Software patents are legalised extortion

Software patents would be great if they actually worked instead of just providing rich pickings for trolls, says Mike Lee
Written by Mike Lee, Contributor

By refusing to kowtow to the US software patent racket, Europe could experience a new golden age of technology, says Mike Lee.

From its theoretical description, a patent system for software seems like a great idea.

Rather than keeping their best code to themselves, software engineers can register their creations with the government, creating a marketplace of functionality. Anyone creating new products can save time and money by licensing, rather than reinventing.

If the patent system actually worked anything like that, software patents would be a no-brainer, but it doesn't, and they're not.

In fact, quite the opposite. Instead, the patent office contains vaguely worded descriptions written and held by lawyers, not for accelerating innovation, but for taxing it.

Reality of the software patents system

Software patents, as practised, are legalised extortion. Someone brings a product to market, born from their own minds, built with their own hands, and shipped through the sacrifice of their own families.

Before they ever see their first paycheque, they start getting letters from those lawyers: "That's a nice little app you've got here. It would be a shame if someone sued you for patent infringement."

In actual patent infringement, there would be an inventor with an invention whose sales are damaged by some dishonest party's copying for the intended purpose of siphoning off some of those sales. Situations such as that one do exist, but the patent system doesn't seem to do a good job of rectifying them.

Instead, the question of patent infringement stands in as a threat, in the form of a lawsuit. Simply asking the question of whether a product infringes on a patent can cost millions of dollars. That's why such lawsuits are rare. Right or wrong, it's cheaper to settle.

Apparent cost of doing business

That is the depressing calculus that enables extortion. Compared with the threat of bankruptcy, signing a licence with a patent troll such as Lodsys seems like a much better decision. The little more than half a percent of revenue is just the cost of doing business.

But as uncovered at the Appsterdam Legal Summit in October — where app makers and intellectual property attorneys came together to discuss these issues — the settlement offer is only made to look like the easy choice.

For example, the Lodsys 'licensing fee' of 0.0575 percent of revenues above $10,000 (£6,300) doesn't seem like much, but that carries with it an auditing clause that allows it to open your books at leisure. Moreover, you'll continue paying that licensing fee even when the patent expires or is found invalid.

Worse than that is what...

...the organisation will spend the money on: getting more money out of other app makers. Giving in to this process creates a kind of viral licensing. It's hard to clean a virus from your system, but it beats passing on the infection to everyone you know.

It's even more sinister than that. As revealed by the investigative reporters at National Public Radio — the closest thing the Americans have to the BBC — the patent troll Lodsys is one of thousands of shell companies leading back to a Silicon Valley start-up called Intellectual Ventures.

Founded by a former Microsoft executive and funded by a who's who of Valley money, the wave of soulless trolls turns out to be coming from none other than Silicon Mordor. The incestuousness of the Valley makes extorting other Valley companies a zero-sum game.

Instrument of Silicon Valley hegemony

Suddenly it becomes clear why Lodsys has cast such a wide net, sending demand letters to app makers on multiple platforms in countries around the world. These software patents are not just a tax on technology — they are an instrument of Silicon Valley hegemony.

Europe offers the first major challenge to that hegemony as the growing tide of anti-intellectualism in the US reverses the brain-drain experienced by Europe in the 1930s. The opportunity presented to Europe by the US patent system is not in falling in line, but in building a wall.

If American technologists are not able to practise their craft, provide for their families, and do business in their native land, let them come to Europe. An American app maker living in Europe can use jurisdictional barriers and their own shell companies to protect themselves from the American patent system.

We want them here. Even if they only lived here for a year before going home, such an influx of American knowledge would contribute to a new golden age of European technology, just as scholars fleeing the fall of Byzantium sparked the Renaissance.

Europe's best route out of the downturn

That's just what Europe needs to pull itself out of the Great Recession. Technology creates high-quality jobs and makes everyone's lives better. At the other end of the spectrum are shady, unregulated industries that make obscene amounts of money for an ultra-smart, ultra-arrogant, ultra-greedy elite.

If American technologists are not able to practise their craft, provide for their families, and do business in their native land, let them come to Europe.

The last time American lobbyists sold us on one of their unregulated money-making ventures it got us into the mess we're in now. Last time it was built on the backs of homeowners, and homeowners inevitably suffered. This time it's built on the backs of technologists. It's time for Europe to go its own way.

It's often said that Europe follows the US, but 30 years behind. Normally that's considered a bad thing, but having just seen the US fall off a cliff, we'll need that lead time to save ourselves.

The UK often seems to be torn between following its former colonies in the States or its former enemies in Europe. You're welcome to make your own decisions, of course. If you pursue the US down the road of software patents, we'll take your technologists too.

Mike Lee is an international adventurer, like Indiana Jones, but with engineering instead of archaeology. Before embarking on a life as a costumed superhero, he shipped product for Apple, President Obama, and your mother. In between winning the Apple Design Award and travelling around the world, Lee co-founded Tapulous, makers of the first popular iPhone game. When he's not wrestling tornados or changing the world, he enjoys drinking, smoking, and causing a ruckus. He was last seen in Appsterdam, world capital of app development.

For the opposite point of view on software patents, read Should software be patentable? That's the wrong question to ask by Marty Goetz, the man who was granted the first ever software patent in 1968.

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