There has been a lot of discussion recently by several top startup investors about how the U.S. patent system is badly broken and calling for Congress to dismantle software patents altogether. In a nutshell, the main problem is the U.S. Patent and Trademark Office (USPTO) has granted many patents for inventions that seem like they would be obvious to anyone working on the Internet–and therefore should be unpatentable. A recent example is the Lodsys case, which seems to grant a patent for the “invention” of enabling users to provide feedback via a website.
Often, these patents, which seem silly to many in the industry, are bought by “non-practicing entity” companies also known as patent trolls, who purchase the patents solely to “license them” to other companies, i.e., threaten those companies with lawsuits if they refuse to pay royalties to utilitize the invention. Apparently, the problem has gotten bad enough now that any promising new startup can expect to be threatened with suits from numerous patent trolls just as they are starting to grow. These angel investors are seeing many or most of their portfolio companies threatened with suits and they are speaking out to fix the system.
This all makes perfect sense to me. There is no question the USPTO occasionally, maybe often, grants patents for inventions that are not novel or not non-obvious (the two criteria for patentability) or both. Nor is there any question that sometimes these patents are used by opportunistic investors in ways that clearly stifle innovation and are ultimately bad for consumers.
The part where I somewhat diverge with the recent discussions is how many of these investors, which also include some entrepreneurs, are pushing hard to do away with all software patents in the U.S. completely. They argue that software patents are fundamentally different from other types of patents, such as physical inventions, and the current system is harming innovation so they should simply be abolished.
I am not an attorney and I am far from an expert on patent matters. Also, for full disclosure, I have a personal bias toward patents now having recently filed the patent application for the technology in KlickFu. However, that said, I still believe software patents can be viable and valuable and the system would be better fixed than dismantled.
While it is true some concepts in software patents are blurry and subject to judgment, the same can probably be said of patents in other areas. (I recall hearing there are more than 5,000 different patents relating to mouse traps.) While some agents in the USPTO undoubtedly lack the necessary technical expertise to effectively consider patent applications, this could probably be fixed by increasing salaries by a government recognizing this would be money very well spent. Finally, while the patent litigation process is probably massively expensive and cumbersome, I would think Congress could rewrite the laws to establish a vastly streamlined mediation process adjudicated by true experts in the field with a simple up-or-down decision rendered in weeks rather than years.
It may be the case that entrepreneurs funded by these super-investors and venture capital firms can grow fast enough and have strong enough relationships with larger companies to avoid having their intellectual property infringed by dominant incumbents and do not need the protection patents can offer. However, for entrepreneurs who do not have millions in the bank and prefer to grow more slowly, it seems patents can serve a useful purpose and truly increase innovation that benefits consumers. There is no doubt the U.S. patent system has serious problems. Before we do away with the system entirely, we should consider if there are relatively simple, practical ways it can be fixed.
