small firms, pointing to such license
agreements as acknowledgments of the
patent's validity and power. This tactic has a
snowballing effect that can give the patent
holder the momentum and resources to take
on larger companies when the time is ripe.
All these costs must be paid by someone. In
the short run, they may come out of the
software industry's operating margins, but
in the long run, as the industry shakes out,
they will be borne by users. At the same
time, the shakeout will mean a loss of
diversity in innovative firms and in the
products available to consumers.

Nature of software

The costs and risks associated with patent-
ing have grown geometrically as software
has become more sophisticated and com-
plex. But, again, the impact was not felt until
recently. In the meantime, driven by a
highly competitive software market,
software developers added function after
function heedless of whether somebody else
might have implemented it first.
Applications software that consisted of a
couple thousand lines of code when
originally released in the early 1980s may
now contain ten thousand lines. Dan
Bricklin, author of the original spreadsheet,
Visicalc, estimates that a modern applica-
tions program may contain thousands of
processes which are patentable under
present Patent Office standards. [29]
Although most of these processes are now
part of the public domain, at this scale the
odds of infringement are probably high.
The highly integrated nature of software
makes the prospect of infringement espe-
cially disturbing. It is usually difficult to
excise an offending process because each
process will be interconnected to the
remainder of the program package at so
many points. Several iterations of redesign
and testing may be required in the removal
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Software is often built on top of other
software, so that a patent problem at one
layer may preclude use of the high layers. In
this way, applications software rides on
operating system software, and many
programs are sold with run-time modules of
programs which operate at a lower level of
functionality. A patent infringement in an
authoring system, for example, may
jeopardize all programs created with that

T he evolution of complex, layered
software also raises problems in applying
the standard of nonobviousness. Where is
the person of ordinary skill in the art to be
found? In the elite few who design micro-
computer software or in the ranks of 700,000
computer programmers? In theory, the
Patent Office should acknowledge speciali-
ties within the development process that
differentiate code writers from higher-level
designers. But, as noted, the Patent Office
does not even recognize computer science as
a qualifying degree, so it seems unlikely that
it will recognize finer degrees of specializa-
A related problem is the breadth of the
claims allowed by the Patent Office for
software processes at the user-interface
level, often at a level of abstraction that is
shocking to the uninitiated. [30] Even
though the disclosure is in terms of a flow
chart rather than code (which enables the
applicant to maintain trade secret protection
at the code level), there is often great
Disparity between the particular implemen-
tation disclosed and the broadest claims in
the patent. All that need be disclosed is the
"best mode contemplated by the inventor of
carrying out his invention," [31] which may
be merely one of many.

S ome of these patents appear to preempt
automation of common functions such as
footnoting and redlining. [32] Others appear
to preempt obvious procedures for entering
data, [33] providing on-line help, [34] or
other fundamental user interface elements.
For years software developers have been
routinely implementing software analogs or
simulations of common office functions,
writing and bookkeeping procedures,
learning strategies, and other human
activities. Now the Patent Office is proceed-
ing as if the first to computerize any such
function merits a 17-year monopoly over
any software implementations of the
In part, this is an issue of what is obvious to
whom. But it also reflects the sweeping
aside of judicial doctrines barring patent-
ability for "methods of doing business" and
"mental steps." [35] For example, a patent
held by Merrill Lynch on its Cash Manage-
ment Account system was upheld -
precisely because it was implemented on a
computer rather than by hand. [36] In effect,
this 1983 decision stood Diamond v. Diehr
on its head, since Diamond v. Diehr
established that a computer program did
not render an otherwise patentable process
unpatentable. These decisions have been
accepted by the Patent Office [37] -
although the Supreme Court has yet to rule
on these matters.

A is frequently noted, software
processes can be implemented in hardware
as well. But the problem is not software
versus hardware but abstract processes
which are now typically implemented in
software. This problem is not even limited
to computers. For example, a patent issued
in 1979 for an "interactive teaching ma-
chine" claims not only a particular machine
but also the process of showing introductory
video segments, presenting the viewer with
a choice of decisions, and then showing the
viewer the likely outcome of the chosen
decision. [38] Although the patent discloses
a clumsy-looking combined videotape deck
and television, the broad process claim
covers a basic mode of user interaction
common in interactive videodisc design.

This example also illustrates the great
difficulty of locating many "software
When such broad claims are allowed, the
traditional quid pro quo the grant of a
limited patent monopoly for revealing what
otherwise might be kept as a trade secret -
is lacking. The process claimed is self-
evident; it cannot possibly be concealed.
Furthermore, what is claimed often appears
to be functionality rather than a process -
the two can be difficult to distinguish in the
user interface area. [39] Although the
particular implementation may not be self-
evident, implementation may be achieved in
many different ways with know-how and
hard work. Thus, the particular implementa-
tion disclosed in the patent does not
necessarily add anything of significance to
public knowledge.

Pragmatism and policy

The traditional quid pro quo has plainly
failed in practice. No one in the industry
looks to patents to learn state-of-the-art
programming and design. Even now, what
comes through the patent system is almost
by definition not state-of-the-art because it is
already nearly three years old. (Had
software been patented from the start, this
might be different: There might now be only
one word processor, one spreadsheet, one
database manager, all with less functionality
than those presently on the market but all
state-of-the-art by definition.)
Nor is there evidence that the fundamental
quid pro quo the incentives provided by
the seventeen-year patent monopoly -
applies. As the President's Commission on
the Patent System reported in 1966:
It is noted that the creation of programs has
undergone substantial and satisfactory growth
in the absence of patent protection and that
copyright protection for programs is presently
After 23 years of dramatic growth and
worldwide acceptance of copyright, these
words hold all the more true today.

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E ven if the nature of the software
development could not be differentiated
from other industrial development, this
situation is historically unique. The patent
system has taken effect in many industries
which previously had no intellectual
property protection (other than trade secret),
but there is no other case where the patent
system has been imposed on an industry
already protected by copyright. The
industry is healthy, competitive, and
prolific. It is hard to imagine that the full
press of a patent regime could propel it
faster. Obviously, the software industry is
not broke but, nonetheless, it is slowly
being "fixed."
Indeed, from a patent perspective, there
appears to be overinvestment and disor-
derly development in the industry. This
perspective sees wasted resources under a
copyright-only regime because of the
uninhibited duplication of effort.
The patent system's answer to this chaos is a
technocratic vision that would rationalize
progress in the industry by reducing the
number of players and creating a massive
database of patents that represents the
accumulated knowledge of the industry at
any one time. The pace of development
would be slowed to fit the cycles of the
patent system and to reduce waste. In the
long run, a few healthy giants would
compete on a global scale, bidding for the
ideas and loyalty of inventive individuals,
and developing the technology with the
knowledge and wisdom that comes from
vertical integration and aggregation of

T he problems with this vision are first
the problems inherent in the patent systems
- those that have been discussed and the
fact that patent holders may act in their own
self-interest to impede progress. Experience
in the early years of the auto industry, the
aircraft industry, and the radio industry all
demonstrate the potential of patents for
blocking progress. These problems are
accepted as the price of providing incentive,
but here no incentive is needed. Moreover,
these problems are exacerbated by special
characteristics of software, software
development, and the present software
industry whether these are inherent
characteristics or a consequence of the long
absence of patenting.
But there is a deeper problem in the
technocratic vision and the likely consolida-
tion of the industry, which was not evident
when computers were known only for "data
processing." As the computer becomes
ubiquitous and software grows more
versatile and sophisticated, the "universal
machine" becomes ever more universal,
ever more adept in its mediation of human
experience. Increasingly, software is
designed to render the technology transpar-
ent, to satisfy the specific human needs and
goals which are not concerned with using
the computer, but with the shaping,
expression, and delivery of information.
New "content- driven" software shows how
the computer program is becoming a
multimedia vehicle for human expression
and communication.

The collision between copyright and patent
principles at the user interface level has
received considerable attention in recent
years although usually in defining the
limits of copyright in "look and feel" and
"structure, sequence, and organization." But
whatever the fit of the particular software
feature into copyright or patent, what is
increasingly at stake is the generation and
flow of information to and from human
beings. At the atomic level, information may
not be patentable (it may not even be
protectable under copyright), but it rides on
processes that are now susceptible to
patenting just as higher level software
processes ride on lower level processes.

information per se is traditionally the
substance and territory of copyright -
which, in the interests of maintaining free
commerce in ideas and maximizing freedom
of speech, forbids only direct appropriation
of particular expression. Patent, by contrast,
is an all-pervading property right, which is
measured by the full scope of the claimed
idea rather than the inventor's particular
implementation (the expression). [40]
The intelligent ordering of information is at
the very heart of grammar, rhetoric, and
graphic design. Should information which is
interactive rather than linear be subject to
the pervasive restraints of patent? Should
human expression which is assembled or
assimilated with the aid of a computer be
restrained by patents? If the computer is
seen as extension of the human mind rather
than vice versa, it is difficult to answer yes.

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[1] 450 U.S. 175
[2] Gottschalk v. Benson, 409 U.S. 63 (1972);
Parker v. Flook, 437 U.S. 584 (1978).
[3] These figures probably vastly underesti-
mate the number because of the limitations
of the EDS methodology and PTO's
classification system. For example, the
footnoting patents cited in note [9] below
are not included.
The other known study, by John T. Soma
and B. F. Smith ("Software Trends: Who's
Getting How Many of What? 1978 to 1987,"
Journal of the Patent and Trademark Office
Society, Vol. 71, No. 5, May 1989, pp. 419-
432), is even more limited. It focuses solely
on patents originally classified or cross-
referenced to subclass 300 ("Programming
Methods or Procedures") of Class 364. It
therefore shows only 262 "software
patents" issued during the ten-year period
from the beginning of 1978 through the end
of 1987.
[4] See Michael C. Gemignani, "Legal
Protection for Computer Software: The
View from '79," Rutgers Journal of Com-
puters, Technology, and the Law, Vol. 7, p.
269-312, 307ff.
[5] Electronic Data Systems, note [3] above,
figures for 1980 through April, 1989.
16] Reliance on copyright protection does
not exclude the possibility of patenting
aspects of software which cannot be
protected by copyright. However, the
patenting process appeared costly and
uncertain. Software publishers also
attempted to use trade secret protection, but
in a mass market they had difficulty
establishing the contractual relationship
required by trade secret. See David A. Rice,
"Trade Secret Clauses in Shrink-Wrap
Licenses," The Computer Lawyer, Vol. 2,
No. 2, February 1985, pp. 17-21.
[7] William M. Bulkeley, "Will Software
Patents Cramp Creativity?" Wall Street
Journal, March 14,1989, p. B1.
[8] Lawrence M. Fisher, "Software Industry
Is in an Uproar Over a Rush of Patents,"
New York Times, May 12,1989, p. Al.
[91 Patent Nos. 4,648,067 and 4,648,071,
issued March 3,1987.

[10] Patent No. 4,807,182, issued Feb. 21,
[11] Perhaps the last article of significance
is Donald Chisum's, "The Patentability of
Algorithms," University of Pittsburgh Law
Review, Vol. 47 No. 4, pp. 959-1022, in
which Chisum attacks the Supreme Court's
distinction between mathematical and
computer algorithms as untenable and
argues that Benson and Flook were
wrongly decided.
[12] E.g., John P. Sumner, "The Versatility
of Software Patent Protection: From
Subroutines to Look and Feel," The
Computer Lawyer, Vol. 3, No. 6 (June 1986),
p. 1; Travis Gordon White and Richard T.
Redano, "Patent Opportunities for Soft-
ware-Related Subject Matter," The Com-
puter Lawyer, Vol. 4, No. 7 (July 1987); John
R. Lastova and Gary M. Hoffman, "Patents:
Underutilized Leverage for Protecting and
Licensing Software," The Computer
Lawyer, Vol. 6, No. 5 (May 1989).
[13] Vince Canzoneri, "Software Enters the
Age of Patent Protection," Computer
Update July/August 1988, p. 32; "Software
Patents: 'A Horrible Mistake'," Softletter,
September 1, 1989; Rachel Parker, "Refac's
Unworthy Patent May Rally the Rest of the
Industry," Infoworld, August 7, 1989, p. 42;
Steve Gibson, "Attorneys' Glee Over Patent
Squabbles Breeds Pessimism," Infoworld,
October 9, 1989, p. 26. See also the articles
cited in notes 7. and 8. above.
[14] E.g., David Bender, letter to the editor,
New York Times, June 8, 1989.
[15] The presumption of patent validity can
now be overcome only by clear and
convincing evidence. Lindemann
Maschinenfabrik GmbH v. American Hoist
& Derrrick Co., 730 F.2d 1452 (CAFC 1984).
[16] Robert L. Harmon, Patents and the
Federal Circuit (Washington, DC: Bureau of
National Affairs, 1988), p. vii.
[17] President's Commission on the Patent
System, "To Promote the Progress of Useful
Arts," 1966, p. 13.
[18] "Computer processes are not classified
within USPTO's patent classification
system in any readily identifiable set of
classes and subclasses." Letter from Jeffrey
Samuels, Acting Commissioner of Patents
and Trademarks to Congressman Robert W.

Kastenmeier, November 1,1989, p. 2. The
letter goes on to cite figures from the Soma
and Smith study (note [3] above) but
acknowledges, "We would have no way of
knowing how accurately these numbers
reflect the total number of patents having
claims drawn to computer processes."
[19] Ibid., p. 5.
[20] Calculated as the average for the 54
software patents issued in April, 1989, as
identified by Electronic Data Systems, note
[3] above.
[21] In the case of the Pardo patent (No,
4,398,249) for "natural order recalc," the
application was filed in 1970 but not
granted until 19831 The current assignee,
Refac International, has filed an infringe-
ment action against six major spreadsheet
22] George H. Gates III, "Trade Secret
Software: Is It Prior Art?," The Computer
Lawyer, Vol. 6, No. 8 (August 1989).
[23] See Vault v. Quaid, 655 F.Supp. 750,
E.D. LA. (1987), affirmed, 847 F.2d 255
(1988), in which the District Court sum-
marily characterized the shrink-wrap
license in question as an unenforceable
contract of adhesion. The Court found
copying for the purpose of reverse engi-
neering to be sanctioned by Section 117 of
the Copyright Act. See also, Steven W.
Lundberg and John P. Sumner, "Patent
Preemption of Shrink-Wrap Prohibitions
on Reverse Engineering," The Computer
Lawyer, Vol. 4, No. 4 (April 1987).
[24] A partial solution to the long pendency
period would be to publish the patent
application after 18 months, as is done in
other countries.
[25] E.g., "Patent Protection For Computer
Software: The New Safeguard," title of
seminar sponsored by Prentice Hall Law
& Business, Washington, DC, September
13-14, 1989. Some would argue that even
the word "protection" obscures the global
effects of the patent system on all players,
whether or not they choose to patent.
[26] Dan Bricklin, MIT Communications
Forum: "Software Patents: A Horrible
Mistake," March 23, 1989.

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[27] Gary M. Hoffman, "Computer Soft-
ware Patents Scope of Protection," in
Michael S. Keplinger and Ronald S. Laurie,
eds., Patent Protection for Computer
Software: The New Safeguard (Englewood
Cliffs, NJ: Prentice Hall Law & Business,
1989), pp. 128-9.
[281 Because of the dubious validity of
software patents, developers may also wish
to locate and document prior art indepen-
dent of the patent record. As indicated
earlier, in the absence of evidence in the
form of a printed publication, this is likely
to be an expensive undertaking. However,
it is a way of buying some certainty.
[29] The Patent Office has declined to enter
into any such estimate. See letter from
Acting Commissioner Jeffrey Samuels
answering Congressman Kastenmeier,
November 1, 1989, p.4 (answer to Question
[30] E.g., Claim 1. from Patent No. 4,674,040,
"Merging of Documents," issued June 16,
1. A method for merging a portion of one
document into another document, said
method comprising:
(a) including a reference in said another
document to said portion; and
(b) causing said portion to be merged
with said another document and
displayed in merged form.
[31] 35 U.S.C. Section 112.
[32] See notes [9] and [10] above.
[33] No. 4,646,250, issued February 24, 1987,
"Data Entry Screen."
[34] No. 4,648,062, issued March 3, 1987,
"Method for Providing an On Line Help
Facility for Interactive Information Han-
dling Systems."
[35] In re Musgrave, 431 F.2d 882 (CCPA
1970) (mental steps).
[36] "The product of the claims of the '442
patent [No. 4,346,442] effectuates a highly
useful business method and would be
unpatentable if done by hand." Paine,
Webber v. Merrill Lynch, 564 F.Supp. 1358,
1369 (Del. 1983).

[37] Gerald Goldberg, "Patent and Trade-
mark Office Report on Patentable Subject
Matter: Mathematical Algorithms and
Computer Programs," U.S. Patent and
Trademark Office, September 1989.
[38] Patent No. 4,170,832. Claim 11 reads:
11. A method of operating audiovisual
teaching equipment including a stored
motion video program having an introduc-
tory life-like scene segment leading to
identified choices and plural motion video
life-like scene segments showing the likely
result of such choices, comprising:
projecting said introductory life-like
segment and identified choices;
terminating projecting of said motion video
program automatically in response to the
end of said introductory segment and
identified choices;
selecting one of said identified choices by
manual actuation; and
automatically projecting in response to said
selecting step only one of said plural
motion video life-like segments displaying
the likely result of said selecting step.
[39] Mere functions are traditionally not
patentable. Denning Wire and Fence Co. v.
American Steel & Wire Co., 169 F 793 (CA8
Iowa, 1909).
Section 112 of the 1952 Patent Act provides
for claims in the form of "means plus
function," and it was once considered
preferable to claim software patents as an
apparatus (a hardware circuit or a general
purpose computer) with specific functional-
ity rather than as a process. However, the
courts and the Patent Office have tried to
discount such differences in form.
[40] This generalization is subject to the
qualification that under the doctrine of
equivalents, courts may occasionally look
beyond the literal claims to "equivalents."
This may involve looking to the "invention
as a whole" including the implementation.
See Ronald S. Laurie and Jorge Contreras,
"Application of the Doctrine of Equivalents
to Software-Based Patents," in Michael S.
Keplinger and Ronald S. Laurie, eds.,
Patent Protection for Computer Software:
The New Safeguard (Englewood Cliffs, NJ,

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Appendix B

Against Software Patents
The League for Programming Freedom
The address of the League for Programming
Freedom is I Kendall Square # 143, P.O. Box
9171, Cambridge, Massachusetts 02139; its
telephone number is (617) 243-4091, and its
electronic mail address is

Software patents threaten to devastate
America's computer industry. Newly-
granted software patents are being used to
attack companies such as the Lotus Develop-
ment Corporation and Microsoft for selling
programs that they have independently
developed. Soon new companies may be
barred from entering the software arena
because the cost of licensing the dozens of
patents necessary for a major program will
make such a project economically impossible.
As programmers, we believe that if the
United States Patent and Trademark Office
continues to grant software patents, we will
soon be effectively forbidden from writing
programs that are useful.

The patent system and
computer programs

The framers of the Constitution established
the patent system so that inventors would
have an incentive to share their inventions
with the general public. In exchange for
divulging an invention, the patent grants the
inventor a 17-year monopoly on the use of
the invention. The patent holder can license
others to use the invention but may also
refuse to do so. Independent reinvention of
the same technique by others does not let
them use it.
Patents do not cover specific programs:
instead, they cover particular techniques
that are used to build programs, or particu-
lar features that programs offer. Once a
technique or feature is patented, it may not
be used in another program without the
permission of the patent-holder--even if it
is implemented in a different way. Since a
program typically uses many techniques
and provides many features, it can infringe
many patents at once.
Until recently, patents were simply not used
in the field of software. Software developers
would copyright individual programs, or
make them trade secrets.

Copyright was traditionally understood to
cover the particular details of a particular
program; it did not cover the features of the
program, or the general methods used. And
trade secrecy, by definition, could not
prohibit any development work by someone
who did not know the secret.

UO n this basis, software development
was extremely profitable, and received
considerable investment, without prohibit-
ing the development of new programs by
But this scheme of things is no more.
Software patents became legal in the U.S. in
1981, and now enough time has elapsed for
numerous patents to be approved.
Many programmers are unaware of the
change and do not appreciate the magnitude
of its effects. Today the lawsuits are just

Absurd patents

The Patent Office and the courts have had a
very difficult time with computer software.
The Patent Office refuses to hire Computer
Science graduates as examiners and in any
case does not offer competitive salaries for
the field. Patent examiners are often ill-
prepared to evaluate software patent
applications to determine if they represent
techniques which have been previously
used or are obvious-both of which are
grounds for rejection.
Their task is made more difficult because
many commonly-used software techniques
do not appear in the scientific literature of
computer science. Some seemed too obvious
to publish, others seemed insufficiently
general. Complicated assemblages of
techniques have often been kept secret.
And what is obvious to a programmer is
frequently not obvious to a patent examiner,
many of whom view innovations in com-
puter science the same way as they see
innovations in chemistry or biology.
Computer scientists know many techniques
that can be generalized to widely varying
circumstances. Based on patents that have

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JUNE 1991

PAE5s eiaed

been awarded, the Patent Office seems to
believe that each separate use of a technique
is a candidate for a patent.
For example, Apple has been sued because
the Hypercard program violates patent
number 4,736,308, a patent that describes
nested scrollable objects: windows that can
scroll, containing tables that can individu-
ally scroll, containing items that can
individually scroll. These three types of
scrolling were all in use at the time that
patent number 4,736,308 was applied for,
but combining them is now illegal.

M any well-known and widely used
techniques have been patented. Unfortu-
nately, the granting of a patent by the Patent
Office carries a presumption in law that the
patent is valid. Patents for well-known
techniques that were in use for more than 10
years before the patent was granted have
been upheld by federal courts.
For example, the technique of using
exclusive-or to write a cursor onto a screen
is well known and has been used for
decades. (Its advantage is that another
identical exclusive-or operation can be used
to erase the cursdr without damaging the
other data on the screen.) This technique can
be used in just a few lines of program, and a
clever high school student might well
reinvent it. But this, as well as other
important graphics techniques, is covered
by patent number 4,197,590, which has been
upheld twice in court.
English patents covering customary
graphics techniques, including airbrushing,
stenciling, and combination of two images
under control of a third one, were recently
upheld in court, despite the testimony of the
pioneers of the field that they had devel-
oped these techniques years before. (The
corresponding United States patents,
including 4,633,416 and 4,602,286, have not
yet been tested in court, but they probably
will be soon.)
Currently all companies who have devel-
oped spreadsheet programs are being sued
because of a patent 4,398,249, covering
"natural order recalc"-the recalculation of
all the spreadsheet entries that are affected
by the changes the user makes, rather than

recalculation in a fixed order. This technique
is very similar to the old artificial intelli-
gence techniques of antecedent reasoning
and constraint propagation, but we cannot
rely on the courts to overturn the patent on
these grounds.
Nothing protects programmers from
accidentally using a technique that is
patented-and then being sued for it.
Taking an existing program and making it
run faster may also make it violate half a
dozen patents that have been granted, or are
about to be granted.
Even if the Patent Office learns to under-
stand software better, the mistakes it is
making now will follow us into the next
century, unless Congress or the Supreme
Court intervenes to declare them void.
However, this is not the extent of the
problem. Computer programming is
fundamentally different from the other
fields that the patent system previously
covered. As a result, even if the patent
system were fixed to operate "as intended"
for software, it would still largely wipe out
the industry it is ostensibly designed to

Why software is different

Software systems are much easier to design
than hardware systems of the same number
of components. For example, a program of a
hundred thousand components might be
fifty thousand lines long and could be
written by two good programmers in a year.
The equipment needed for this costs less
than ten thousand dollars; the only other
cost would be the programmers' own living
expenses while doing the job. The total
investment would be less than a hundred
thousand dollars. If done commercially in a
large company, it might cost twice that. By
contrast, an automobile typically contains
under a hundred thousand components; it
requires a large team and costs tens of
millions of dollars to design.

XA d software is also much cheaper to
manufacture: copies can be made easily on
an ordinary workstation costing under ten
thousand dollars. To produce a hardware
system often requires a factory costing tens
of millions of dollars.
Why is this? A hardware system has to be
designed using real components. They have
varying costs; they have limits of operation;
they may be sensitive to temperature,
vibration or humidity; they may generate
noise; they drain power; they may fail either
momentarily or permanently. They must be
physically inserted in their place in the
machinery, and it must be possible to gain
access to them to test or replace them.
Moreover, each of the components in a
hardware design is likely to affect the
behavior of many others. Therefore, is it
very hard to figure out what a hardware
design will do: mathematical modeling may
prove wrong when the design is built.
By contrast, a computer program is built out
of ideal mathematical objects whose
behavior is defined, not merely modeled
approximately, by abstract rules. When you
write an if-statement after a while-state-
ment, you don't have to worry that the if-
statement will draw power from the while-
statement and thereby distort its output, nor
that it will overstress the while-statement
and make it fail.
Despite the fact that they are built from
simple parts, computer programs are
incredibly complex. The program with fifty
thousand lines probably has a hundred
thousand parts, making it as complex as an
automobile, though far easier to design.
While programs cost substantially less to
write, market and sell than automobiles, the
cost of dealing with the patent system is not
less. The same number of components will,
in general, be likely to involve the same
number of possibly-patented techniques.

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PAE1 6special edition JUNE 1991I___

What is "obvious"?

The patent system will not grant or uphold
patents that are judged to be "obvious."
However, the standard of obviousness that
the patent system has developed in other
fields is inappropriate to the software field.
Patent examiners are accustomed to
considering even small, incremental changes
as deserving new patents. For example, the
famous Polaroid vs. Kodak case turned on
differences in the number and order of
layers of chemicals in a film--differences
between the technique Kodak was using
and those described by previous, expired
patents. The court ruled that these differ-
ences were unobvious.
Computer scientists solve problems far
faster than people in other disciplines,
because the medium of programming is
more tractable. So they are trained to
generalize solution principles from one
problem to another. One such generalization
is that a procedure can be repeated within
itself, a process known as nesting. Nesting
in software is obvious to computer pro-
grammers-but the Patent Office did not
think that it was obvious when it granted
the patent on nested scrolling, for which
Apple was sued.
Cases such as this cannot be considered
errors. The patent system is functioning in
software just as it does in other fields-but
with software, the result is outrageous.

Patenting what is too obvious
to publish

Sometimes it is possible to patent a tech-
nique that is not new precisely because it is
obvious-so obvious that no one saw a
point in writing about it.
For example, computer companies distribut-
ing the free X Window System developed by
MIT are now being threatened with lawsuits
by AT&T over patent number 4,555,775,
covering the use of "backing store". This
technique is used when there are overlap-

ping windows; the contents of a window
that is partly hidden are saved in off-screen
memory so they can be put back quickly on
the screen if the obscuring window disap-
pears (as often happens).
In fact, the technique of backing store was
used in an earlier MIT project, the Lisp
Machine System, before AT&T applied for
the patent. But the Lisp Machine developers
did not publish anything mentioning the
use of backing store until the programmers'
reference manual was written some years
later. They expected that any window
system developer would have the same
idea, given that the memory of the computer
was large enough to make the idea practical.
(Earlier window systems, such as those at
Xerox, did not use backing store because the
computers in use had insufficient memory
space to spare any for this purpose.)

X Without a publication, the use of
backing store in the Lisp Machine System
may not count as prior art to defeat the
patent. So the AT&T patent may be enforce-
able, and MIT may be forbidden to continue
using a method that MIT used before AT&T.
The result is that the dozens of companies
and hundreds of thousands of users who
accepted the software from MIT on the
understanding that it was free are now faced
with possible lawsuits (they are being
threatened by Cadtrak as well). The X
Windows Project was intended to develop a
window system that all developers could
use freely. Because of software patents, this
public service goal seems to have been

The danger of a lawsuit

Under the current patent system, a software
developer who wishes to follow the law
must determine which patents his program
violates and negotiate with each patent
holder a license to use that patent. Licensing
may be prohibitively expensive, as in the
case when the patent is held by a competi-
tor. Even "reasonable" license fees for
several patents can add up to make a project

unfeasible. Alternatively, the developer may
wish to avoid using the patent altogether;
unfortunately, there may be no way around
The worst danger of the patent system is
that a developer might find, after releasing a
product, that it infringes one or many
patents. The resulting lawsuit and legal fees
could force even a medium-size company
out of business.
Worst of all, there is no practical way for a
software developer to avoid this danger-
there is no effective way to find out what
patents a system will infringe. There is a
way to try to find out-a patent search-but
such searches are unreliable and in any case
too expensive to use for software projects.

Patent searches are
prohibitively expensive

In a system with a hundred thousand
components, there can easily be hundreds of
techniques that might already be patented.
Since each patent search costs thousands of
dollars, searching for all the possible points
of danger could easily cost over a million.
This is far more than the cost of writing the
But the costs don't stop there. Patent
applications are written by lawyers for
lawyers. A programmer reading a patent
may not believe that his program violates
the patent, but a federal court may rule
otherwise. It is thus now necessary to
involve patent attorneys at every phase of
program development.
Yet such involvement only reduces the risk
of being sued later-it does not eliminate
the risk. So it is necessary to have a reserve
of cash for the eventuality of a lawsuit.
When a company spends millions to design
a hardware system and plans to invest tens
of millions to manufacture it, an extra
million or two to pay for dealing with the
patent system might be bearable. However,
for the inexpensive programming project,
the same extra cost is prohibitive.

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In particular, individuals and small compa-
nies cannot afford these costs. Software
patents will put an end to software entrepre-

Patent searches are unreliable

Even if companies could afford the heavy
cost of patent searches, they are not a
reliable method of avoiding the use of
patented techniques. This is because patent
searches do not reveal pending patent
applications (which are kept confidential by
the Patent Office). Since it takes several
years on the average for a patent to be
granted, this is a serious problem: a com-
pany could begin designing a large program
after a patent has been applied for, and
release the program before the patent is
approved. Only later will that company find
out whether its profits will be confiscated.
For example, the implementors of the
widely-used public domain program
compress followed an algorithm obtained
from the journal, IEEE Computer. They and
the user community were surprised to learn
later that patent number 4,558,302 had been
issued to one of the authors of the article.
Now Unisys is demanding royalties for
using this algorithm. Although the program
is still in the public domain, using it means
risking a lawsuit. And implementing the
algorithms found in the journals is no longer
In addition, the Patent Office does not have
a workable scheme for classifying software
patents. Patents are most frequently
classified by the activity they are used in,
such as "converting iron to steel;" but many
patents cover algorithms whose use in a
program is entirely independent of the
purpose of the program. For example, a
program to analyze human speech might
infringe the patent on a speedup in the Fast
Fourier Transform; so might a program to
perform symbolic algebra (in multiplying
large numbers); but the category to search
for such a patent would be hard to predict.

ou might think it would be easy to keep
a list of the patented software techniques, or
even simply remember them. However,
managing such a list is nearly impossible in
practice. The patent office has now granted
more than 2000 software patents. In 1989
alone, 700 patents were issued. We can
expect the pace to accelerate.
When you think of inventions, you probably
call to mind revolutionary inventions such
as the telephone or magnetic core memory.
This is not the standard that the patent
system uses, however. What we would
consider a minor cleverness or variation or
combination of existing techniques, they
consider patentable. This leads to a profu-
sion of obscure patents.

JA y capable software designer will
"invent" several such improvements in the
course of a project and will say that they are
straightforward-hardly inventions at all.
However, the number of avenues for such
improvement is very large, so no single
project is likely to find any given one.
Therefore, the Patent Office is not likely to
classify them as obvious. As a result, IBM
has several patents (including 4,656,583) on
certain fairly straightforward, albeit
complex, speedups for well-known compu-
tations performed by optimizing compilers,
such as computing the available expressions
and register coloring.
Patents are also granted on combinations of
techniques that are already well known and
in use. One example is IBM patent 4,742,450,
which covers "shared copy-on-write
segments." This is a technique that allows
several programs to share the same piece of
memory that represents information in a
file; if any program writes a page in the file,
that page is replaced by a copy in all of the
programs, which continue to share that page
with each other but no longer share with the
Shared segments and copy-on-write are
very old techniques; this particular combi-
nation may be new as an advertised feature,
but is hardly an invention. Nevertheless, the
Patent Office thought that it merited a
patent, which must now be taken into
account by the developer of any new
operating system.

These sorts of patents are like land mines:
your chances of running into any one of
them are small, but soon there will be
thousands of them. Even today it is hard to
keep track of them, and a recent list pub-
lished by lawyers specializing in the field
omitted some of these IBM patents. In ten
years, programmers will have no choice but
to march on blindly and hope they are

Patent licensing has
problems, too

Most large software companies are trying to
solve the problem of patents by getting
patents of their own. Then they hope to
cross-license with all the other companies
and be free to go on as before.
While this approach will allow companies
like Microsoft, Apple and IBM to continue
business, it will shut future companies out
of the marketplace. A future start-up, with
no patents of its own, will have no choice
but to meet whatever conditions the giants
choose to impose. And that price might be
extremely high: companies currently in the
market have an incentive to keep out future
competitors. The recent Lotus lawsuits
against Borland and the Santa Cruz Opera-
tion (although involving an extended idea of
copyright rather than patents) show how
this can work.

E ven a system of industry-wide cross-
licensing will not protect the software
industry from companies whose only
business is to buy patents and then sue
people for license fees. For example, the
New York-based REFAC Technology
Development Corporation recently bought
the rights to the "natural order recalc"
patent solely so that REFAC could sue
Lotus, Microsoft and other companies
selling spread-sheet programs. Contrary to
its name, REFAC does not develop anything
except lawsuits. It has no financial incentive
to join a cross-licensing compact. The
exclusive-or patent is owned by another
such litigation company, Cadtrak, which is
now suing Western Digital.

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PAG 1 8p e I a l diio JUE 99

REFAC is demanding five percent of sales of
all major spread-sheet programs. If some
future program infringes on twenty such
patents-and this is not at all unlikely, given
the complexity of a computer program and
the specificity of patents that have been
recently issued-that program will never be
To get a picture of the effects for yourself,
imagine if each square of pavement on the
sidewalk had its owner, and you had to
negotiate a license to step on it. Imagine
trying to walk the entire length of a block
under this system. That is what writing a
program will be like if software patents are
allowed to proliferate.

The fundamental question

According to the Constitution of the United
States, the purpose of patents is to "promote
the progress of science and the useful arts."
Thus, the basic question at issue is whether
software patents, supposedly a method of
encouraging software progress, will truly do
so or whether they will instead hold
progress back.
So far we have explained the ways in which
patents will make ordinary software
development difficult. But what of the
intended benefits of patents: more inven-
tion and more public disclosure of inven-
tions? To what extent will these actually
occur in the field of software?
There will be little benefit to society from
software patents because invention in
software was already flourishing before
software patents, and inventions were
normally published in journals for everyone
to use. Invention flourished so strongly, in
fact, that the same inventions were often
found again and again.

In software, independent
reinvention is commonplace

A patent is an absolute monopoly; anyone
who uses the patented technique can be
stopped, even if it was independently
The field of software is one of constant
reinvention; as some people say, program-
mers throw away more "inventions" each
week than other people develop in a year.
And the comparative ease of designing large
software systems makes it easy for many
people to do work in the field.
As programmers, we solve many problems
each time we develop a program. In the
past, we would publish the important
solutions in journals and forget the rest. All
of these solutions are likely to be reinvented
frequently as additional people tackle
similar problems and try to do a good job.
Today, however, many of these specialized
solutions are being patented. If you then
rediscover it in the course of your work, you
are headed for a lawsuit that you cannot
Meanwhile, the prevalence of independent
reinvention negates the usual justification
for patents. Patents are intended to encour-
age the development of inventions and,
above all, the disclosure of inventions. If a
technique will be reinvented frequently,
there is no need to encourage more people
to invent it; since some of the developers
will choose to publish it (if it merits publica-
tion), there is no point in encouraging a
particular inventor to do so-and certainly
not at such a high price.

Could patents ever be

Although software patents in general are
harmful to society as a whole, we do not
claim that every single software patent is
necessarily harmful. It is possible, though
not certain, that careful study would show
that under certain specific and narrow

conditions (necessarily excluding the vast
majority of cases) it would be beneficial to
grant software patents.
Nonetheless, the right thing to do now is to
eliminate all software patents as soon as
possible-before more damage is done. The
careful study can come afterward.
This may not be the ideal solution, but it is
close and is a great improvement. Its very
simplicity helps avoid a long delay while
people argue about details.
Clearly software patents are not urgently
needed by anyone except patent lawyers.
The pre-patent software industry had no
problem that patents solved; there was no
shortage of invention and no shortage of
If it is ever shown that software patents are
beneficial in certain exceptional cases, the
law can be changed again at that time-if it
is important enough. There is no reason to
continue the present catastrophic situation
until that day.

Inventions are not the
important thing

Many observers of US and Japanese
industry have noted that one of the reasons
Japanese are better at producing quality
products is that they assign greater impor-
tance to incremental improvements,
convenient features and quality rather than
to noteworthy inventions.
It is especially true in software that success
depends primarily on getting the details
right. And that is most of the work in
developing any useful software system.
Inventions are a comparatively small part of
the process.
The idea of software patents is thus an
example of the mistaken American preoccu-
pation with the big invention rather than the
desirable product. Patents will reinforce this
misdirection of American attention. Mean-
while, by presenting obstacles to competi-
tion in the important part of software
development, they will interfere with
development of quality software.

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Software patents are legally

It may come as a surprise that the extension
of patent law to software is still legally
questionable. It rests on an extreme interpre-
tation of a particular 1981 Supreme Court
decision, Diamond vs. Deihr. (This informa-
tion comes from a paper being written by
Professor Samuelson of the Emory School of
Traditionally, the only kinds of processes
that could be patented were those for
transforming matter (such as, for transform-
ing iron into steel). Many other activities
which we would consider processes were
entirely excluded from patents, including
business methods, data analysis, and
"mental steps". This was called the "subject
matter" doctrine.
Diamond vs. Deihr has been interpreted by
the Patent Office as a reversal of this
doctrine, but the court did not explicitly
reject it. The case concerned a process for
curing rubber-a transformation of matter.
The issue at hand was whether the use of a
computer program in the process was
enough to render it unpatentable, and the
court ruled that it did not. The Patent Office
took this narrow decision as a green light for
unlimited patenting of software techniques,
and even for the use of software to perform
specific well-known and customary activi-
Most patent lawyers have embraced the
change, saying that the new boundaries of
what can be patented should be defined
over decades by a series of expensive court
cases. Such a course of action will certainly
be good for the patent lawyers, but it is
unlikely to be good for software developers
and users.

One way to eliminate
software patents

We recommend that Congress pass a law
that excludes software from the domain of
patents. That is to say that, no matter what
might be patented, the patent would not
cover implementations in software; only
implementations in the form of hard-to-
design hardware would be covered. An
advantage of this method is that it would
not be necessary to classify patent applica-
tions into hardware and software when
judging them.
People often ask how it would be possible to
define software for this purpose-where the
line would be drawn.

or the purpose of this legislation,
software should be defined by precisely the
characteristics that make software patents
* Software is built from ideal mathematical
components, whose inputs are clearly
distinguished from their outputs. Ideal
mathematical components are defined by
abstract rules so that failure of a component
is by definition impossible. The behavior of
any system built of these components is
likewise defined by the consequences of
applying the rules to its components.
* Software can be easily and cheaply copied.
Thus, a program which computes prime
numbers is a piece of software. A mechani-
cal device designed specifically to perform
the same computation would not be
software, since the mechanical device might
fail if it were not properly oiled, and would
have to be constructed out of physical

There are areas of design which are between
hardware and software in some ways: for
example, gate arrays and silicon compilers.
These will fall on one side or the other of the
line that is drawn. If the line is drawn as
proposed here, based on the needs of the
field, there is reason to hope that these will
fall on the side that is best. However, these
in-between areas are comparatively small,
and what really matters is to solve the
problem for the larger area of ordinary
software as surely and expeditiously as


Exempting software from the scope of
patents will prevent the patent system from
turning an efficient creative activity into
something that is prohibitively expensive.
Individual practitioners will be able to
continue work in their fields without
expensive patent searches, the struggle to
find a way clear of patents, and the un-
avoidable danger of lawsuits.
If this change is not made, it is quite possible
that the sparks of creativity and individual-
ism that have driven the computer revolu-
tion will be snuffed out.


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M A:

This special edition is devoted to
the report of the Committee on
Algorithms and the Law. The next
regularO PT I M A will appear
in mid-summer, 1991.

Books for review should be
sent to the Book Review Editor,
Prof. Dr. Achim Bachem,
Mathematiches Institute der
Universitlit zu Koln,
Weyertal 86-90, D-5000 Kiln,
West Germany.

Journal contents are subject
to change by the publisher.

Donald W. Heam, EDITOR
Elsa Drake, DESIGNER

303 Weil Hall
College of Engineering
University of Florida
Gainesville, Florida 32611-2083 USA


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JUNE 1991


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