Is Software Patentable
Recently, I was attending a get together of some old school friends from my youth. We try to see each other every once and a while. I was chatting with a friend of mine and invariably the question is raised “Well Sam, what is it that you actually do”. Having fielded this question before I said, as I have many times in the past, “I negotiate and draft contracts for the licensing of software and I also draft the consulting contracts to implement that software”. My friend, who is a software engineer and a very intelligent man, countered with “I thought you couldn’t get a patent for software”. He relayed his experience of 15 years hence writing code for software games and not being allowed to patent the algorithms. Well, he had me back on my heels and flat-footed. I wasn’t sure how to answer him. I relied on my experience as a Law Professor and being asked questions where I did not have the answers at my finger tips. The secret is to ask rhetorical questions in a sort of Socratic manner and get to the answer. I did not feel comfortable at first stating definitively that “Yes, of course software can be patented”. My discomfort came from the knowledge of asking this very question in the past and not getting a conclusive and authoritative response. So I began asking the questions and stating that when I draft a software license and I am representing the buyer I include indemnification language to protect my client similar in tone to the following:
“Seller shall indemnify Buyer against all claims, liabilities, and costs, including reasonable attorneys' fees, reasonably incurred in the defense of any claim brought against Buyer by third parties alleging that Buyer's Use of the Software infringes or misappropriates any United States patent; a copyright; or trade secret rights, provided that: such indemnity shall not apply if the alleged infringement results from Use of the Software in conjunction with any other software, an apparatus other than a designated apparatus, or unlicensed activities and so long as Buyer promptly notifies Seller in writing of any such claim and Seller is permitted to control fully the defense and any settlement of such claim as long as such settlement shall not include a financial obligation on Buyer. Seller may settle any claim on a basis requiring Seller to substitute for the Software alternative substantially equivalent non-infringing programs.”
And when I am representing the Seller I include language in the license to protect my client that limits its liability for any claims of patent infringement with language similar in tone to the following:
“Buyer's sole and exclusive remedies for any damages or loss in any way connected with the Software furnished by Seller, whether due to Seller's negligence or breach of any other duty, shall be, at Seller's option: (i) to bring the performance of the Software into substantial compliance with the functional specifications; (ii) re-performance of services; or (iii) return of an appropriate portion of any payment made by Buyer with respect to the applicable portion of the software or services. Seller will not be responsible under this Agreement if the Software is not used in accordance with the documentation; or (ii) if the defect is caused by Buyer, a Modification, third-party software, or third party database. ANYTHING TO THE CONTRARY HEREIN NOTWITHSTANDING, EXCEPT FOR DAMAGES RESULTING FROM UNAUTHORIZED USE OR DISCLOSURE OF PROPRIETARY INFORMATION, UNDER NO CIRCUMSTANCES SHALL SELLER, OR BUYER BE LIABLE TO EACH OTHER OR ANY OTHER PERSON OR ENTITY FOR AN AMOUNT OF DAMAGES IN EXCESS OF THE PAID LICENSE FEES.”
So this little exercise helped me to raise my confidence level in order to respond to my friend that yes in the US software is patentable. But just why is there such an open question on this issue. There is no definition of software from the US patent office. As of today in the US it is readily accepted that software embodied in a physical computer readable medium and aiding an innovative process or machine is considered patentable. If you seek such a patent you must “subtly claim the software as employing or performing certain functions or processes and as embodied in a computer readable medium”. Please see http://ezinearticles.com/?A-Soft-Introduction-to-Software-Patents&id=593392
“Software patents have a very recent history as the first software patent granted was in 1981, in the legal case of Diamond v. Diehr. The claimed invention is a heat treatment of rubber, wherein software code is employed to compute the optimum time duration for the treatment. In another case of State Street Bank & Trust v. Signature Financial Group, a software business method was granted a patent in the year 1998, redefining software patentability. Software patentability has been a topic of debate world over. The first question an inventor, who wishes to patent his invention, asks is "Is software patentable". The short answer is that the US patent office does grant software patents, and there has been a surge in software patenting in the US.” Id.
In my research I found some very interesting facts.
· A classification of software patents is virtually nonexistent, although a majority of recent patents are software patents based on the above criteria and
· There are about 1400 patents purely on computational software.
· IBM possesses 31,995 US patents.
· HP possesses 21,000 patents worldwide as on 2003.
· Microsoft possesses 5000 US patents.
· Siemens possesses more than 10,000 issued and pending US patents.
· In the USPTO database there are about 25,123 claimed software patents and about 284,978 granted patents that disclose the use of software in their inventions.
For further reading on this subject please see several articles listed at the following URL http://ezinearticles.com/?expert=Ash_Tankha
Please note that the above discussion is on US patents only. In Europe this is still an open question. See European Patent Office quiet on whether software can have a patent. And in Asia and the rest of the world it is anybody’s guess.
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